Market and product

HOUSTON (ICIS)--Resurgence in demand for fertilizers in North America during 2010 will carry forward into 2011, placing heavy pressure on the supply side to deliver plant nutrients when and where needed.

Following weak demand in 2009 as US and Canadian farmers were disinclined to purchase because of high fertilizer prices, improving prices for commodity crops, along with the need to replenish exhausted soils, spurred sales of nitrogen, phosphate and potassium fertilizers in 2010.

Fertilizer producers and marketers across North America said corn, wheat, soybean and other crop growers returned to normal levels of fertilizer applications in the spring of 2010.

The heavy demand allowed fertilizer sellers to clear out inventories, creating a need to refill the system over the summer for the 2010 autumn application season.

The autumn application season was marked by robust sales again, particularly for ammonia and phosphate fertilizers.

With crop plantings expected to increase next year, and grain and oilseed prices providing incentives for farmers to invest in nutrients, the stage is set for growth in the fertilizer market in 2011.

The fertilizer demand outlook for 2011 is the best since 2007, Illinois-based fertilizer maker CF Industries said in a November presentation to investors.

CF projected total US fertilizer demand in 2011 at more than 22.25m nutrient short tons (st), an increase of 6.2% from 2010.

CF forecast US nitrogen demand at 13.2m st, potassium at 4.6m st and phosphorus at 4.5m st.

Supplies of all nitrogen fertilizers are expected to remain tight going into 2011 as suppliers position product in anticipation of a strong spring season in the US and Canada, fertilizer major PotashCorp said.

The North American market was demonstrating ammonia import demand recovery of 18% for 2010, PotashCorp said in a fourth-quarter market analysis.

The direct application of ammonia this autumn in the US was strong as attractive crop returns and good weather supported demand, PotashCorp said.

The Saskatchewan-based company said 2010 was a strong growth year for ammonia with US imports increasing by 12% to around 5.2m tonnes, more than 25% of global imports.

PotashCorp said nitrogen fertilizer markets in the US, Latin America and Europe will continue to expand in 2011, with Latin America expected to grow by 9% next year.

Global demand for potash fertilizer will increase by at least 10% in 2011, fertilizer major Mosaic said.

World demand for potash is projected to be 54m tonnes in 2011, a 10.2% increase from 49m tonnes in 2010, said Mosaic.

Mosaic projected that global shipments of phosphate fertilizers would increase to 57m-59m tonnes in 2011, up from about 56m tonnes in 2010.

Over the long term, Mosaic projected the phosphate fertilizers market would grow 2.5-3.0%/year over the coming decade, while the potash market would grow at 3.5-4.0% each year.

A confluence of supply and demand factors could keep crop nutrient markets extremely tight for the next several years, Mosaic said.