News: IPL Incitec Pivot Posts 34.8 Pct Drop In FY Net Profit, page-12

Chemicals Sector China's phosphate exports +12% at 10.48m tons in 2018 YTD; Magnitude of China exports in 2019 central to DAP/MAP prices.                     

Updates in the global phosphate market and note that the magnitude ofChina’s exports in 2019 will influence the direction of DAP/MAP pricing and mayfavour IPL if prices increase.

While Chinese DAP/MAP/TSP exports were ~1.230m tonsin November 2018 vs. ~0.703m tons in November 2017, the level of contraction orexpansion in production in 2019 is less evident.

Key points are summarizedbelow:
·   Phosphate exports (DAP/MAP/TSP) from China areexpected to be flat-to-lower in 2018 due to increased air and water pollutionaudits. And theMosaic Company’s base case assumes China phosphate export volumes coulddecrease up to ~0.5m-1.0m tons in 2019.
·   The magnitude of China’s phosphate exports in2019 will influence the direction of DAP/MAP prices. The direction of Chinese production can makethe difference between a ‘tight’ and ‘loose’ global phosphate market (and mayimpact IPL positively if prices increase).·   Supply and demand balance in global phosphatemarket may begin to loosen into 2019. The Mosaic Company closed its Plant Cityfacility in late 2017 in the US, to cut costs and improve profitability, andthis resulted in a decrease of 1.4m tons in US DAP production. And India isrebuilding its inventories leading to stronger phosphate demand growth. A riskto the phosphate supply/demand balance is increased production from the largeMa'aden facility in Saudi Arabia of 3m tons which is currently producing at ~1mton rate, and struggling with operational issues. There is also additionalincremental supply coming from OCG Group in Morocco related to a 1m tonexpansion made in 2018.