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Publication > Issue > Articles
Where's the beef?
Summary
Having lobbied so hard to win the sceptics in US Congress to favour China's entry in the World Trade Organisation (WTO), The Fertilizer Institute (TFI) could not mask its disappointment when China appeared to renege on its commitment to import considerably increased volumes of fertilizers in 2002. Unfair, the Chinese replied: fertilizer demand in China is not unlimited and we cannot swamp the market. Then came a further shot across the US bows: new regulations on the metals content in imported fertilizers, more severe than any proposed elsewhere. These rulings would pose a considerable threat to future US fertilizer exports. The way seemed clear for a major battle of wills...Abstract
China and WTO? A marriage made in heaven, or so The Fertilizer Institute (TFI) had hoped. Having pulled its weight on lobbying for China’s entry into the World Trade Organisation, TFI looked forward to the enhanced opportunities for exports of DAP and urea by its US member companies that would follow once China established tariff rate quotas (TRQs) for these products.
US fertilizer producers had been hard-hit when China abruptly stopped buying urea in 1997. This decision had a devastating effect on international nitrogen fertilizer markets. Suppliers had initially hoped that this was just a temporary blip, but the international market in effect dried up altogether as around 6 million t/a of urea business had to find new markets. This was reflected in world market prices: before China’s urea import ban, urea prices were averaging $200-220/t f.o.b. Black Sea. They have yet to recover to those levels, and during much of the past year, urea prices drifted at around $100/t. No-one has emerged to take China’s place in taking up the world’s urea surplus, and the aggregate offtake by the leading urea importing countries today – Vietnam, Brazil, Philippines and Turkey – falls short of the Chinese total pre-1997.
For KEMWorks, small is good
Summary
KEMWorks Technology, Inc. is a young company, but one with a fine pedigree. As a full service engineering company, it offers expertise in solving process problems in two main areas: phosphate fertilizer technology and environmental engineering. Fertilizer International visited the KEMWorks Technology offices in Mulberry, Florida to find out more.Abstract
large-scale engineering and technology companies have retreated from the fertilizer sector, declaring that it was not a core activity in their business portfolios. The phosphate industry is particularly marked by a number of “fallen flags”, former big names that helped advance the technology that still forms the backbone of the P2O5 processing industry throughout the world. Likewise, in many process industries, the larger manufacturing companies have cut back their in-house technological staff. The departure of some of the long-standing names did not result in any hiatus, however, and into the breach stepped in several dynamic new companies, dedicated to advancing the frontiers of technology in phosphate processing.
One of these new players is KEMWorks Technology, Inc. Located at the heart of the US phosphate district in Mulberry, central Florida, KEMWorks was set up in 1995. The four founding partners came from larger engineering companies, and brought an unrivalled level of expertise in phosphate technology, plant design and project management. Headed by Marten Walters, President, the KEMWorks team decided to focus on the front-end provision of technology in mining, beneficiation, chemical processing and project management. Subsidiary functions such as civil, structural and electrical design are sub-contracted to other companies in the KEMWorks network of business partners.
Moving south
Summary
The theme of the 17th Annual Phosphate Conference, which was held in the heartland of the US phosphate industry in Lakeland, Florida between 17-18 October 2002, was Moving South. This refers to the prospect of the leading phosphates producers in central Florida having to relocate their mining operations away from their long-established bases in central Florida as reserves become depleted. Such a move presents several problems, and these issues were addressed at the meeting, as described by David W. Leyshon.Abstract
The headline next morning read, “Mining Future in Doubt.” The Lakeland Ledger’s coverage of Lakeland’s Annual Phosphate Conference featured the remarks of Gene Armbrister, IMC’s Manager of Mine Services. Armbrister said, “I’m not sure ten years from now we’ll be mining (in Central Florida).” After his talk in the opening panel discussion of the two-day convention,
Armbrister told the Ledger that he wanted to send “a wake-up call” to the phosphate officials. Armbrister based his controversial remarks on rising costs of mining and permitting as the mines move south. Already, IMC must transport phosphate up to 10 miles to the chemical plants. Armbrister states that slurry transport of ore as practised in Florida is significantly more expensive than conveying as practised by phosphate companies abroad. He suggested that it could become cheaper to import rock from countries such as China or Peru.
