VINACHEM

World fertilizer demand grows firmly and achieves full recovery for all nutrients by 2011/12
After a strong recovery of N and P fertilizer consumption in 2009/10, global fertilizer demand is estimated to have increased by another 6.2% in 2010/11 to 173.0 million metric tonnes (Mt). This strong growth was triggered by the sharp rebound of economic activity and tight agricultural commodity markets. N fertilizer demand, which fully recovered in 2009/10 from the economic downturn, is seen as up 2.6% to 104.5 Mt.P fertilizer demand is estimated to have increased by 8.8% to 40.7 Mt, surpassing its 2007/08 record. After two consecutive depressed campaigns, K ertilizer demand strongly rebounded (+18%) to 27.8 Mt, but it would remain about 1.1 Mt below its 2007/08 high. Demand is estimated to have increased in all the regions but West Asia and Eastern Europe and Central Asia.
The largest changes in vo lumes occurred in East Asia (+2.8 Mt), North A merica (+2.2 Mt), Latin America (+1.8 Mt), South Asia (+1.7 Mt), and Western and Central Europe (+1.3 Mt).

Global Fertilizer Consumption (Mt nutrients)

Source: IFA

In response to attractive agricultural commodity prices in 2011 and sound agricultural market fundamentals in the fir st half of 2012, world fertilizer demand is forecast to rise steadily in 2011/12 (+3.0%) to a record 178.2 Mt. N demand would increase firmly, by 3.1%, to 107.7 Mt as farmers optimize yields to benefit from current high crop prices. After an impressive 21% rebound between 2008/09 and 2010/11, P demand is anticipated to rise more modestly in 2011/12 (+1.0%) to 41.1 Mt. K demand would strongly rebound (+5.7%) for the second consecutive year, to a new high of 29.4 Mt. Total fertilizer demand is forecast to rise in all the regions but Western an d Central Europe. The largest increases in volu me are projected in East Asia (+1.4 Mt), South Asia (+1.4 Mt) and Latin America (+1.3 Mt).

Projected Evolution of Aggregate Regional Fertilizer Demand (Mt nutrients)



When to the exceptional 2007/08 campaign, world fertilizer demand is anticipated to have fully recovered for the three nutrients including K, by 2011/12. The situation is more contrasted at the region al level. Two regions Western and Central Europe and West Asia, are still seen as using less fer tilizers than in 2007/08
Demand in Western and Central Europe is more than 2 Mt below the level of four years ago and is unlikely to fully recover in the foreseeable future. South Asia has been by far the main contributor to the expansion of world demand during these four years. This region alone accounted for three-fourths of the net increase at the global level. A sizable expansion of demand has also been recorded in Eastern Europe and Central Asia.

Anticipated Evolution of Fertilizer Demand Between 2007/08 and 2011/12 (Mt nutrients)



Forecasts to 2012/13 are highly speculative due to the depressed economic context in the advanced economies, which could very well deteriorate in the last quarter of 2011 through 2012, dampening world economic activity. Agricultural commodity prices are seen as remaining attractive but highly volatile Consequently, global fertilizer demand in 2012/13 would continue to grow, but at a more moderate rate than in 2011/12. Aggregate demand is forecast as up 2.3%, to 182.2 Mt Demand for P and K would grow firmly: +3.0% to 42.3 Mt for P, and +3.3% to 30.4 Mt for K. A more moderate increase of 1.7% (to 109.5 Mt) is projected for N. Demand is forecast to expand for all the nutrients in all the regions. The largest increases in volume are projected in East Asia (+1.7 Mt) and South Asia (+1.1 Mt).

The forecast is subject to high economic uncertainty
The baseline forecast for 2012 and the first half of 2013 has a high level of uncertainty. The main uncertainty relates to the evolution of the debt crisis affecting the euro area and the US. In 2011/12,the downside risk is seen as slightly higher than the upside risk since the economic downturn may impact fertilizer demand in the first half of 2012. The downside risk is seen as much greater in 2012/13, in that the economic crisis may impact the whole campaign. At the nutrient level, the downside risk is proportionally greater for P and K than for N because farmers tend to cut P and K applications before reducing N rates, as experienced in 2008/09