Fertilizer International 520 May-Jun 2024
31 May 2024
CRU Phosphates 2024
CONFERENCE REPORT
CRU Phosphates 2024
More than 370 delegates from over 150 companies and 40 countries gathered at the Hilton Warsaw City Hotel, Warsaw, Poland, 26-28 February, for CRU’s Phosphates 2024 conference.
We report on selected keynote and commercial presentations given at CRU’s 16th Phosphates International Conference and Exhibition held in Warsaw in February.
Additions to the team
Nicola Coslett, the CEO of CRU Events, opened the event by welcoming delegates to Warsaw for the first time:
“Welcome to the 16th edition of CRU’s Phosphate Conference. For those of you who are new to the event, welcome to the phosphates community, and we are happy you have joined us this year in the beautiful city of Warsaw. It’s the first time in my 15 years at CRU we’ve run the event in Poland.
“We’re delighted to announce we have over 370 people in attendance, including 70 speakers, 50 exhibitors, and 100 operators joining us this year. And with an excellent programme planned over the next few days, with both commercial and technical presentations, many thanks to all our speakers for their contributions.
“CRU is excited to announce the recent acquisition of Fertilizer International and its two sister publications – adding Simon Inglethorpe and colleagues – with this expanding our technical expertise alongside our unrivalled team of 30 dedicated and highly experienced fertilizer analysts.
“This will enhance CRU’s ability to deliver more comprehensive and insightful information to you, our clients. And with so many new entrants into ammonia, phosphate, and the fertilizer industries, the need for technical knowledge and insights has never been more important.”
Prices at the crossroads
“We find [phosphate] prices at something of a crossroads, currently, with supply and demand factors ultimately cancelling each other out.” That was the opening message from CRU’s Humphrey Knight in the conference’s keynote market outlook presentation.
“What we’ve seen over the last six months is this unusual situation where many prices have essentially flatlined … [with] some major phosphate import and export benchmarks essentially running at more or less the same level, around $600 per tonne. That’s really unusual behaviour.
“So, what’s going on in phosphate prices – they are behaving very differently to other parts of the fertilizer sector. Nitrogen and potash prices have, broadly speaking, faced downwards pressure over the past six months. Consequently, DAP and MAP prices find themselves significant outliers in the global fertilizer market.”
On the demand side, crop prices are key, said Knight. While these have been elevated for much of the last four years, due to tight supply, decline has now set in.
“When we talk about fertilizer demand, we have to consider crop prices first and foremost – particularly the prices of key fertilizer consuming products such as corn, soybean and wheat. Many crop prices are now getting close to levels we haven’t seen since early 2020.
“Essentially, crop prices are coming down because there is a consensus that the tight supply situation is going to change and come to an end this year. Consequently, there is a relatively muted and bearish overall outlook for crop prices over the rest of 2024.”
Yet, against this weakening demand backdrop, phosphate prices remained stubbornly high in early 2024 – resulting in deteriorating affordability. This has affected the US in particular and has also seen Brazil’s barter ratio (i.e., the number of 60 kg soy/corn bags needed to purchase one tonne of fertilizer) slide into unfavourable territory.
While affordability is likely to remain a headwind in the year’s first half, CRU believes global phosphate fertilizer demand will rise in 2024 by around two percent year-on-year, driven by Brazil and the US, with the weakness in Asian demand set to continue.
“Yes, affordability is very challenging, but there is one caveat – inventories in key consuming markets such as India and Brazil are pretty low,” said Knight. “This implies that replenishment is required and demand is coming down the road over the next few months.”
But it is the supply side of the market that really explains anomalously high DAP and MAP prices, suggested Knight:
“If we really want to understand why phosphate prices find themselves at these elevated levels, very different to those of nitrogen and potash, we have to look at the supply side of the equation, and particularly China and Morocco, the world’s two largest DAP and MAP exporters. Supply from both has become limited, albeit for very different reasons.”
