DUBAI,- With the global fertiliser sector expected to grow at a relative flat rate till 2020, the industry can anticipate a period of change in the medium term, according to speakers at the 7th GPCA Fertiliser Convention in Dubai.
Hosted by the Gulf Petrochemicals and Chemicals Association (GPCA), the annual conference gathered industry experts at a three-day event.
Global fertiliser demand is expected to grow to 200 million tonnes by 2020, expanding by 1.3 percent year on year, according to forecasts by the International Fertiliser Industry Association (IFA). The GCC, meanwhile, holds a fertiliser portfolio of 37.7 million tonnes today, a capacity that is one-fourth of the region's total petrochemicals production capability, as per the GPCA.
"While the industry continues to expand its capacity, the GCC's fertiliser industry has three main challenges right now and in the future, that can also be seen as opportunities. From less than ideal market conditions, to nutrient losses into the environment, to the misuse of fertilisers our industry is in a state of change," said Dr. Abdulrahman Jawahery, Chairman, IFA.
"From optimisation projects and debottlenecking to shutting down obsolete capacity and postponing expansion plans, the industry is trying to come to terms with the flux," he added.
For GCC producers, further challenges appear in the form of changing behaviour of key consumers and evolving market conditions.
"Today, commercial farmers are looking at the reduction of use of fertilisers, as well as optimised use of this commodity. And we can also expect China to join the mature market club, like Western Europe and North America, where demand will grow but not at high rates," he continued. "This explains the relatively flat demand worldwide."
However, there are opportunities on the horizon.
"Africa can be a major market, and we already see major GCC companies like SABIC taking the lead here. With the Abuja declaration in 2006, where governments assigned targets for fertiliser use, the industry was set to grow exponentially. While these targets have been missed, the declaration represents a huge opportunity for our industry," said Dr. Jawahery.
"Meanwhile, markets such as India operate on a subsidised regime that support nitrogen fertilisers. This can lead to overuse, but is also an opportunity for phosphate fertilisers. The questions we need to ask ourselves are as follows: how can we help regions such as Africa grow? And how can we promote a more balanced use of fertilisers in South Asia?" he asked.
A future opportunity, another expert said, lies in solutions rather than products.
"A key challenge in the world is the difference in soil from one place to another. For example, 41 percent of the world's soil is over saline, the ground in the United States is low in sulphur and here in the region, we have arable land," said Ahmed M. Al Qahtani, General Manager, Business Strategy, Agri-nutrients, SABIC.
"You cannot have a general product for all countries. What you must do is to tailor your solution for the country you are addressing," he explained.
China, according to Al Qahtani, is an emerging influencer in the global fertiliser market. "Their market is maturing, but they are looking at solutions. From coal plants that produce ultra-low emissions and phasing out old plants to fast introductions of fertiliser solutions, China is an innovator."
The agility of Chinese producers has a huge implication for GCC fertiliser companies.
"With the maturing of the Chinese market, it is unlikely that this country will be a major destination for GCC-produced fertilisers, though it may continue to import a small amount of specialty fertilisers," stated Dr. Abdulwahab Al-Sadoun, Secretary-General, GPCA.
"The key consideration for producers in the Arabian Gulf however, is that Chinese fertiliser manufacturers will build on their dominant position in producing nitrogen and phosphate based fertilisers, and eventually, take away market share in key export countries," he explained.
Source: Emirates News Agency