Mosaic Company (the) · NYSE:MOS
Mosaic Company (the) — The Mosaic Company — Fertilizer Outlook and Technology Conference 2018
29 slides from Mosaic Company (the)'s conference presentation, Nov 14, 2018
Slide 1: Phosphate Supply/Demand Outlook
Phosphate Supply/Demand Outlook Dr. Michael Rahm Vice President Market and Strategic Analysis The Mosaic Company Fertilizer Outlook and Technology Conference Jacksonville, FL November 14, 2018 1
Slide 2: Safe Harbor
Safe Harbor This presentation contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Such statements include, but are not limited to, statements about the anticipated benefits and synergies of our acquisition of the global phosphate and potash
Slide 3: Topics
Topics ▪ A Look Back ▪ A Look Ahead ▪ Factors to Watch 3
Slide 4: A Look Back
A Look Back 4
Slide 5: Margins have moved up during the last year
Margins have moved up during the last year Benchmark DAP Stripping Margin $ Tonne Calculated from Published Weekly Spot Prices 350 The benchmark DAP margin increased $77 per tonne from November 2, 2017 to September 325 20, 2018. Normal seasonal factors have pressured 300 margins in Q4, but margi
Slide 6: Several drivers of the recovery
Several drivers of the recovery ▪ The pace of demand growth has picked up • Still a heavy drag from China • And a slow recovery in India • But extraordinary and broad-based gains in the rest of the world ▪ Three one-million-tonne-plus supply adjustments in 2018: • Temporary idling of Mosaic’s Plant
Slide 7: The pace of demand growth has picked up
The pace of demand growth has picked up MMT Product Global Phosphate Shipments DAP/MAP/NPS/TSP 72.5 Source: CRU and Mosaic Global shipments of the leading finished phosphate 70.0 products increased 1.5% per year from 2010 to 2015, but the pace of growth has picked up to 2.0% per 67.5 year since 20
Slide 8: Extraordinary gains outside China and India
Extraordinary gains outside China and India MMT Product Phosphate Shipments by Region DAP/MAP/NPS/TSP 45.0 China and India are heavy drags on growth. 40.0 Estimated shipments for 2018 are less than levels 35.0 in 2010 for both of these large phosphate consuming countries. 30.0 We project that In
Slide 9: Supply Adjustment #1: Idling of Plant City
Supply Adjustment #1: Idling of Plant City Plant City Production 1000 Tonnes 2015 2016 2017 DAP 1,338 1,131 1,000 MAP 292 303 261 Total 1,630 1,434 1,261 Mosaic announced that it planned to temporarily idle the Plant City facility for a minimum of one year in its October 31, 2017 earnings release
Slide 10: Supply Adjustment #2: Slower Ramp-Ups
Supply Adjustment #2: Slower Ramp-Ups ▪ MWSPC JV • Produced 447,000 tonnes of DAP in 2017 • Most expectations for 2018 likely were in the 2.0-2.5 million tonne range • We indicated that 1.5-1.7 million tonnes was a more realistic target • Output looks like it will be near the low end of this range t
Slide 11: Supply Adjustment #3: Lower Chinese Exports
Supply Adjustment #3: Lower Chinese Exports Mil Tonnes China Phosphate Exports Mil Tonnes China Phosphate Exports China Phosphate Exports DAP/MAP/TSP Rolling 12-Month Total 1000 Tonnes 12 Jan-Sep Source: China Customs 12.0 6,000 10 Source: China Customs and Mosaic 11.5 5,000 8 11.0 4,000 10.5 6 3,00
Slide 12: Raw materials cost pressure
Raw materials cost pressure Phosphate Prices Weekly Raw Materials Prices $ Tonne Published Spot Prices Ammonia Sulphur $ Tonne c&f Tampa $ LT 550 700 175 525 $655 in November 2014 500 600 150 $147 in 2015 Q1 475 $140 in 2018 Q4 450 500 125 425 400 400 100 $355 in November 2018 375 350 300 75 325 200
Slide 13: Summary of 2018 Expected Changes
Summary of 2018 Expected Changes 2018 Expected Phosphate Supply and Demand Changes Demand Growth -0.45 Plant City Idle -1.26 Projected supply and demand changes 1.00 this year resulted in a small deficit. OCP Ramp MWSPC Ramp 1.05 A drawdown of channel inventories, a bit of demand destruction, an
Slide 14: A Look Ahead
A Look Ahead 14
Slide 15: Summary of 2019 Projected Changes
Summary of 2019 Projected Changes 2019 Expected Phosphate Supply and Demand Changes Projected changes in supply and demand Demand Growth -1.24 likely will result in another deficit in 2019, Nutrien Closures -0.60 particularly if environmental regulations OCP Ramp 0.80 take hold and significantly r
Slide 16: Still Positive Demand Drivers