Morocco’s DAP and MAP exports, for example, having peaked at 8.0 million tonnes in 2020, declined over the next two years to a low of 6.3 million tonnes in 2022. Subsequently, an upturn in volumes last year saw Moroccan exports partially recover to 7.0 million tonnes in 2023 – with volumes potentially reaching 8.2 million tonnes this year.
China’s government, meanwhile, has become increasingly interventionist, implementing periodic export restrictions on DAP and MAP since late 2021. These restrictions were initially put in place response to very high international prices – and resulted in a halving of DAP/MAP exports from China in 2022. The subsequent easing of restrictions last year saw exports of these recover by 25 percent year-on-year.
“I think if you are looking for one single event behind what has happened in phosphate pricing, and why it’s so different to nitrogen and potash, it is this situation in China, ultimately,” said Knight. “That’s the main thing to take away.”
On balance, CRU expects DAP and MAP prices to gradually fall over the next six months [March-August 2024].
“CRU’s view is that challenging affordability, the weak demand situation we find ourselves in, and unsupportive raw materials, will finally begin to bite and outweigh those supply issues,” said Knight. “Admittedly, we also take a view that supply limitations will ease through 2024 – but I accept there is significant risk attached to that.”
In terms of what to watch for in 2024, Knight highlighted the shipping disruption from Houthi attacks – with phosphate rock and phosphoric acid exports from Red Sea ports (c.11.0 million tonnes combined) being particularly vulnerable. A deepening Middle East conflict could create more serious fertilizer market risks, suggested Knight, given the region’s status as a major global supplier.
Another development to watch out for this year is a US court ruling on the future of countervailing duties (CVDs). These duties have drastically cut Moroccan and Russian phosphate fertilizer imports into the United States since 2021. Current US price premiums (e.g., MAP f.o.b. NOLA) could end if CVDs were slashed or ended, a development that could also herald the large-scale return of Russian and Moroccan product to the US market.
“This one single issue alone [CVDs] could result in significant disruptions or changes to trade flows and major changes to phosphate pricing dynamics,” said Knight. “So potentially really worth keeping an eye on.”
Overall, Knight’s key takeaways were:
- In the short-term, prices to fall as poor affordability finally bites. Supply limitations set to ease in 2024 with demand returning due to stock replenishment.
- Over the medium-term, an elevated cost floor and high capacity utilisation to support prices out to 2028. Phosphate fertilizer pricing will also be increasingly driven by national policies and corporate strategies.
- Lithium iron phosphate (LFP) demand is set to inject growth into the still niche specialty phosphate sector.
- The phosphate rock market is vulnerable to near-term disruption to dry bulk freight. A quarter to one-third of global merchant rock trade comes out of Red Sea ports.
Phosphorus and the future of farming
In this well received presentation, Nutrien’s Karl Wyant placed phosphorus – and phosphate fertilizers – at the centre of faming and the food system.
Improving phosphorus use efficiency was highlighted as a major challenge.
In a perfect world, 100 percent of phosphorus applied via fertilizers will go into the crop to drive yields. But, in practice, the efficiency of phosphorus fertilizers is typically between 5-30 percent, noted Wyant:
“Phosphorus is plagued because it’s so reactive in the soil. On the low side, it can be five percent efficient on high-pH, high-calcium soils. We can push efficiency to about 30 percent with some formulations pushing this higher to 40-50 percent.”
Innovation in fertilizer formulations and precision technology were part of the answer, in Wyant’s view:
“What we can do is take the familiar and take the new to drive a new version of fertilizer. And those new versions of fertilizers, their promise is improved efficiency.
“Nutrient has worked on this in our innovation pipeline. We took our MAP and added micronised sulphur. Now we have a specialised phosphorus product [Smart Nutrition MAP+MST] that contains sulphur – and we can drive efficiency with it.”
Precision technology is also driving more efficient phosphorus use.
“In the last 15 years, the world has come a long way with affordable and accessible technology becoming available to help growers make decisions,” said Wyant. “We can choose the right formulation and actually drive our application rates, our recommendations, off real-world data.”
