Key NPK trends in 2019

By argusmedia – paris Grain Day

Several key trends emerged in the global NPK market in 2019. Governments played a key role in the market, as changes to import and export legislation in major producing and consuming countries disrupted long-established trade flows.

 

CHINA

Chinese exports surge following export tax removal
China had been a net importer of NPKs, but on 1 January
2019 the government scrapped the export tax on NPKs — it
had been set at Yn100/t in 2018. The policy change boosted
Chinese NPK exports significantly, with shipments in January-
November rising by 170pc on the year, and exports exceeding
imports in March and August.
Myanmar and the Philippines received the largest shares
of Chinese exports in January-November, GTT data show.
Exports to Myanmar rose by 364pc on the year to 359,827t,
while shipments to the Philippines rose by 144pc to 184,430t.
Exports to other southeast Asian markets grew considerably,
as the graph below shows. The growth is particularly
noteworthy as import demand for NPKs across southeast Asia
was reduced throughout 2019 by poor crop returns, low cash
flow and unfavourable weather.
Chinese producers also appear to have targeted Africa.
Mozambique was the third most popular destination for
exports in January-November 2019, according to GTT data,
although shipments did not pick up immediately after the
export tax was scrapped — of the 130,890t delivered to
Mozambique in January-November, 117,890t was shipped
from July onwards. Meanwhile, in October, a 10,000t cargo of
Chinese NPKs was shipped to Zambia, the highest monthly
volume for Zambia recorded on GTT and the first shipment
there from China since 2003.
Chinese producers have taken steps over the last year to
raise their profile as exporters. In March, Kingenta passed
the prequalification stage in the Kenya Tea Development
Agency’s (KTDA) tender to buy 88,655t of 26-5-5, having
failed to prequalify in 2018, when KTDA was not familiar with
Kingenta’s product.

 

UKRAINE

Supply diversifies following ban on Russian fertilizer imports
On 1 July 2019, the Ukrainian government banned all fertilizer
imports from Russia. Although the ban was preceded by
various sanctions and duties that reduced Russian producers’
share of Ukrainian NPK imports, the import ban represented
the loss of what had been Russia’s largest NPK export market
and Ukraine’s largest supplier. Russia accounted for 72pc of
Ukrainian NPK imports in 2014-18, while Ukraine accounted
for 19pc of Russian NPK exports, the highest percentage for a
single country, GTT data show.
Although flows from Russia did not stop entirely after 1 July
— pre-sold NPKs were allowed into the country after the ban —
imports fell by 94pc on the year in July-November to 26,316t,
latest customs data show. The supply gap prompted an influx of
new product. Ukraine imported 31,387t of Moroccan
15-15-15 in August- September, as OCP entered the market.
And Nippon Jordan Fertilizer delivered 14,400t of 10-26-26 to
Ukraine in September — Ukraine’s first Jordanian NPK receipts.
Bulgarian producer Agropolychim also made its Ukrainian
market debut, shipping 7,820t of 15-40-10+2S to the country
in July-November. And the first Greek NPKs arrived in Ukraine,
too, with 7,310t imported from Hellagrolip in July-November.
Other producers that were present in Ukraine before the
ban, but very much in the shadow of Russian firms, saw
big increases in their exports to the country. Imports of
Yara product rose by 299pc on the year in July-November
to 81,353t, customs data show, while imports from Serbian
producer Elixir increased by 68pc to 24,658t. Romania’s
Azomures first shipped NPKs to Ukraine in April 2019, and of
the 23,388t received from Azomures since then, 16,549t was
delivered after 1 July, customs data show.
Despite these increases, monthly imports fell on the year
each month in July-November. And just as Ukrainian importers
failed to replace Russian supply, Russian producers failed to
entirely replace Ukrainian demand.
Russian NPK exports fell by 5pc year on year in January-
November to 5mn t. The impact of a 48pc drop in exports to
Ukraine was mitigated by a 21pc rise in exports to China,
which is now Russia’s largest export market, but shipments to
other regions in January-November were relatively stable.
Producers’ attempts to replace Ukrainian demand have
pushed them to focus on other markets. In mid-November, it
emerged that Phosagro will supply Benin’s Interprofessional
Cotton Association (AIC) with 180,000t of 14-18-18+6S+1B
and 25,000t of 13-17-17+6S+0.5B+1.5Zn. These are the first
significant consignments of Russian product to be shipped
to Africa. And in late October, Phosagro announced plans to
open a trading office in South Africa, increasing its potential
to disrupt OCP’s dominance of the continent.