Still Positive Demand Drivers Strong Agronomic Need More Expensive But Still Affordable Estimated World Grain & Oilseed Nutrient Removal Plant Nutrient Affordability Plant Nutrient Price Index / Crop Price Index 2007-12 2016-18 Percent 1.10 Less Affordable Stoop Stoop 1.00 Mil Tonnes (2.67 bmt) (3.1
Slide 17: Still Positive Demand Drivers
Still Positive Demand Drivers 2019 new crop futures prices are about the same as those of the last three years Corn Prices HRW Wheat Prices Soybean Prices US$ BU US$ BU US$ BU Daily Close of the December Contract (Sep 1 - Aug 31) Daily Close of the July Contract (Jun 1 - May 31) Daily Close of the N
Slide 18: Shipments forecast to increase 1.8% in 2019
Shipments forecast to increase 1.8% in 2019 MMT Product Global Phosphate Shipments DAP/MAP/NPS/TSP 70-72 72.5 Shipments of the leading phosphate products are Source: CRU and Mosaic 69.9 projected to increase 0.6% or 0.5 million to 69.9 70.0 million tonnes this year. This adds to the solid 2.4% or
Slide 19: Broad-based gains outside China and India
Broad-based gains outside China and India Mil Brazil DAP/MAP/NPS/TSP Shipments Mil Latin America less Brazil Tonnes Tonnes DAP/MAP/NPS/TSP Shipments 9.0 4.0 Source: CRU, ANDA and Mosaic Source: CRU and Mosaic 8.0 3.5 7.0 6.0 3.0 5.0 2.5 4.0 3.0 2.0 2.0 1.5 1.0 0.0 1.0 10 11 12 13 14 15 16 17 18E 19F
Slide 20: Demand Highlights: Brazil
Demand Highlights: Brazil Mil Tonnes Brazil Total Plant Nutrient Shipments Mil Tonnes Brazil Plant Nutrient Product Shipments Product 5.5 37.5 Min/Max Range (2013-2017) Source: ANDA Source: ANDA, Mosaic 5.0 2018 35.0 4.5 7-Yr Olympic Average 32.5 4.0 30.0 3.5 27.5 3.0 25.0 2.5 22.5 2.0 20.0 1.5 17.5
Slide 21: Demand Highlights: The Brazil Advantage Today
Demand Highlights: The Brazil Advantage Today 2017/18 Argentine Drought Still Weak Real U.S.-China Trade War Mil Tonnes Argentina Soybean Production MT HA Brazilian Real Cents Bu Soybean Premium at Paranaguá Port R/USD Daily Rate 65 3.4 300 Source: USDA November 8, 2018 4.25 60 3.2 Source: Forex 250
Slide 22: Positive five-year demand outlook
Positive five-year demand outlook Global Phosphate Shipments Change in Phosphate Shipments 2017 vs. 2010 Change in Phosphate Shipments 2023F vs. 2017 MMT DAP/MAP/NPS/TSP 80 Brazil 6.7% India 3.1% Source: Mosaic and CRU Phosphate Outlook Octob er 2018 Other Asia + Oceania 4.7% Brazil 3.1% 75 North Am
Slide 23: CRU five-year supply/demand forecasts
CRU five-year supply/demand forecasts Mil Tonnes Global Phosphate Supply and Demand Opr MMT P2O5 Global PhosAcid Capacity by Country Global PhosAcid Capacity by Year P2O5 Rate MMT P2O5 Acid Capacity, Production and Operating Rate 70 79% 63 63 Source: CRU October 2018 62 0.6 0.1 62 0.4 1.1 0.6 60 78%
Slide 24: Factors to Watch
Factors to Watch 24
Slide 25: Factors to watch
Factors to watch ▪ Agricultural commodity prices • Food or farm crisis and impact on phosphate demand? ▪ Demand developments in key regions • Zero growth or more declines in China? • Continued recovery in India? • An African take-off? ▪ Ramp-up of new capacity • Slower-than-expected or faster-than-e
Slide 26: Crop Prices: 2019 Bullish Bias
Crop Prices: 2019 Bullish Bias Mil Tonnes World Less China Grain and Oilseed Stocks Percent Stocks outside China provide a better and more 450 Source: USDA November 8, 2018 22% consistent read of grain and oilseed 425 21% fundamentals over time in our view (note the 400 20% recent large revisions)
Slide 27: China Phosphate Exports: 2019 Bullish Bias
China Phosphate Exports: 2019 Bullish Bias Yichang City Case Study Yangtze River The Yangtze River basin accounts for nearly all Anhui of China’s phosphate rock and about 90% of its finished phosphate production. Yichang City Hubei Hubei is the largest phosphate rock producing Sichuan province,
Slide 28: China Phosphate Exports: 2019 Bullish Bias
China Phosphate Exports: 2019 Bullish Bias Yangtze River The State Council has developed standards and guidelines for Anhui Yichang City provincial and city governments Sichuan Hubei to use in implementing new environmental regulations. Based on ecological factors, the Guizhou Yichang City gover
Slide 29: Thank You!
Thank You! Phosphate Supply/Demand Outlook Dr. Michael Rahm Vice President Market and Strategic Analysis The Mosaic Company Fertilizer Outlook and Technology Conference Jacksonville, FL November 14, 2018 29
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