Press-release: Acron Group Releases 2015 Operating Results
Group’s Consolidated Output (Operating Results for Acron, Dorogobuzh, Hongri Acron and NWPC)
|PRODUCT, KT||2015||2014||YOY, %|
|Incl. in-house consumption||1,729||1,707|
|Incl. in-house consumption||481||536|
|Incl. in-house consumption||87||119|
|Incl. in-house consumption||395||417|
|Incl. in-house consumption||24||36|
|Incl. in-house consumption||24||36|
|Total commercial output for Mineral Fertilisers*||5,015||5,091||-1.5|
|Organic Synthesis Products||447||401||11.5|
|Incl. in-house consumption||232||207|
|Incl. in-house consumption||82||71|
|Incl. in-house consumption||148||135|
|Incl. in-house consumption||1||1|
|Low-density and technical-grade ammonium nitrate||266||230||15.5|
|Liquid carbon dioxide||57||53||7.6|
|Total commercial output for Industrial Products*||1,055||1,003||5.2|
|Incl. in-house consumption||775||718|
|Total commercial output for Apatite Concentrate*||361||173||108.0|
|TOTAL COMMERCIAL OUTPUT*||6,431||6,267||2.6|
* Commercial output is output less in-house consumption.
Chairman of Acron’s Board of Directors Alexander Popov comments:
“In 2015, Acron Group continued to increase output of its core commercial products. The Group has been increasing its output for seven years and we expect this trend to be stable in the coming years.
“In the short term, we will commence start-up operations for technological equipment at our new ammonia unit in Veliky Novgorod and plan to produce the initial batch of product in late March. Operating results in 2016 will improve with commissioning of the new unit and a lighter schedule of overhauls at the Group’s facilities compared to 2015. Over 2017-2020, we plan to gradually increase apatite concentrate output as the second stage of the Oleniy Ruchey mine is brought into operation.”
Comments on Operating Results:
In 2015, Acron Group’s commercial output was 6,431 kt, up 2.6% year-on-year due to increased output of apatite concentrate and non-organic compounds.
Commercial output of mineral fertilisers and ammonia was down 1.5% in 2015 to 5,015 kt due to equipment upgrade at Hongri Acron to improve environmental sustainability and a planned overhaul of Acron’s facilities in Veliky Novgorod in April-May and August-September. At Dorogobuzh, however, commercial product output was up 21.6%.
Commercial output of industrial products was up 5.2% due to increased production of UFR and low-density and technical-grade ammonium nitrate. In early 2015, the Oleniy Ruchey mine reached its first stage design capacity of 1.1 mt, which more than doubled apatite concentrate output for sales to third parties.
Comments on Market Trends
Mineral fertiliser prices lost considerable ground over 2015 as the commodity market deteriorated. This was mainly due to weaker demand in some consumer countries, general market uncertainty, increased sector competitiveness and the lower cost of production in some producing countries with lower energy costs and weaker national currencies.
According to our estimates, urea prices dipped below the cost of production for most Chinese producers, which resulted in a substantial decrease in urea exports from China in H2 2015 year-on-year. China is a marginal producer and accounts for approximately 45% of global urea production and approximately 20% of global urea supplies. China’s cost of production is, therefore, a crucial consideration for the market. We believe that the potential for urea prices to decrease within economically feasible limits has been exhausted. Even so, commodity markets remain highly volatile and speculative, which we believe should level off in the short term.
In 2015, prices for such premium products as AN and UAN also decreased. AN saw weaker demand in Brazil, where the economic slowdown, more expensive credit and a weaker national currency conspired to reduce farmers’ purchasing power.
NPK prices remained almost unchanged in H1 2015, backed by sustainable phosphate and potash sectors. Nevertheless, NPK prices also adjusted in Q4, driven by commodity prices and severe drought in Southeast Asian countries.
We expect the global mineral fertiliser market to recover in Q1 2016 as we approach the spring sowing season in the Northern hemisphere, which will support prices in the nitrogen and phosphate sectors.
Average Indicative Prices, USD/t, FOB Baltic/Black Sea
|2015||2014||CHANGE, %||Q4 2015||Q3 2015||CHANGE, %|
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