Ru En

Acron Group’s Commercial Output Up 6% in H1 2021

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

Mineral fertilisers

Product, '000 t 6M 2021
6M 2020
YOY, %
Ammonia 1,415
1,374
3.0
Incl. in-house consumption 1,377
1,306
Nitrogen fertilisers, including 2,424
2,442
-0.7
Incl. in-house consumption 427
403
AN 1,118
1,227
-8.8
Incl. in-house consumption 142
135
Urea 651
568
14.7
Incl. in-house consumption 284
269
Incl. prilled urea  163
276
-40.9
Incl. in-house consumption 11
8
 
Incl. granulated urea  231
34
up by factor 6.8
Incl. in-house consumption 16
3
 
UAN 655
648
1.1
Complex fertilisers, including 1,296
1,140
13.6
Incl. in-house consumption 25
16
NPK 1,201
1,080
11.2
Incl. in-house consumption 25
16
Bulk blends 95
60
57.4
Total commercial output for Mineral Fertilisers 3,307
3,231
2.4

Industrial products

Product, '000 t 6M 2021 6M 2020 YOY, %
Organic Compounds, including 241
187
28.9
Incl. in-house consumption 125
94
Methanol 53
44
21.1
Incl. in-house consumption 46
35
Formalin 86
67
28.1
Incl. in-house consumption 77
58
Urea-formaldehyde resins 101
75
34.2
Incl. in-house consumption 2
1 72.4
Non-organic compounds, including 590
493 19.8
Low-density and technical-grade AN 244
156
56.1
Industrial urea 79
66
20.5
Calcium carbonate 237
243
-2.7
Liquid carbon dioxide 28
24
13.5
Argon 3
3
-8.3
Total commercial output for Industrial Products 706 585 20.7

Phosphate inputs

Product, '000 t 6M 2021     6M 2020 YOY, %
Apatite concentrate 621
538
15.4
Incl. in-house consumption 478 433
Total commercial output for apatite concentrate 143
105
36.2
TOTAL COMMERCIAL OUTPUT

4,157
3,921
6.0
 Note: Commercial output is output less in-house consumption.


Comments from Alexander Popov, Chairman of Acron’s Board of Directors:

‘In H1 2021, Acron Group posted a new output record. In the reporting period, the Group produced 4,157,000 tonnes of commercial products, up 6% year-on-year. Mineral fertiliser output was up 2% to 3,307,000 tonnes.

‘Output of ammonia, which we use as a basic feedstock for finished products, increased 3% to 1,415,000 tonnes, and the share of ammonia processed into finished products rose to 97%. In the reporting period, our flexible production chain allowed us to increase our output of the highest-margin products, primarily urea and complex fertilisers. Agricultural-grade urea output was up 15% to 651,000 tonnes, and complex fertiliser output increased 14% to 1,296,000 tonnes. In response to recovering demand for industrial products, the Group increased its output 21% to 706,000 tonnes. We also benefited from a favourable UAN price environment in Q2 2021 and expanded our UAN output.

‘The additional output always reaches its consumer since the demand for our products is very strong both in Russian and global markets. Higher profit margin of agribusiness and farmers’ purchasing power supported by high prices for the basic crops contribute to the spike in sales. Notably, the Russian agricultural industry is one of the record holders, as Acron Group’s fertiliser supplies to the domestic market for the spring sowing season in 2021 boosted 27%.

‘Acron Group has continued to invest heavily in capacity expansion to meet the growing market demand. Over the next several weeks, we will launch the Urea-6+ unit at Acron (Veliky Novgorod) to increase the facility’s urea capacity by 520,000 tonnes per annum. Additionally, the Group embarked on upgrades to the Urea-1, Urea-2, Urea-3, and Urea-4 units to increase their consolidated capacity by 390,000 tonnes per annum, and also commenced constructing a new 700,000-tpa urea granulation unit. Upon completing this project, Acron’s Novgorod-based facility will become the largest urea production facility both in Russia and in Europe.

‘Acron Group increases the output in line with the ESG strategy focused on preserving natural resources, increasing the equipment efficiency and improving its footprint regions. Implementation of the Group’s two urea projects will help reduce direct CO2 emissions by 630,000 tonnes per annum, the equivalent of 130,000 cars.’

Market Trends

In Q2 2021, global urea prices continued to grow. By the end of the quarter, the FOB Baltic price was USD 450, reaching its post-2012 high. This price growth was driven by various factors including continued strong seasonal demand in Europe and the United States, extensive urea purchases by India, high grain prices, and higher global gas prices driving up production costs. China’s threat of a 30% export duty on urea, which resulted in limited supplies from this country, also contributed to stronger prices. In Q3 2021, purchases by India and Brazil have supported the market amid a seasonal decline in demand in Europe and the United States.

AN and UAN prices increased to their highest level since 2014 in Q2 2021 due to strong demand in the Northern Hemisphere and rising urea prices, which serve as a benchmark for other nitrogen fertilisers prices.

NPK prices were up as well in Q2 2021, supported by a similar pricing trend for the basic product basket (urea, DAP, and potassium chloride). However, the increase in basic product prices outstripped blends because of their higher liquidity, so the NPK 16-16-16 premium over the basic product basket decreased to 0-5% from the historical average of 20%.


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

Q2 2021 Q1 2021    Q2 2020      Q2 2021 / 
Q1 2021  
change
Q2 2021 / 
Q2 2020  
change
NPK 16-16-16 353
312
258
13%
37%
AN
245
234
153
5%
61%
UAN 250
213
144
17%
73%
Urea 359
326
207
10%
73%
Ammonia 462
329
197
40%
135%