The adoption of variable rate application technology (VRT) has been one notable trend, said Wyant:
“In the United States, we started to see an upward trend in adoption of variable rate technology in about 2003, with corn leading the way. What I mean by variable rate is having a full map of the soil nutrient conditions on the field – so you can actually put more fertilizer where you need it and less fertilizer where you don’t.”
Much greater adoption of VRT, in turn, has spurred demand for soil analysis. Indeed, soil sampling and analysis in the United States has grown exponentially, during the last 15-20 years, increasing from around three million samples tested in 2003 to more than 10 million samples each year currently.
“Cheaper soil samples, faster throughput, means you can do a lot more with the data. So soil sampling just keeps growing,” observed Wyant.
Regenerative agriculture is also becoming a more central focus for growers, in Wyant’s view:
“If you haven’t heard of regenerative ag, it’s a movement that’s focusing on improving soil health and soil carbon sequestration. That’s something that, as an industry, we’re going to have to understand – how does phosphate drive carbon sequestration, how does phosphate drive soil health outcomes, and how does phosphate relate to what’s left over: crop residues.”
Wyant described these leftover farm residues as ‘crop trash’:
“We’re seeing more crop trash left over, and cover crop trash, so there’s a value there for phosphate – we published an article on this with Fertilizer International [516, p30]. There’s about 50 kilograms per hectare of phosphate just left in corn residue, just sitting on the field.”
Such residues have both nutrient and monetary value that, ideally, should be captured instead of being neglected.
“If we’re going down this regenerative pathway, the nice chunk of money in the phosphate is an incentive to figure out how we make sure that’s accounted for across our financial budgets and nutrient budgets in the field,” said Wyant.
Wyant closed by saying a bond of trust was necessary between all those with a stake in food production, especially from the industry’s ultimate customers – food consumers:
“Remember, here at the top of this food system, we’re all consumers. Having trust across the different players and partners is important in making sure that our future as an industry – not just the farming side but also industrial and feed markets – is secure and we have that social license to operate.”
Biological demand for phosphorus, and its necessary presence in the diet of animals and humans, also needs to be more widely known, Wyant suggested. That includes the role of phosphorus in bones, in the phospholipids that encloses all plant and animal cell membranes, in the ATP that powers biological work, as well as the phosphorus that binds DNA.
This requirement for phosphorus, from plants, animals and humans, is fundamental and ever present.
“My final closing point is, wherever you need phosphorus, in bones, DNA and ATP, biological demand remains the same,” summed up Wyant.
The specialty phosphate outlook
CRU’s Mauricio Fortuna unveiled the exciting new findings from the recently published specialty phosphates market report.
This covers:
- Core specialty phosphates: purified wet-process phosphoric acid (PPA) / thermal process acid (TPA), technical monoammonium phosphate (tMAP), and lithium iron phosphate (LFP) and lithium manganese iron phosphate (LMFP) collectively categorised as LxFP.
- Niche specialty phosphates: sodium tripolyphosphate (STPP), elemental phosphorus (P 4 ) and superphosphoric acid (SPA).
- Animal-feed phosphates: dicalcium phosphate (DCP) and monocalcium phosphate (MCP) / monodicalcium phosphate (MDCP).
The report’s outcome, particularly for the LxFP segment – where CRU’s view of demand has tripled since its previous estimate – were extraordinary, as Fortuna explained:
“Over the past few months, I’ve been working on our specialty phosphates report, which covers not just LFP, but other phosphate niches like elemental phosphorous, STPP and animal feed. And I’m quite excited to share some of the conclusions I’ve come to. Some of the numbers are truly remarkable. Extraordinary amounts of growth fuelled by this new and exciting industry.”
