Acron Group’s Mineral Fertiliser Output Up 4% in Q1 2019

  Group’s Consolidated Output (including operating results for Acron, Dorogobuzh and North-Western Phosphorous Company)

Mineral fertilisers

Industrial products

Phosphate inputs

Commercial output is output less in-house consumption.

Chairman of Acron’s Board of Directors Alexander Popov commented on the results:

“In Q1 2019, Acron Group has continued increasing production output and setting new records. Mineral fertiliser output was up 4% year-on-year to 1,645,000 tonnes, and total commercial output increased 2% to 1,936,000 tonnes.

“The Group’s ammonia output was up 2% year-on-year to 681,000 tonnes. The volume of ammonia processed to end products was up 6% to 592,000 tonnes, setting yet another record. Due to the commissioning of a new urea unit at the end of 2018, agricultural-grade urea output was up 26% to 315,000 tonnes. Most of the additional urea was used to produce UAN. In Q1 2019, UAN output increased 35% year-on-year to 426,000 tonnes.

“The Group’s total complex fertiliser output was down 13% year-on-year to 610,000 tonnes, mainly because Dorogobuzh suspended its blend production due to weaker regional demand. However, in January 2019 the Group put 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.

“In Q1 2019, apatite concentrate output decreased 17% due to a higher volume of overburden operations year-on-year. Additionally, the ore extraction from the underground mine expands due to its development. At this stage, the ore contains less phosphorus than the ore from the open-pit mine. However, it is expected that ore quality will improve and apatite concentrate output will go back up with further development of the underground mine.

“In April 2019, the European Commission resolved to introduce preliminary anti-dumping duties on UAN imports from Russia (31.9% for Acron Group and 34% for other producers). In 2018, we imported 399,000 tonnes of UAN to Europe. That is a significant volume, but we are able to minimise the losses from these duties thanks to our operating flexibility and diversified sales structure. Depending on the market environment, we can reshuffle our product mix to other nitrogen-based fertilisers. UAN prices in Europe increased significantly in response to the threat of new anti-dumping duties and remain high after their introduction. In future, if the effectiveness of our sales to Europe decreases, Acron Group may redirect part of its exports to other markets, such as Latin America, where we started developing several of our own trading networks in 2018. At the same time, we will pursue legal efforts to protect our interests in the competent EU bodies. We estimate our 2019 losses from the new duties at a maximum of USD 10 million”.

Market Trends

In February 2019, urea prices fell globally due to a seasonal drop in demand, except in China, where high production costs force local producers to keep urea prices unchanged at approximately USD 290 FOB. Industry experts expect that the global urea price will start recovering in Q3 2019, and its growth will accelerate in Q4 2019 due to stronger seasonal demand and high prices of Chinese urea available for export.

In Q1 2019, the price of ammonium nitrate remained almost flat despite the decline in urea prices. UAN prices continued decreasing following urea prices, while UAN still remained a premium product.

In Q1 2019, NPK prices decreased amid a negative trend in pricing for nitrogen and phosphate fertilisers. However, this decrease was less tangible, and the premium over the product basket increased.

Average Indicative Prices, USD/t, FOB Baltic/Black Sea

• Q1 2019 Operating Results pdf, 190.4 Kb