Press release: Acron Group’s Fertiliser Output Up 29% in H1 2017

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

 

In H1 2017, Acron Group companies increased mineral fertiliser output nearly by a third to over 3 million tonnes. The record high results were due to the stable operation of the new ammonia unit, commissioned in 2016 at Acron’s Veliky Novgorod facility, and to upgrades of core operations at both of the Group’s production sites.

Acron’s Veliky Novgorod facility increased the capacity of its four urea units, commissioned in 1969-1970, to 1,800 tonnes per day. Once the upgrades on the fifth urea unit are completed, aggregate capacity will reach 3,000 tonnes per day. We also decided to build a sixth urea unit with a capacity of 600 tonnes per day. That project is expected to be completed in the summer of 2018.

Acron’s Veliky Novgorod facility also posted record high numbers for its NPK units, where an overhaul was started in early 2016. During this period, each of the two units increased NPK output more than 10% to 2,000 tonnes per day from 1,840 tonnes per day. The Company plans to ramp up production to 2,100 tonnes per day.

 

In 2016, Dorogobuzh completed an overhaul of its ammonium nitrate and NPK units, and the Company launched an upgrade of its ammonia unit this year. Once the project is completed, capacity will be up to 2,100 tonnes per day from 1,740 tonnes per day, for an annual output of 130,000 tonnes.

 

The decrease in apatite concentrate output at the Oleniy Ruchey mine is due to extensive stripping operations in Q1 2017. At the same time, the output in Q2 2017 reached a historical record high. The mine is expanding, and the start of ore production is scheduled for this year.

 

Thanks to our investment projects, we intend to continue increasing production volume.

The mineral fertiliser market in the second quarter is traditionally characterised by low seasonal demand. In this context, the increase in global urea supply pushed prices for this product down from local record highs seen in Q1 2017. The slowdown in India’s imports added pressure. At the same time, exports from China shrank to half what they were the previous year. China remains a stabilising factor in the market. According to our estimates, the cost of urea production for most Chinese producers is $245 FOB per tonne because of the high prices for coal, used as a raw material, and the strengthening of the yuan in recent months. Consequently, we do not expect a considerable drop in global urea prices from the current levels.

The prices for premium nitrogen fertilisers – ammonium nitrate and urea-ammonium nitrate – also declined in Q2 2017, although more moderately than for the basic product – urea. As a result, these products’ premiums increased.

NPK prices in Q2 2017 were relatively stable. Amid lowered prices in the nitrogen and phosphorous segments, NPK fertilisers were supported by higher potash prices. NPK premiums to the product basket remain high.

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