Asia remains GCC’s largest fertiliser market in 2012

Asia remains the largest market for GCC-based fertiliser producers with more than 7mn tonnes of the region’s fertiliser reaching the continent last year.

According to Gulf Petrochemicals and Chemicals Association (GPCA), the output is expected to increase to an estimated 13mn tonnes of ammonia and 16.5mn tonnes of urea by 2020.

According to GPCA data, nitrogen fertilisers such as ammonia and urea are manufactured by a hydrocarbon intensive process and currently make up the bulk of the region’s fertiliser portfolio.

But GPCA cautioned GCC-based fertiliser producers that they need to diversify their portfolios to withstand future oil and gas feedstock challenges.

With the increasing demand for power and water desalination in the GCC (Gulf Co-operation Council) countries, hydrocarbon reserves are becoming more expensive for the region’s fertiliser producers.

“GCC producers must diversify their fertiliser portfolio to include more phosphate fertilisers, as this will decrease their reliance on hydrocarbon feedstock and grow their share of export markets,” said Dr Abdulwahab al-Sadoun, GPCA secretary general. “Phosphate fertilisers require less natural gas to produce and are a relatively untapped resource in this region.”

The continued evolution of the GCC’s fertiliser industry has been enabled by the abundant supply of favourably priced natural gas, explained al- Sadoun.

Meanwhile, the share of phosphates currently makes up a fraction of the region’s fertiliser portfolio, with a production capacity of just 3.4mn tonnes. Phosphate fertilisers will reach 5.5mn tonnes of capacity by the decade-end.

More than half of the fertilisers produced in the GCC is exported, resulting in valuable revenues for the Gulf countries.

“With analysts predicting that Asian markets currently account for nearly 60% of global phosphate demand, strategic additions in phosphate capacity here in the Gulf will solidify the favourable position that GCC fertiliser producers currently enjoy,” al- Sadoun said.

However, the GPCA also forecasts that export trade flows may be impacted in the long term as cheaper hydrocarbons become available to competitors due to the expansion of shale gas production in North America.

GCC fertilisers remain optimistic with expansion continuing apace, the GPCA said. Saudi Arabian Mining Company, also known as Maaden, will add 1.5mn tonnes of rock phosphate capacity at its Waad Al Shamal Industrial City development by 2016. The first phase of the $7bn development is a signal that the region is already beginning to diversify its fertiliser sector.

In order to find solutions to the challenges facing the region’s fertiliser industry, GPCA will host the fourth Fertiliser Convention in Dubai from September 22-24 on “Facing current and future GCC fertiliser challenges”.

The keynote address will be given by Charlotte Hebebrand, director general of the International Fertiliser Industry Association, who will provide insights into the global outlook for fertilisers and its impact on the GCC.