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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)

Mineral fertilisers

Product, '000 t H1 2019 H1 2018 YOY, %
Ammonia 1,362 1,285 6.0
Incl. in-house consumption * 1,189
Nitrogen fertilisers 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: 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

Product, '000 t H1 2019 H1 2018 YOY, %
Organic Synthesis Products 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 399 414 -3.7
Low-density and technical-grade ammonium nitrate 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

Product, '000 t H1 2019 H1 2018 YOY, %
Apatite concentrate 482 619 -22.1
Incl. in-house consumption 393 465
Total commercial output for Apatite Concentrate 90 154 -41.7

3,803 3,749 1.5

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 higher 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 2019  
Q2 2019 / 
Q2 2018  
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