Fertiliser production in the GCC region is set to expand by 14% to 43.1mn tonnes over the next five years, spearheaded by Qatar and Saudi Arabia, shows a new report by the Gulf Petrochemicals and Chemicals Association (GPCA).
At 37.8mn tonnes, the GCC’s current fertiliser capacity earns $6.3bn in sales revenue, according to the GPCA’s 2015 fertiliser Indicators report. Additionally, capacity for this commodity has nearly doubled since 2005 due to strong demand from export markets, resulting in closer trade relationships with diverse markets such as India, the United States and Brazil.
GPCA secretary-general Dr Abdulwahab al-Sadoun said: “Since 2005, the GCC has been the epicentre of a dynamic fertiliser industry, whose growth has been driven by increased demand for food, growing access to feedstock and the rise in global population. With the recent focus of regional governments in developing their non-oil industries, fertilisers will continue to be a key focus sector in the medium term.”
With a production capacity of 16.7mn tonnes and 9.8mn tonnes respectively, Saudi Arabia and Qatar lead fertiliser production in the region.
However, with relatively flat demand from local and global markets for fertilisers, coupled with macroeconomic volatility, challenges remain for regional producers, GPCA said.
“There is no doubt that GCC fertiliser producers are encountering aggressive competition from producers with access to cheap feedstock as a result of the development of the shale gas in the US and coal-based industries in China,” al-Sadoun explained.
“Being export-oriented industry with over 60% of the output destined for international markets, regional companies must formulate and execute new strategies to ensure that their cost leadership and supply chain costs are agile. Price competitiveness will ensure retaining and expanding market share in the future.”
The fertiliser indicators report will be released at the GPCA Fertilizer Convention. Now in its 7th edition, the conference will be held in Dubai from September 6 to 8.
With insights on the market outlook for commodities, to upcoming trends, the conference will host regional and global experts from the fertiliser industry.