Let us put knowledge into practice
Summary
It is all too easy to overlook or undervalue the importance of potassium. Consequently, while the forecast growth in the world's population in the coming decades will make enormous demands on available land resources to ensure that the extra mouths will be fed, world consumption of potash has latterly failed to keep pace with agronomic requirements, creating increasingly widespread evidence of potash soil mining. Yet, as Dr. Johannes Siemes, Marketing Manager of K+S Kali GmbH, explains, the world potash industry is more than capable of meeting any increase in demand. The article is based on his presentation at the recent Fertilizer Industry Round Table meeting.Abstract
In the last two decades, the world potash market has seen dramatic changes. Developments ranged from the political and structural upheavals in the former Soviet Union (FSU) and Eastern Europe, changes in agricultural and food policies, as well as the consolidation of the potash industry. Fig. 1 shows how the market for potash contracted severely in the early 1990s, reaching a nadir in 1993, when potash production fell to just 20.3 million tonnes K2O, while potash sales amounted to only 20.9 million tonnes K2O – a collapse that could be likened to the current stock market crash. Potash production in Western Europe nose-dived from 8.7 million tonnes K2O to below 5 million tonnes K2O in 1993, while production in North America fell during the same period from 9.8 million tonnes K2O to 8.3 million tonnes.
The mid-1990s brought a recovery in potash sales, and production rose to around 26.3 million tonnes in 1997. However, global potash demand fell back in 1998, since when it has stagnated at between 25-26 million t/a K2O.
Toros steers through the storms
Summary
In 2001, Turkey faced the most severe economic crisis in its history, forcing the devaluation of the Turkish Lira against the US Dollar by over 140 %, while the country's long-running inflationary cycle accelerated to over 70 %. This crisis affected Turkey's agricultural sector, as subsidies were decreased or totally withdrawn. Agricultural credits to farmers were cut, and this inevitably impacted on the demand for fertilizers. To make matters worse, 2001 was marked by a severe drought. Special correspondent David Hayes learnt how one company, Toros, is coping with these circumstances.Abstract
Turkey’s continuing economic crisis has dealt a blow to the country’s fertilizer industry, which only two years ago celebrated record sales. The financial problems facing the nation’s farmers have coincided with the withdrawal in 2001 of direct fertilizer subsidies, which have been replaced by an agricultural support scheme for small- and medium-sized farmers, based on the actual acreage being cropped. Fertilizer consumption reached a record level of 5.5 million tonnes in 2000, before farmers reduced their purchases sharply in the wake of the economic crisis. Total fertilizer use fell by 24 % to 4.2 million tonnes in 2001, forcing many Turkish fertilizer manufacturers to suspend production for several months to bring down stockpiles. (Fig. 1)
“2001 was an exceptional year, so we should not generalise,” commented Yavuz Kuran, Vice President of Marketing and Sales at Toros Gübre AS, Turkey’s largest fertilizer supplier, “But we don’t expect this record level of consumption to return quickly. It will take several years to recover. Everyone suffered. Fertilizer consumption fell and the market shrank.”
Under pressure in France
Summary
As the largest market within Western Europe, France has for long been able to support a large-scale domestic fertilizer industry, as well as attracting a high volume of imports. This has led to the most intense levels of competition for sales. However, as outlined by Daniel Bailly, Editorial Director of the French magazine, Référence Appro, the aftermath of the tragic explosion in Toulouse has further complicated the scenario in the French market. These are not the only woes that domestic suppliers must face . . .Abstract
Overshadowing every other consideration in the French fertilizer industry during the past year were the consequences of the catastrophic explosion at the AZF plant in Toulouse. The full effects of this tragic event have yet to be felt, but one immediate consequence was the imposition of a considerable number of additional regulations covering the manufacture, storage and transport of ammonium nitrate. Other factors also had far-reaching consequences in the French fertilizer market in 2002, the most important of which were the reorganisation of the industry and further anti-dumping measures.
Bloodied but unbowed
Summary
The beleaguered Western European fertilizer industry can be compared with a veteran prize fighter, having for long enjoyed a predominance in its chosen field. Younger upstarts have now emerged to fight for the crown. In international fertilizer markets, the Western European suppliers have lost market share and are now facing the prospect that they will lose their domestic markets to overseas competition. Like the proud fighter reeling under the punches, should the West European fertilizer producers consider throwing in the towel?Abstract
What are the ideal qualities of a senior manager in the Western European fertilizer industry? Qualities of irrepressible optimism, verging on outright masochism, appear to be ideal for today’s senior managers – a belief that matters can only get better. Failing that, a grim determination to see out the present problems is an equally good personal quality. Every senior manager would agree that the climate for business is exceptionally difficult in Western Europe today, and the regional fertilizer industry is facing further severe tests, calling into question its long-term prospects for survival.
The issues that currently confront Western European fertilizer industry decision-makers can be summarised as follows:
- Continuing long-term trends in supply and demand in a competitive global market
- The effects of the enlargement of the European Union
- The latest proposals for the reform of the Common Agricultural Policy (CAP)
- The implications of the tragic explosion in Toulouse in September 2001.