In 2016, Acron Group Boosts Output 13.5%

  Group’s Consolidated Output 

(Operating Results for Acron, Dorogobuzh, and NWPC)**

Mineral fertilisers

Industrial products

Phosphate inputs

* Commercial output is output less in-house consumption.

** The Results do not include Hongri Acron’s output (the facility was sold in 2016)

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

“In 2016, the Group’s output of key products hit a record high due to commissioning of the new ammonia unit at Acron’s site in Veliky Novgorod. Excluding the operating results of Hongri Acron, which was sold, the Group’s commercial output of key products in 2016 was 6.5 million tonnes, up 13.5% year-on-year. Fertiliser output was up 19.8% to 5.3 million tonnes. The new Ammonia-4 operated sustainably at increased capacity, with ammonia output totalling 371,000 tonnes in 2016.

“With the significant additional volume of ammonia, we were able to operate our processing facilities at full capacity. As a result, nitrogen fertiliser output in 2016 was up 23.3% to 3.7 million tonnes, the Group’s all-time record for all key products, ammonium nitrate, urea and UAN.

“In addition to key products, Veliky Novgorod-based Acron produced 62 tonnes of rare-earth metal compounds in 2016. 

This lays the groundwork for stable growth in operating results at the current capacity over the coming years.”

Market Trends

2016 was one of the most difficult years the global fertiliser market has experienced in the past decade. Global supply far outpaced demand, and almost every market segment saw prices pressured by oversupply. Prices for certain products, such as ammonia, hit record lows since 2005.

New capacity specifically affected the nitrogen sector, which saw extra supply from the U.S. and Russia. Lower prices ousted less efficient and high-cost players in China and Ukraine, where exports shrank 40% and 30% respectively, balancing the market in new price conditions.

The energy market affected Chinese companies’ cost of production: coal prices decreased through mid-year, which in turn decreased the cost of production in China and created additional pressure on global prices for urea and other nitrogen products. In H2 2016, however, coal prices rose sharply, resulting in a dramatic upsurge in fertiliser prices: after reaching a many-year record low in the late third quarter, urea prices started recovering and pulled up related products, as well. In the fourth quarter, seasonal demand sustained the growth, and by the end of the year urea prices hit their record high over 2016.

NPK prices drifted down over 2016, mimicking the dynamics of phosphate and potash core products. However, general demand for the products was sufficient and producers and distributors did not see dramatic overstocking.

The fertiliser industry is optimistic about 2017. The market pushed off from its local price floor in the third quarter and sales are entering the high season. Moreover, 2017 does not expect as much new nitrogen capacity to be put on stream and demand will continue to grow on the back of strong fundamental factors.

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