Less spectacularly, the outlook for niche specialty phosphates and animal feed phosphates was characterised by a mix of decline, stagnation or stable recovery, Fortuna said:
“The story for niche specialty products is important, but perhaps less exciting. In animal feed phosphate, we do see a recovery following a falloff in 2022. But it is going to be a stable and steady recovery, not a story of dramatic growth in the foreseeable future.
“In other niche specialty markets, STPP most notably, we’re seeing a decline. And in niche markets like P 4 and SPA, we foresee either a stagnant or a gently rising market.”
While rapid LxFP demand growth was attracting a lot of interest, there was a need to keep this in perspective, Fortuna cautioned.
“The most interesting part of this story is the extraordinary growth in the LFP demand over the next few years in our forecast just out for 2028. If we consider it out to 2035, that growth keeps going.
“With that said, it’s important to note that, even with this extraordinary amount of [LxFP demand] growth, that’s only going to be a few percent of demand compared to fertilizer products. It’s worth keeping in mind that fertilizer is still going to be the most important market for this industry.”
The projected rise in the use of LxFPs in the cathodes of electric batteries was driving this grow, explained Fortuna:
“Our batteries team sees quite an aggressive growth in cathode active material [CAM] demand with total growth multiplying by seven or eight times by 2035. Although LFPs are somewhat new to the market, we do expect them to be the dominant cathodic material during this growth, accounting for about half of the total demand in the next decade.”
China’s continuing dominance of CAMs, and therefore PWA/TPA and tMAP production for the LxFP market, was Fortuna’s key message: “My one takeaway from this entire presentation is that China is going to absolutely dominate this market in the medium-term,” he said.
Almost all LxFP growth in the next 5-7 years is going to be focused on China, in CRU’s view.
“On capacity, I have to emphasise how much this is a China-centred growth story – at least in the medium term,” said Fortuna. “Although we do know of a few [LxFP CAM] projects in the United States, in Morocco, in Chile, they completely shrink in comparison to the projects in China.”
The other key takeaways from the presentation were:
- The use of PWA and tMAP inputs in LxFP cathodes is strengthening.
- The production of cathode materials far outpaces downstream demand.
- Cost is the main determinant for phosphate rock selection and deciding whether to consume high grade rock with low impurities or to spend more on the beneficiation of lower grade rock instead.
LFP battery value chain – unlocking growth
In a companion presentation, CRU’s Sam Adham discussed how the phosphates industry could unlock growth from the strongly growing LFP battery market and its value chain.
Echoing Mauricio Fortuna in the previous presentation, Adham said China is massively over producing LxFP cathode active materials (CAMs) – 1.6 million tonnes in 2023 versus demand of 0.8 million tonnes – and LFP battery cells. The country has also drastically cut production costs.
“Chinese companies have got LFP battery costs down to an art,” said Adham. “They’ve already minimised processing and labour costs – so now the cost of LFP is really down to the price of lithium.”
Insufficient CAM supply outside of China, said Adham, is acting as a barrier to LxFP uptake and cost reduction elsewhere. Also, until recently, LxFP CAM investments outside of China were mostly limited to small start-ups, with these lacking knowhow and therefore having little chance of securing large supply contracts with major automakers.
This situation is now changing, however, thanks to the US Inflation Reduction Act (IRA).
“The Act offers very generous tax credits for companies producing critical minerals, battery components and EVs sold in the US, as long as the sourcing requirements for these critical minerals and battery components are being met,” said Adham. “It’s the latter requirement that has spurred a wave of [LxFP CAM] investments outside of China.”
South Korea – which has the second largest industrial base for electric batteries after China – in collaboration with the US is spearheading the move into LFP/LMFP, said Adham:
“Most of these [investments] are linked to the US supply chain, most of them are in countries that have free trade agreements with the US, and most of them involve South Korean and Chinese companies. The upshot is that there’s now a viable path outside of China for LFP cathode battery supply to develop sufficiently, to meet international demand.”
Summing up, Adham said: “The takeaway is that LFP has and will continue to be a major chunk of demand for batteries, and it is the scale-up of that supply chain outside of China that will continue to unlock further growth, with much of that depending on favourable policies.”
