With the global fertilizer 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 Fertilizer Convention in Dubai. Hosted by the Gulf Petrochemicals and Chemicals Association (GPCA), the annual conference gathered industry experts over a 3-day event. Global fertilizer demand is expected to grow to 200 million tons by 2020, expanding by 1.3% year on year, according to forecasts by the International Fertilizer Industry Association (IFA). The GCC, meanwhile, holds a fertilizer portfolio of 37.7 million tons 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 fertilizer 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 fertilizers... our industry is in a state of change," said Dr. Abdulrahman Jawahery, Chairman, IFA and President, GPIC. "From optimization projects and debottlenecking to shutting down obsolete capacity and postponing expansion plans, the industry is trying to come to terms with flux." For GCC producers, further challenges appear in the form of changing behaviors of key consumers and evolving market conditions. "Today, commercial farmers are looking at the reduction of use of fertilizers, as well as optimized 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," added Dr. Al Jawahery. "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 fertilizer 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 like India operate on a subsidized regime that support nitrogen fertilizers. This can lead to overuse, but is also an opportunity for phosphate fertilizers. The questions we need to ask ourselves are as follows: how can we help regions like Africa grow? And how can we promote a more balanced use of fertilizers in South Asia?" A future opportunity, said another expert, 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% 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." China, according to Al Qahtani, is an emerging influencer in the global fertilizer 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 fertilizer solutions, China is an innovator." The agility of Chinese producers has a huge implication for GCC fertilizer companies. "With the maturing of the Chinese market, it is unlikely that this country will be a major destination for GCC-produced fertilizers, though it may continue to import a small amount of specialty fertilizers" said Dr. Abdulwahab Al- Sadoun, Secretary General, GPCA. "The key consideration for producers in the Arabian Gulf however, is that Chinese fertilizer manufacturers will build on their dominant position in producing nitrogen and phosphate based fertilizers, and eventually, take away market share in key export countries." — SG
