Mosaic Company (the) · NYSE:MOS
Mosaic Company (the) — International Fertilizer Industry Association Production and International Trade Meeting 2 (September 2005)
32 slides from Mosaic Company (the)'s conference presentation, Sep 13, 2005
Slide 1: Global Processed Phosphate Trade: Recent Trends and Medium Term Prospects
Exhibit 99.1 Thank you Corrine. I can think of no more appropriate place than Sao Paulo to deliver a paper on phosphate trade. Brazil and other countries in this region have played and will continue to play key roles in shaping trade flows. Global Processed Recent Michael by International 1 Trends R
Slide 2: Safe Harbor Statement - Forward-Looking Statements
Before starting, I must remind you that I will discuss forward-looking statements in this presentation. Safe Forward- Certain the cause in IMC frames; existing, any to liability including markets; This 2 orassumptions obtain conditions Harbor presentation expressed and thestatements the under and th
Slide 3: Recent Trends
Critics often observe that economists are predicting the past with greater and greater accuracy! Fully aware of the risks of re-enforcing this perception, a look back at recent trends may prove useful in analyzing prospects for processed phosphate trade during the next few years. Recent Trends 3
Slide 4: World processed phosphate import demand by region
This chart shows world processed phosphate import demand by region for the last 10 years as well as our forecast for 2005. Processed phosphate includes the three most widely used phosphate products worldwide, namely diammonium phosphate (DAP), monoammonium phosphate (MAP) and triple superphosphate (
Slide 5: Global phosphate market cyclical downturn: DAP price and market margin
Those developments sent the global phosphate market into a deep and prolonged cyclical downturn beginning in mid-1999. The top chart shows the price of DAP fob Tampa vessel. The bottom chart shows what we term a market margin for DAP. It is the difference between the price of DAP and the cost of pur
Slide 6: China's net processed phosphate import demand decline
China accounted for much of the decline in world processed phosphate demand. China’s net processed phosphate import demand, defined as imports less exports for DAP, MAP and TSP, shrunk by one-half from 1998 to 2001. Net imports continued to decline after 2001 as China aggressively developed its phos
Slide 7: U.S. phosphate plant closures
The drop in import demand and the corresponding decline in margins forced significant supply adjustments — mostly in the United States. The United States accounted for 90 to 95 percent of China’s DAP imports each year so the decline hit the U.S. industry especially hard. As a result, four facilities
Slide 8: World processed phosphate export supply by region
This chart shows processed phosphate exports by region and is the mirror image of the import demand chart shown earlier. The United States regularly exported about 12 million tons of processed phosphate each year during the last half of the 1990s, even during 1998 and 1999 when world import demand s
Slide 9: Import demand recovery after 2002
World import demand began to recovered after 2002, increasing more than 1.2 million tonnes from 20.2 million in 2002 to 21.5 million in 2004. We project that world import demand will increase to 21.7 million tonnes this year. World Processed Source: 24 MMT 95 L Europe Asia 9 Other Oceania Amer 21 97
Slide 10: Import demand excluding China
Recall from the earlier chart that China’s imports continued to dwindle after 2002. This chart excludes China from the analysis and demonstrates the strength of the demand recovery in the rest of the world during the last three years. Import demand outside of China increased more than three million
Slide 11: Phosphate prices and margins rebound
Phosphate prices and margins have rebounded in response to improved fundamentals. In short, plant closures in the United States and elsewhere have offset the drop in Chinese imports. Now, strong demand growth outside China has tightened the global phosphate market. Rising raw materials costs also ha
Slide 12: Brazil's processed phosphate imports
Many regions have registered solid increases in import demand, but a few countries merit special notice. Brazil’s appetite for processed phosphate imports surged in 2003 and 2004. The collapse of the real coupled with high soybean prices during these two years super-charged Brazil’s export oriented
Slide 13: India and Pakistan pick up the slack
India and to a lesser extend Pakistan have picked up the slack from Brazil this year. The combined imports of these two countries are projected to double or increase almost 1.7 million tonnes from 1.7 million tonnes last year to 3.4 million tonnes this year. Indian DAP imports are forecast to more t
Slide 14: U.S. export supply forecast
As noted earlier, U.S. exports are forecast to exceed 9.4 million tonnes this year, the highest level since 2000. The slight increase in processed phosphate exports is one factor that has pulled up U.S. operating rates to high levels during the last couple of years. But there are other important fac
Slide 15: U.S. phosphoric acid capacity, production and operating rate
This chart shows U.S. phosphoric acid capacity, production and operating rate since the 1994/95 fertilizer year. Acid production is broken into two categories – the quantity upgraded to DAP, MAP and TSP and the quantity sold as merchant acid or upgraded into other products such as feed phosphate or
Slide 16: Changes in import demand by region over 10 years
