22 Jul 2019 09:21
Acron Group’s Mineral Fertiliser Output Up 4% in H1 2019
22 July 2019
Acron Group’s Mineral Fertiliser Output Up 4% in H1 2019
Group’s Consolidated Output(including operating results for Acron, Dorogobuzh and North-Western Phosphorous Company)
| Product, ‘000 t | H1 2019 | H1 2018 | YOY, % |
| MINERAL FERTILISERS | |||
| Ammonia | 1,362 | 1,285 | 6.0 |
| Incl. in-house consumption* | 1,189 | 1,075 | |
| Nitrogen fertilisers, including | 2,561 | 2,081 | 23.1 |
| Incl. in-house consumption | 577 | 484 | |
| AN | 1,072 | 939 | 14.2 |
| Incl. in-house consumption | 219 | 199 | |
| Urea | 631 | 475 | 32.8 |
| Incl. in-house consumption | 358 | 285 | |
| UAN | 858 | 667 | 28.6 |
| Complex fertilisers, including | 1,056 | 1,277 | -17.3 |
| Incl. in-house consumption | 15 | 22 | |
| NPK | 998 | 1,148 | -13.1 |
| Incl. in-house consumption | 15 | 22 | |
| Bulk blends | 58 | 129 | -54.7 |
| Total commercial output for Mineral Fertilisers | 3,197 | 3,062 | 4.4 |
| INDUSTRIAL PRODUCTS | |||
| Organic synthesis products, including | 242 | 235 | 3.0 |
| Incl. in-house consumption | 125 | 117 | |
| Methanol | 51 | 54 | -5.9 |
| Incl. in-house consumption | 45 | 43 | |
| Formalin | 87 | 85 | 2.2 |
| Incl. in-house consumption | 79 | 73 | |
| Urea-formaldehyde resins | 104 | 95 | 8.7 |
| Incl. in-house consumption | 1 | 1 | |
| Non-organic compounds, including: | 399 | 414 | -3.7 |
| Low-density and technical-grade AN | 93 | 88 | 6.2 |
| Industrial urea | 60 | 53 | 12.4 |
| Calcium carbonate | 217 | 244 | -10.9 |
| Liquid carbon dioxide | 25 | 26 | -4.1 |
| Argon | 4 | 3 | 6.9 |
| Total commercial output for Industrial Products | 516 | 532 | -3,0 |
| PHOSPHATE INPUTS | |||
| Apatite concentrate | 482 | 619 | -22.1 |
| Incl. in-house consumption | 393 | 465 | |
| Total commercial output for Apatite Concentrate | 90 | 154 | -41.7 |
| TOTAL COMMERCIAL OUTPUT | 3,803 | 3,749 | 1.5 |
Note: Commercial output is output less in-house consumption.
* Updated for H1 2018
Chairman of Acron’s Board of Directors Alexander Popov commented on the results:
“In H1 2019, Acron Group set new records, with mineral fertiliser output up 4% year-on-year to 3,197,000 tonnes and total commercial output up 1.5% year-on-year to 3,803,000 tonnes.
“The Group’s ammonia output was up 6% year-on-year to 1,362,000 tonnes, and the volume of ammonia processed to end products increased 11% to 1,189,000 tonnes, setting yet another record. Ammonia output and the volume of ammonia processed will continue to expand. We plan to finalise upgrades to the ammonia unit at Dorogobuzh by the end of this year, increasing its capacity to 130,000 tonnes per annum. Due to the commissioning of a new urea unit at the end of 2018, agricultural-grade urea output was up 33% to 631,000 tonnes. By the end of this year, we plan to complete the construction of a new urea granulation unit that will produce premium product. In the reporting period, the Group also continued to expand technical-grade urea production. Technical-grade urea output was up 12% year-on-year to 60,000 tonnes. Production of UAN based on urea solution increased alongside the expansion of urea output. In H1 2019, UAN output was up 29% to 858,000 tonnes. Ammonium nitrate output increased 14% year-on-year due to the expansion of nitric acid output, which is a key feedstock for ammonium nitrate. In H1 2019, we commissioned two new nitric acid units with 135,000 tonnes each. Construction of another unit is underway and is expected to be commissioned at the end of this year.
