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Acron Group Releases 6M 2016 Operating Results

Group’s Consolidated Output (Operating Results for Acron, Dorogobuzh, Hongri Acron and NWPC)

Mineral fertilisers

Product, kt 6M 2016 6M 2015 YOY, %
Ammonia957861 11.1
Incl. in-house consumption 922 841
Nitrogen fertilisers 1.766 1.468 20.3
Incl. in-house consumption 321 239
AN 859 763 12.6
Incl. in-house consumption 92 47
Urea 370 296 25.1
Incl. in-house consumption 229 192
UAN 536 408 31.4
Complex fertilisers: 1.108 1.171 5.4
Incl. in-house consumption 9 10
NPK 1.083 1.146 -5.5
Incl. in-house consumption 9 10
Bulk blends 25 25 -0.8
Total commercial output for Mineral Fertilisers* 2.579 2.410 7.0

Industrial products

Product, kt 6M 2016 6M 2015 YOY, %
Organic Synthesis Products 177 238 -25.4
Incl. in-house consumption 93124
Methanol 35 48 -26.7
Incl. in-house consumption 33 45
Formalin 66 91 -27.1
Incl. in-house consumption 60 79
UFR 76 99 -23.2
Incl. in-house consumption 1 0
Non-organic compounds 365 393 -7.3
Low-density and technical-grade ammonium nitrate 109 134 -18.8
Calcium carbonate 201 185 8.9
Liquid carbon dioxide 26 27 -1.7
Argon 3 3 9.4
Hydrochloric acid 25 45 -44.0
Total commercial output for Industrial Products* 448 507 -11.6

Phosphate inputs

Product, kt 6M 2016 6M 2015 YOY, %
Apatite concentrate 584 557 4.8
Incl. in-house consumption 405 373
Total commercial output for Apatite Concentrate* 179 184 -3.0
Incl. at Group's Russian facilities 3.037 2.793 8.8

* Commercial output is output less in-house consumption.

Acron Board of Directors Chair Alexander Popov commented on the results:

“Due to ongoing upgrades and implementation of investment projects, Acron Group each year improves its operating results. In the first half of 2016, the output of main commercial products at the Russian facilities, which are the most profitable in Acron Group, increased 8.8% and reached another record high. The Group’s total commercial output of main products amounted to 3,206,000 tonnes, up 3.4% year-on-year.

Over the first six months of 2016, the output of main commercial products by Acron and Dorogobuzh was the highest in their history, up 11.7% and 5.4% year-on-year respectively. The growth was recorded for the entire product line of mineral fertilisers. Noteworthy is the increase in output of the premium UAN fertiliser by 31.4% year-on-year.

The start of production at the new ammonia unit with the output of 30,000 tonnes contributed to the growth in the reporting period. The launch of the new large-tonnage Ammonia-4 unit opens up new horizons for further expansion of the processing capacity and introducing new products. 

Market Trends

The prices for urea and other nitrogen products remain under pressure due to a weak seasonal demand in summer. In addition, India has been sluggish this year having cut down imports by 37%. To some extent, the decreased India’s imports are offset by lower exports from China because the world prices have fallen below production cost level for the majority of manufacturers in the country. In the first half of the year, the exports from China decreased 25% year-on-year. In general, the potential for further price decline is limited since Chinese producers with a considerable market share would not be able to compete with prices below US$ 200 FOB. At the same time, the potential for price increase is also very limited. We may expect some price recovery nearer to the fourth quarter on the back of traditionally strong seasonal demand. 

NPK prices declined in the second quarter following the prices for basic products – urea, DAP and MOP, but the premium on the basket of basic product remains at an adequate level.

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

Q2 2016Q1 2016Q2 2015Q2 2016 /
Q1 2016
Q2 2016 /
Q2 2015
NPK 16-16-16308326360-5.4%-14.4%