Fertilizer production in the Arabian Gulf is set to expand to 43.1 million tons in the next five years, according to a new report by the Gulf Petrochemicals and Chemicals Association (GPCA).
At 37.8 million tons, the GCC’s current fertilizer capacity earns $6.3billion in sales revenue, according to the GPCA’s 2015 Fertilizer 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.
“Since 2005, the GCC has been the epicenter of a dynamic fertilizer industry, whose growth has been driven by increased demand for food, growing access to feedstock and the rise in global population,” said Dr. Abdulwahab Al- Sadoun, Secretary General, GPCA. “With the recent focus of regional governments in developing their non- oil industries, fertilizers will continue to be a key focus sector in the medium term.”
With a production capacity of 16.7 million tons and 9.8 million tons respectively, Saudi Arabia and Qatar lead fertilizer production in the region.
However, relatively flat demand from local and global markets for fertilizers, coupled with macroeconomic volatility, challenges remain for regional producers.
“There is no doubt that GCC fertilizer 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,” said Dr. Al- Sadoun. “Being export oriented industry with over 60 percent 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 Fertilizer Indicators report will be released at the GPCA Fertilizer Convention. Now in its 7th edition, the conference will be held in Dubai on Sept. 6- 8. With insights on the market outlook for commodities, to upcoming trends, the conference will host regional and global experts from the fertilizer industry.