Developments during the last 10 years have altered processed phosphate trade flows. For example, processed phosphate trade totaled 21.1 million tonnes in 1995 and increased only two percent or approximately 400,000 to 21.5 million tonnes during the next 10 years. The geographic make-up of demand, ho
Slide 17: Changes in product mix over 10 years
The product mix today also is different than 10 years ago. DAP trade has declined three million tonnes during the last 10 years. DAP accounted for almost 70 percent of processed phosphate trade in 1995 versus just more than one-half last year. MAP trade has increased almost three million tonnes duri
Slide 18: Changes in export supply by region over 10 years
The geographic make-up of export supply also is different today than 10 years ago. The United States accounted for 55 percent of total processed phosphate exports in 1995, but the U.S. share dropped 12 percentage points to 43 percent last year. All other suppliers gained market share during the last
Slide 19: Medium Term Prospects
Trade flows have changed during the last 10 years. And many of the factors driving recent changes likely will continue to impact trade flows in the medium term. Medium Term Prospects 19
Slide 20: Global phosphate supply chain becoming more efficient
Many of the changes during the last 10 years have made the global phosphate supply chain more efficient. Put another way, the world cannot afford inefficient or sub-optimum phosphate trade flows. Developments such as the substitution of high analysis for low analysis products, investments in large s
Slide 21: High analysis products displace low analysis products
High analysis products, defined as DAP, MAP and TSP, now account for approximately one-half of global phosphate demand. That is up from roughly one-third in 1980. This trend no doubt will continue. For example, phosphate producers in China are building large-scale facilities that produce high analys
Slide 22: Rock trade is trending down
The development of more large scale operations that are integrated from rock mine to granulation plant shows up in recent rock trade statistics. Rock trade is trending down, despite a jump in shipments last year. Trade peaked at 33 million tonnes or more than 23 percent of production in 1999 and dro
Slide 23: Morocco is the leading rock exporter
This trend is expected to accelerate because two of the top four exporters – namely Morocco and China – are building additional phosphoric acid capacity and will upgrade more of their rock into high-analysis fertilizer such as DAP and MAP in the near future. Morocco is the leading rock exporter by a
Slide 24: Chinese rock production and exports trends
Clear trends are emerging in China. China ranked as the second largest rock producer and fourth largest rock exporter in 2004, according to IFA statistics and Mosaic estimates. We estimate that China mined more than 31 million tonnes of rock last year. That is up approximately 20 percent or five mil
Slide 25: Rock importers and non-integrated production
A large number of countries import rock. India tops the list, importing nearly twice as much as the next largest country. It may surprise you that the United States ranks as the second largest importer of rock. All of the U.S. imports last year originated from Morocco and the United States ranked as
Slide 26: Developments accelerating supply chain efficiency
Furthermore, current developments such as surging energy prices, escalating raw materials and other production costs, the decoupling of EU and U.S. farm income support payments and evolving fertilizer subsidy policies likely will accelerate these trends during the next five years. The world now real
Slide 27: Mosaic examples of supply chain efficiency
Consider a few examples from Mosaic. Our large and highly efficient port at Quebracho Argentina discharges vessels at a rate of 12,000 tonnes per day. Warehouse capacity is 136,000 tonnes and annual put-thru is more than 450,000 tonnes. We have squeezed costs out of the Argentine supply chain. Our r
Slide 28: Constraints: political objectives and trade barriers
Unfortunately, we do not live in a perfect world. Other economic and political objectives no doubt will continue to restrict trade or promote the development of less efficient trade flows. Governments directly or indirectly control much of the world’s phosphate resources. Industrial development obje
Slide 29: Key assumptions driving phosphate trade forecasts
So what does all of this mean for processed phosphate trade in the next few years? These are key assumptions driving our forecasts. Phosphate demand prospects look decent driven by strong economic growth, particularly in Asia. We project that Indian DAP imports will trend upward and meet a large sha
Slide 30: Forecast import demand by region excluding China
This chart shows our forecasts of import demand by region for the next few years. China is excluded to make this more of an apples to apples comparison over time. We project that import demand will decline next year largely as a result of a pull-back in Indian imports and little or no recovery in Br
Slide 31: Forecast export supply and U.S. operating rates
Producers outside the United States are forecast to capture the projected growth in import demand. U.S. exports, however, are projected to remain stable at approximately 8.5 million tonnes during the next few years. That is a decline from levels of the past few years. But the expected drop is less t
Slide 32: Thank You
Thank you for your kind attention. Hopefully, the presentation has stimulated a few questions. Thank You! Global Recent Michael by International Phosphate Trends R. Rahm Fertilizer andVice Trade: Medium Industry President TermAssociation Market Prospects & Economic ProductionAnalysis and Internation