 

NIGERIA

Nigerian NPK import ban removes a key outlet for OCP
In December 2018, the Central Bank of Nigeria (CBN) announced
that it was cutting foreign currency access for
finished imported NPK products. The action was requested by
the Fertilizer Producers and Suppliers Association of Nigeria
(Fepsan), which argued that it would save on foreign exchange
reserves, protect domestic producers and encourage the use
of more soil-specific fertilizers.
Nigeria imported 351,821t of NPKs in 2018, AFO data show.
The bulk of this was supplied by OCP, with Moroccan NPK
exports to Nigeria in 2018 totalling 294,774t — the largest
volume exported to a single country by Morocco, GTT data
show.
OCP has been unable to entirely offset the loss of Nigerian
demand — Moroccan NPK exports in January-October 2019 fell
by 23pc year on year, GTT data show. Exports to Benin, which
received the highest share of Moroccan NPKs in January-
September, were little changed on the same period of 2018,
totalling 218,163t, compared with 217,130t. Shipments to other
major African markets fell, with exports to Ivory Coast falling
by 5pc to 78,823t, exports to Angola fell by 37pc to 34,906t
and exports to Ghana were down by 84pc, at 8,604t.
With insufficient demand in Africa to replace Nigerian imports,
the ban forced OCP to seek new markets. Moroccan exports to
Europe in January-October increased by almost 600pc year on
year.
In Europe, Spain received the largest volume of Moroccan
NPKs in January-October, with shipments to the country rising
by 192pc to 54,383t.
Ukraine was another key European growth market for OCP,
with Moroccan exports there in January-October totalling
41,081t. This reflects the producer’s success in capitalising on
the Ukrainian government’s import ban on Russian fertilizers
— OCP had never exported NPKs to Ukraine before July 2019.
Outside Europe, exports to Uruguay rose by 86pc on the year
to 35,515t in January-September.

 

BRAZIL AND INDIA

Emerging markets a key focus
Demand from emerging markets continues to increase, as
both Brazil and India imported record volumes of NPKs.
Brazil imported 1.3mn t of NPKs in January-November 2019,
latest GTT data show, surpassing the 1.2mn t imported in all
of 2018.
Indian importers have purchased 749,918t of NPKs so far in
the 2019-20 fertilizer year (starting in April and including some
arrivals in January), according to Argus data, exceeding the
651,515t that arrived at Indian ports in the 2018-19 fertilizer
year. The higher demand is attributed to a healthy monsoon
that encouraged importers to diversify supply.
Among the record total were the first imports from South
Korea since 2012. South Korean trading firm Samsung
delivered 27,500t of 12-32-16 to India in September, after
winning Indian importer NFL’s 19 August purchase tender for
25,000t of the grade. Samsung sourced the fertilizer from
South Korean producer Namhae.
Southern India-based fertilizer producer FACT imported 16-16-
16 for the first time, buying 27,000t of Russian product from
trading company Swiss Singapore in May. FACT then issued
its first tender for 17-17-17 in late June, but the tender was
scrapped after attracting just one bid.

 

ETHIOPIA

New terms in Africa’s largest procurement tender
African demand was disrupted by signi cant changes to the
Ethiopian Agricultural Business Corporation’s (EABC) annual
procurement tender. This is the largest African procurement
tender of the year, and volumes continue to rise. In 2018, it
awarded 625,000t of NPS, NPS+B and NPS+B+Zn fertilizer
supply to OCP — and this volume was subsequently increased
by 100,000t.
The 2019 tender was announced in late August, seeking just
under 3mn t of NPS, NPS+B, NPS+Zn and NPS+B+Zn fertilizer
for delivery over the next three crop years. This was the  rst
time EABC has tendered for product to cover demand for more
than one year and the  rst time that the corporation tendered
for NPS+Zn. The 888,000t requested for 2019-20 delivery was
much higher than the quantity requested for 2018-19.
Moreover, EABC requested o ers on a fob basis, rather than
the usual cfrlo Djibouti basis, which included bags and
domestic bagging. This change would transfer control of the
delivery process to the Ethiopian Shipping Company. But
suppliers are understood to have pushed back against this
change, leading to two postponements of the tender closing
date and a total three-week delay.
The tender eventually closed on 21 October and 50 o ers were
submitted for 46 lots to be delivered across the three years.
OCP swept the board — only four of the lots were contested by
other suppliers, and only one of those lots attracted an o er
lower than OCP’s.
The award process reverted to the pattern of previous years
— EABC awarded all of the 2019-20 lots to OCP. The 2020-21
and 2021-22 lots were scrapped. Final deliveries were initially
requested by 10 April 2020, but following the tender delay it is
likely that deliveries will continue through the second quarter
of next year. OCP planned to ship the  rst cargo before the
end of November, followed by two more — all probably around
50,000t — in December. But no corresponding shipments
have yet appeared on Jorf Lasfar line-ups, as weather
conditions continue to restrict loadings at the port.

 

 

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