“The Group’s total complex fertiliser output was down 17% year-on-year to 1,056,000 tonnes, mainly because Dorogobuzh suspended its blend production due to weaker regional demand. However, in early 2019, the Group brought on stream a new blended fertiliser unit at the Acron production facility in Veliky Novgorod, significantly expanding its product portfolio with blends, which are increasingly popular globally. The Group’s NPK output decreased due to a temporary reduction in apatite concentrate supply from the Oleniy Ruchey mine, which was caused by such factors as a higher volume of overburden operations year-on-year and the lower phosphorus grade of the ore at this stage of underground mine development. We expect that in Q3 2019, apatite concentrate output will recover to the level sufficient to utilise the full NPK capacity at the Group’s production facilities. It is expected that ore quality will improve and apatite concentrate output will go back up with further development of the underground mine”.
Market Trends
In the second quarter of 2019, global urea prices were up due to strong demand in India and Latin America and high prices of urea available for export from China. Supported by high production costs, urea prices in China have ranged between $280 and $300 FOB this year. Given growing demand, in the second quarter Baltics prices increased from $230 to $270 FOB. According to industry experts, in the third quarter Baltics prices for urea will remain relatively stable and range from $260 to $270 FOB, and in the fourth quarter prices will grow moderately due to increased demand before the spring sowing season in the Northern hemisphere.
In the second quarter, AN prices rose on the back of higher urea prices. UAN prices, which fell in the first quarter due to the seasonal pullback in demand, did not recover significantly in the second quarter due to unfavourable weather conditions and a delay in seasonal demand in North America, which is a key UAN market. To obtain higher net-backs, Acron Group continues to expand sales to end customers: in May 2019, the Group began direct UAN supplies to Argentina.
In the second quarter, NPK prices remained relatively stable. The support from the positive price trend in the nitrogen segment was offset by the negative trends in the phosphate and potash segments. In the second quarter, the NPK premium over the basic product basket was approximately 20%.
Average Indicative Prices, USD/t, FOB Baltic/Black Sea
| Q2 2019 | Q1 2019 | Q2 2018 | Q2 2019 / Q1 2019change | Q2 2019 / Q2 2018change | |
| NPK 16-16-16 | 305 | 312 | 291 | -2.4% | 4.8% |
| AN | 197 | 182 | 166 | 8.2% | 18.5% |
| UAN | 138 | 178 | 155 | -22.6% | -10.9% |
| Urea | 250 | 243 | 225 | 3.2% | 11.3% |
| Ammonia | 223 | 276 | 232 | -19.0% | -3.6% |
| H1 2019 | H1 2018 | YOY, % | |
| NPK 16-16-16 | 309 | 288 | 7.3 |
| AN | 190 | 176 | 7.5 |
| UAN | 158 | 158 | -0.3 |
| Urea | 246 | 224 | 9.8 |
| Ammonia | 249 | 258 | -3.2 |
Media Contacts:
Sergey DorofeevAnastasiya GromovaTatiana SmirnovaPublic RelationsPhone: +7 (495) 777-08-65 (ext. 5196)
Investor Contacts:
Ilya PopovInvestor RelationsPhone: +7 (495) 745-77-45 (ext. 5252)
Background Information
Acron Group is a leading vertically integrated mineral fertiliser producer in Russia and globally, with chemical production facilities in Veliky Novgorod (Acron) and the Smolensk region (Dorogobuzh). The Group owns and operates a phosphate mine in Murmansk region (North-Western Phosphorous Company, NWPC) and is implementing a potash development project in Perm Krai (Verkhnekamsk Potash Company, VPC). It owns transportation and logistics infrastructure, including three Baltic port terminals and distribution networks in Russia and China. Acron’s subsidiary, North Atlantic Potash Inc. (NAP), holds mining licences for 11 parcels of the potassium salt deposit at Prairie Evaporite, Saskatchewan, Canada. Acron also holds a minority stake (19.8%) in Polish Grupa Azoty, one of the largest chemical producers in Europe.
In 2018, the Group sold 7.3 million tonnes of various products to 67 countries, with Russia, Brazil, Europe and the United States as key markets.
In 2018, the Group posted consolidated IFRS revenue of RUB 108,062 million (USD 1,723 million) and net profit of RUB 13,318 million (USD 212 million). Acron’s shares are on the Level 1 quotation list of the Moscow Exchange and its global depositary receipts are traded at the London Stock Exchange (ticker AKRN). Acron employs approximately 11,000 people.
For more information about Acron Group, please visit www.acron.ru/en.