Specialty market – challenges and opportunities
ICL’s Juan von Gernet took a deep dive into the broader specialty fertilizer market – illuminating what he described as an opaque industry where good data is hard to come by.
Even coming up with an agreed definition for specialties is problematic, as von Gernet explained:
“Defining what are specialty fertilizers, ironically, is a really difficult question to answer. Everybody has their own opinion of what the definition should be, so you get lots of contrasting opinions.
“Different companies and marketers also offer different products within their specialty baskets. What I’ve done is come up with my own definition – which is our product portfolio.”
ICL’s portfolio includes straights, micronutrients, semi-specialty products, blends, biostimulants and controlled-release fertilizers (CRFs). Based on that mixed basket, specialty products collectively provide a global market with a volume of between 20-25 million t/a and a value of $18-24 billion, said von Gernet, depending on the year.
Although slippery to define, specialty products are functionally similar.
“[They’re] fertilizers formulated to address the specific needs of the plant, the soil, the prevailing application conditions,” said von Gernet. “While also allowing for increased nutrient uptake and reduced losses to the environment.”
One of ICL’s prized semi-specialty products is potassium magnesium sulphate (SOPM), or rather the mineral polyhalite, a calcium-rich variant marketed by ICL under the Polysulphate brand.
“Global [SOPM] demand is around three million tonnes annually. Production is concentrated in the US, Germany, the UK. I was actually down the [UK] Boulby mine, 1.4 kilometres underground in the North Sea, just a couple of weeks ago.
“Boulby is where ICL produces and markets Polysulphate – potassium magnesium sulphate with a fair amount of calcium in it – a product close to our hearts. What’s cool about Polysulphate is that it has a very low carbon footprint in comparison to other fertilizers and can also be used in organic farming.”
Juan ended his presentation by highlighting underlying drivers (regulations, energy pricing, the battery boom, climate, soil, land and water availability, value, margins, competition etc.) and assessing the mix of market opportunities versus challenges/risks for these. He concluded that:
- Trade restrictions, Covid-19, energy prices, sustainability and margin potential have all affected the specialty market in recent years.
- Consumer pressures and the regulatory drive for better sustainability will act to spur demand growth in future.
- Looking ahead, ICL expects specialty market growth above five percent p.a. – which will attract further interest in the segment and ultimately lead to more intense competition.
- Importantly, while many players are broadening their specialty portfolios, no single company can offer a complete basket of ‘core’ products – suggesting that a fair amount of industry consolidation is likely in coming years.
An integrated phosphate ecosystem
Marc Sonveaux of Prayon Technologies set out the company’s vision of a sustainable phosphates industry. At the heart of this was an integrated ‘ecosystem’ based on four Prayon processes:
- GetMoreP
- Ecophos
- Prayon Ecophos Loop Process (PELP)
- Mg Leaching.
Collectively, these processes can take currently unusable low grade phosphate rock (including tailings) and secondary phosphate sources (sewage sludge ash, bone ash, spent acids, solid residues) and transform these into a range of valuable phosphate products (DCP animal feed, DCP super rock, phosphoric acid) and co-products (‘eco’ gypsum, pure calcium chloride, Al/Fe chlorides).
“We have the GetMoreP process based on sulphuric acid and the EcoPhos process using hydrochloric acid,” said Sonveaux. “We also have the PELP technology for fly ash and the brand new Mg leaching process presented at this conference.”
The PELP process can produce purified technical phosphoric acid, while dicalcium phosphate (DCP) – so-called ‘super rock’ – is generated by other process routes.
“This DCP, what we call super rock, can be used to replace very high-quality phosphate rock [as a feedstock],” said Sonveaux. “In the phosphate industry, if you replace natural rock phosphate with DCP super rock, you generate more concentrated phosphoric acid and less but cleaner gypsum that can be valorised in the plaster or cement industry.”
