Asian countries are behind US and European countries in terms of
achieving agricultural crop yield. The focus on improving crop yields has
driven the demand for complex
fertilizers in the Asian subcontinent over the past decade. Asia
complex fertilizer market registered moderate growth during 2012-2017, growing
at a CAGR of ~%, to register revenues worth USD ~ billion in 2017 as compared
to USD ~ billion in 2012. Moderate growth was due to decline in consumption of
complex fertilizers in certain key territories and slump in price of complex
fertilizers, driven by decline in cost of raw materials in international
markets. Overall, complex fertilizer production in Asia grew at a CAGR of ~%
during 2012-2017, whereas consumption of complex fertilizers grew at a CAGR of ~%
during the same period.
China was the largest consumer and producer of complex fertilizers
in Asia and accounted for about ~% of the market in 2017.
India ranked second and comprised for ~% of the
market share in 2017. Vietnam, Indonesia and Thailand were other major
countries utilizing complex fertilizers in Asia and accounted for ~%, ~% and ~%
market share respectively in 2017. All other Asian countries together comprised
for remaining ~% of the market.
NPK 16-16-8 was the most widely used complex fertilizer in Asia
and accounted for ~% market share in overall complex fertilizer market in 2017.
NPK 20-20-15 was the next popularly used fertilizer grade and comprised for ~%
market share in 2017. NPK 15-15-15 and NPK 20-20-0 were other popularly used
complex fertilizers which comprised for ~% and ~% market share respectively in
2017. All other grades/formulas of complex fertilizers together comprised for
about ~% of the market share in 2017.
India fertilizer industry is of very critical importance to the
Indian Economy as it manufacturers raw material for agriculture purposes, which
is the major occupation of the country. Agriculture is livelihood to 58% of the
country's population and contributes up to 14% to the economy. The country has
second largest arable land and is partly self-sufficient in meeting its
nitrogen fertilizers, but it is primarily dependent on imports for its potash
and phosphate needs. India has limited amount of rock phosphate of low grade
which can only be utilized for production of SSP. The fertilizer industry is
highly regulated and monitored by the Government of India. India has 21 units
which produce DAP and complex fertilizers as of FY’2017.
The monsoon in India is closely watched for agricultural
activities as the agriculture and fertilizer sector is highly dependent on
monsoons. Straight fertilizers such as Urea and DAP are highly subsidized in
the country by the Indian government. In the case of complex fertilizers, the
share in total subsidy has been on a declining trend due to partial decontrol
of the sale price. Consumption of complex fertilizers declined at a CAGR of ~%
during the period FY’2012-FY’2017, whereas, production grew marginally at a
CAGR of ~% during FY’2012-FY’2017. Monsoon,
on which a major part of agriculture depends, was erratic and inconsistent.
Furthermore, decline in prices of complex fertilizers coupled with slump in
consumption resulted in decline of the complex fertilizers market in the
country.
India imported about ~ thousand MT of NPK fertilizers during 2016,
majorly from Russia. Imports declined in 2016 by as much as ~% as compared to
2015. Incline in domestic production of NPK fertilizers and lesser monsoon
rainfall resulted in a decline in import demands during 2016. Imports of NPKs
have been heavily dependent on the agro-climatic conditions of the country.
Hence, imports have registered sharp incline and/or decline in the last few
years.
Russia was the biggest exporters of NPK fertilizers to India as of
2016, contributing about ~% of the overall NPK imports of the country (in terms
of volume). Latvia, Estonia and China were other major import destinations for
India and accounted for ~%, ~% and ~% of the total NPK imports, respectively in
2016.
Granulated/fused form of complex fertilizers was widely used in
India such that about ~% of all complex fertilizers utilized in the country
were of granulated or fused form. Tata Chemicals Limited (TCL), Coromandel
International and Zuari Fertilisers and Chemicals Limited are the only
companies known to have invested and established blending plant facilities for
customized NPK production. However, the production capacities of these plants
are very small and farmers are reluctant in experimenting new grades of NPKs. TCL
was the first company in India to establish blending plant facility at Babrala,
Uttar Pradesh in 2009. Major blended NPK grades sold include NPK 10-18-25, NPK
7-20-18 and NPK 19-19-19.
India complex fertilizer market is highly competitive and
concentrated with top 5 players comprising for over ~% of the market share, in
terms of revenue in FY’2017. In terms of complex fertilizer production, the top
5 players accounted for about ~% of market share as of FY’2017. There are about
13 companies (3 public, 1 cooperative and 9 private companies) engaged in the
production of complex fertilizer in India.
Coromandel international was the market leader and comprised for ~%
market share in FY’2017, in terms of revenue. The company produced around 2.4
million MT of complex fertilizers during FY’2017. IFFCO emerged as the second
largest player in this space and comprised for ~% market in 2017. Other
prominent players included Paradeep Phosphates, Rashtriya Chemicals and
Fertilizers Limited, Fertilizers and Chemicals Travancore, Gujarat State
Fertilizers & Chemicals Limited and Gujarat Narmada Valley Fertilizers
& Chemicals Limited which comprised for market shares of ~%, ~%, ~%, ~% and
~%, respectively in FY’2017.
The Direct
Transfer Benefit will soon be deployed across the country from 2018 onwards,
since the pilot projects have indicated a success. The Point of Sales (PoS)
machines will capture details of the farmer including Aadhaar number, details
of the retailer, product purchased, farm land in which the commodity is used,
health of the soil, land ownership details if available and the opening and
closing stock of every retailer. This will help to bring soil health in focus
and curb any pilferages and leakages in the subsidy reimbursement process as
every sale made will be recorded in the POS machine. The process will
streamline and enable in quick subsidy disbursal to the manufacturers within
weeks and it will ensure the fertilizer is received by the farmer himself.
Timely outgo of the subsidy will further revive the profits of the companies
and also help in reducing the working capital pressures in the long run. Several
companies including the likes of Coromandel International, Paradeep Phosphates
and Fertilizers and Chemicals Travancore have announced investments to increase
their production capacity of complex fertilizers.
Ken Research estimates the consumption of complex fertilizer to
grow at a CAGR of ~% in the next five years, rising from ~ million MT in FY’2018
to ~ million MT in FY’2022. Furthermore, production of complex fertilizers is
expected to grow at healthy CAGR of ~% during FY’2017-FY’2022, inclining from ~
million MT in FY’2018 to ~ million MT by FY’2022.
NPK 20-20-0 was the most widely used complex fertilizer in India,
recording fastest growth during the last 5 years. Going forward, utilization of
NPK 20-20-0 is most likely to remain strong owing to comparatively cheaper
price.
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