Production down in 2014: According to CRU's preliminary calculations, 2014 could be the first decline in y-on-y urea production since 2001. Having gathered association production data, customs statistics and company data (where available) total global production of urea looks to have fallen in response to a large destocking of Chinese urea. Up to 6.0 million tonnes of production - much of it in China, Egypt, Ukraine and the Middle East - looks to have been lost.
Chinese costs look soft: CRU has reappraised its estimates of Chinese marginal costs downwards, following a downwards adjustment to the medium-term coal forecast, an upwards adjustment to the strength of the dollar and more efficient than calculated anthracite production in Shanxi.
The Americans are coming: CRU is expecting to see the commissioning of CF Donaldsonville's new ammonia/urea/UAN facility and OCl's Iowa Fertilizer in 2015. While significant commercial production this year is unlikely, it is a landmark event nonetheless, as together these two plants are the vanguard of 4.3 million t/y of new urea capacity that will be operational by 2018.
Energy markets will decide urea's medium-term future: Oversupply in the urea market looks to be chronic for the duration of the forecast. This suggests that annualised urea prices will trend to marginal production cost. These costs have fallen over the last two years as first coal prices and more latterly oil prices have undergone significant downwards revisions. Higher urea pricing will need an energy market recovery.

Executive Summary 1

Chapter 1 - Demand 9

1.1 Global Urea Demand overview 9

1.2 Agricultural Markets overview 10

      1.2.1 Recent agricultural developments 10

      1.2.2 Short and medium term considerations 12

1.3 Regional Assessment of Urea demand 18

      1.3.1 North America 18

      1.3.2 Central and South America 20

      1.3.3 Europe & CIS 22

      1.3.4 Asia 24

      1.3.5 ROW 29

Chapter 2 - Supply 31

2.1 Regional supply outlook 35

      2.1.1 China 35

      2.1.2 CIS 37

      2.1.3 North America 39

      2.1.4 Africa 41

      2.1.5 South Asia 43

      2.1.6 Central and South America 45

      2.1.7 South-East Asia & Oceania 46

2.2 Urea Production Costs and Feedstock Prices 47

2.3 CRU's Committed Capacity Forecast by Plant 49

Chapter 3 - Trade, Balance and Prices 51

3.1 Global Trade 51

3.2 Regional trade outlook 52

      3.2.1 East Asia 52

      3.2.2 North America 54

      3.2.3 Latin America 55

      3.2.4 Africa 57

      3.2.5 Europe 58

      3.2.6 CIS 59

      3.2.7 Middle East 61

      3.2.8 South Asia 62

3.3 Pricing Fundamentals and Price Drivers 64

      3.3.1 Fundamentals 64

      3.3.2 Supply Balance and Operating Rates 65

3.4 Calculating the Global Price Floor 66

      3.4.1 Coal Price Outlook 66

      3.4.2 The Chinese export floor 68

      3.4.3 The Outlook for Ukrainian Export Costs 70

3.5 Urea Price Driver Analysis 71

3.6 The Outlook for Urea Prices to 2016 74

3.7 The Outlook for Urea Prices: 2016-2019 76

3.8 Risks to the forecast 78

Appendices

Appendix A - The Long Term Outlook for the Urea Market 79

A.1 The long-term outlook for urea demand 80

A.2 Urea gap analysis 88

A.3 Long-term guidance: CRU's LRMC methodology 89

A.4 Choice of regions for LRMC 90

A.5 LRMC base year: 2013$ 91

A.6 LRMC inflation indexes 93

A.7 Long-run marginal cost forecast, 2012-2037 96

Appendix B - Economic Outlook 99

B.1 Overview 99

B.2 Exchange rates 104

B.3 Macroeconomic outlook 106

B.4 Scenario 115

Appendix C - Nitrogen Fertilizer Consumption 119

Appendix D - Urea Consumption 123

Appendix E - Urea Production 127

Appendix F - Urea - Gross Capacity 129

Appendix G - Urea - Net Capacity 131

Appendix H - Urea Imports 133

Appendix I - Urea Exports 137

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