Prayon describes PELP as an “outstanding technology for phosphate recycling” from sewage sludge ash (SSA). The technology, which has been validated at pilot-scale, recovers 96-98 percent of phosphorus from SSA while removing up to 99 percent of the impurities present.
“With PELP technology, sewage sludge ash is dissolved in phosphoric acid and then filtered to remove the impurities and insoluble part of the ash, explained
Sonveaux. “Then we have three specific stages of ion exchange, to remove calcium/magnesium, iron, and aluminium, and [finally] we have phosphoric acid concentration.”
Sonveaux summed up Prayon’s three overall aims on sustainability:
“Firstly, as a producer, we try to use secondary phosphate sources in our production plants as much as possible. Secondly, as a technology supplier, we are developing processes that optimise phosphorus use and bring high value to secondary phosphates. Thirdly, as a commercial partner, we hep generate value from the selling of products derived from secondary sources.”
The PuraLoop recycling process
Lucas van der Saag explained how ICL is delivering on its objective to develop a portfolio of fertilizers based on recycled sources of phosphorus. The company has developed an innovative process known as PuraLoop to transform sewage sludge ash (SSA) into an efficient fertilizer and effective plant nutrient source.
“The idea at ICL, with our current process, is to use this sewage sludge ash as basis for the production of fertilizer,” said van der Saag. “We believe that sewage sludge ash, as a raw material, has a huge potential for phosphate recovery.”
About 31 percent of sewage sludge from Europe’s wastewater treatment plants ends up being incinerated to create SSA currently. This one source alone could provide around six percent of Europe’s phosphate fertilizer demand, according to some estimates.
“If we look towards the future, if all of Europe’s sewage sludge was incinerated and reused, we could go up to around 20 percent [of demand],” said van der Saag. “So there is great potential in using sewage sludge ash to replace phosphate ore in Europe.”
In the PuraLoop process, SSA is firstly mixed with sulphuric acid or phosphoric acid in an acidulation step. The run-of-pile (ROP) material obtained is then granulated. Last year, ICL met all the necessary EU regulatory requirements to produce single superphosphate (SSP) and triple superphosphate (TSP) from SSA, including a fertilising products regulation (FPR) audit and full REACH registration.
The advantages of using SSA as a fertilizer production raw material, said van der Saag, was that it eliminated odour and was essentially cadmium- and fluorine-free. Agronomic trials have also shown very good results, he added.
A full-scale industrial PuraLoop installation is now up and running at ICL’s Amfert production site at the port of Amsterdam. This is capable of producing two products: PuraLoop 0-38-0 and Pura-Loop 5-5-22. The company manufactured 1,000 tonnes of PuraLoop 0-38-0 during successful production runs at the end of last year. van der Saag highlighted the many benefits for the EU from ‘closing the loop’ on phosphorus:
“One is that we can turn waste into a product of agronomic and economic value. We can also reduce our dependency for critical raw materials on outside sources and, finally, we can have a leadership role in environmental and technological innovations for food and fertilizer production.”
Technical presentations
Summaries of key presentations from this year’s excellent technical programme can be found in the CRU Phosphates 2024 preview in our January/February magazine (Fertilizer International 518, p36).
Importantly, two key industry players, JESA Technologies and Prayon Technologies, chose CRU Phosphates 2024 to launch newly patented processes on the market. JESA’s James Byrd presented the SWIFT process for valorising fluorine, turning this from a nuisance pollutant into a valuable co-product. We will report fully on SWIFT in the July/August issue of Fertilizer International.
Kevin De Bois of Prayon, meanwhile, gave delegates an overview of Prayon’s new magnesium removal process for phosphate rock, as highlighted in our January/February magazine (Fertilizer International 518, p38). This new approach has real potential to transform both phosphate resource efficiency and resource availability.
Market information
Please note that market information and commentaries reported here date from the time of the event in late February 2024. These should therefore be interpreted with caution. Although reasonable care and diligence has been taken, CRU does not guarantee the accuracy of any data, assumptions or forecasts.
