CRU: Top NPK Market Forecasts for 2020

Chinese NPK exports exploded in 2019. They soared nearly five-fold in one of the most prominent NPK stories of the year. This dramatic rise coincided with the elimination of NPK export taxes. While we expect Chinese NPK exports to continue rising in 2020, they are unlikely to duplicate the 2019 feat.

Chinese NPK exports to Myanmar and the Philippines grew particularly strongly in 2019, but it is unlikely that either will import Chinese NPK at the same pace of growth in 2020. In Myanmar, most product is moving overland into the north of the country from Yunnan province. Northern Myanmar increased its Chinese NPK intake by over double in 2019, and it is unlikely that demand can keep expanding at this pace in 2020. Competition from Yara and other producers active in the country will also exert resistance.

In the Philippines, Namhae, Yara, and other producers provide competition. Plans to restart Philphos fertilizer production in early 2019 did not materialise. However, the Philippines imported 35% more y/y Chinese NPK in 2019, greatly incentivising a Philphos restart in 2020. Moreover, Philphos reportedly restarted phosphoric acid production in late 2019 or early 2020. More domestic Philippine NPK production will reduce Chinese NPK export growth into the country.

Chinese NPK will continue to lack the same product quality as European and Russian producers. Most Chinese NPK capacity uses steam granulation, which produces physically inferior product. Many Southeast Asian importers favour higher quality product than offered by Chinese producers, slowing further Chinese expansion.

China also increased NPK exports to East and Southeast Africa, particularly Mozambique, but export growth to these regions will face competition from regional producers, including Omnia, which commissioned a new nitrophosphate plant in Sasolburg in 2019. Ma'aden may also step up fertilizer sales into Southeast Africa though its new fertilizer distributor and blender subsidiary Meridian, which it acquired in 2019.

There are no changes to Chinese NPK export incentives for 2020. All export tariffs have been removed, and there are no export quotas. Without new incentives such as export subsidies, or even with them, it will be difficult for Chinese NPK exports to maintain the spectacular growth seen in 2019.

2. Africa and diversification to boost OCP exports

OCP NPK and NP exports are forecast to rise nearly 23% y/y in 2020. Much of the increase will originate from OCP's traditional compound market, Africa.

Nigeria banned NPK imports in 2019, all but eliminating imports. Threatened by oversupply and competition from imported compounds, the Nigerian government took steps to protect and encourage its bulk blend industry and policy by instituting foreign exchange and regulatory bans on NPK imports.

Read the full story:

https://www.crugroup.com/knowledge-and-insights/spotlights/2020/top-npk-market-forecasts-for-2020/ 

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