As world population continues to grow, so does the demand for food. Over the long term, fertilizer producers are expected to see an increase in demand as adequate soil fertilizer is key to crop yield. Companies in this space, like CF Industries and Potash Corp., should feel positive market effects from the demand, but plant, facility, and equipment investments must be maintained, purchased or upgraded to facilitate the increased production.
The three main types of fertilizers, nitrogen, phosphate, and potash differ in consumption characteristics. Take the potassium and phosphorous market – fewer suppliers and a production discipline make up the industry structure, but application is subject to greater cyclicality. Nitrogen, on the other hand, required in annual application, is part of a more fragmented industry with more dynamic prices but stable volume. Despite differing consumption characteristics, all three fertilizer types are expected to feel the effects of the increased global food demand.
The market is not without challenges, however. Fires in Fort McMurray, Alberta, resulted in new OSHA regulations on fertilizer dealers. “The biggest challenge facing the industry is water quality and nutrient stewardship,” says TFI President, Chris Jahn. But Jahn remains optimistic, thanks in large part to the long-term industry outlook and the growth demographics across the globe.
Fertilizer producers appear optimistic, too, making significant capital investments this year in plant and equipment. Many producers are turning to second-hand fertilizer plants as a means for increasing their production capacity.
Take the used Phosphoric Acid and Ammonium Nitrate plants featured in International Process Plant’s (IPP) extensive global plant portfolio. Customers snapping up plants are saving 70-80% on the cost of acquisition and engineering, and rewarded with good quality, second-hand assets that help them to meet the increasing worldwide fertilizer demand.
As fertilizers continue to play an integral role in supplying the world’s rapidly growing population with sufficient food, fertilizer producers must take the steps necessary to keep up with the demand.
To learn more about second-hand fertilizer plants, contact IPP today.