Adecoagro Profertil #2: Assessing the economics of a potential fertilizer plant expansion

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Adecoagro Profertil #2: Assessing the economics of a potential fertilizer plant expansion

production accounting for a smaller share (~3.5mn tons/y = ~20%). The region's total

nameplate capacity is larger, at 9mn tons/y. Nevertheless, a large share of this

volume is idled, running below capacity or severely disrupted (including 3mn tons/y

in Venezuela). If we account only for operating units, actual LatAm capacity is

closer to ~4-5mn tons/y. We estimate there is an additional 5.9mn tons/y of

capacity coming online from plausible/FID'd projects. This would take total LatAm

capacity to 10-12mn tons/y, vs a demand of ~15mn tons/y - not even accounting for

consumption growth vs a 4% CAGR between 2013-2024.

The bottom line is that even accounting for the pipeline of new urea plants,

LatAm is likely to continue being on a deficit of urea, requiring imports to meet

growing demand.

However, Argentina would likely be on a surplus. That means that with the capacity

expansion, Adecoagro would have to sell part of its urea at a narrower premium vs

global benchmarks that it currently does today - potentially shifting from import

parity to export parity.

Domestic natural gas supply to keep growing

Argentina's shale gas production has grown significantly over the past years, with a

19% 6y CAGR, becoming the most relevant source of gas in the country. Currently,

Argentina natgas production is at 146Mcmd (2026TD), with shale alone accounting

for 83Mcmd (57% share), mostly consumed domestically. Production is forecast to

keep growing, with WoodMac estimating an output exceeding ~220Mcmd after

2030, reflecting new oil developments with associated gas. Part of this additional

production is going to be directed towards exports, with projects under Argentina