Acron Reports 4 percent Rise in 1H Fert Production

Acron Group, Moscow, reported a 4 percent increase in mineral fertilizer production in the first six months of this year, to 3.197 million mt, up from 3.062 million mt a year-ago. Total commercial output was up 1.5 percent year-over-year, to 3.803 million mt compared with the previous year’s 3.749 million mt.

The group increased ammonia production by 6 percent, to 1.36 million mt, with the volume of ammonia processed to end products rising 11 percent year-over-year to 1.189 million mt, which Acron said was “another record.”

The group’s ammonia output and the volume of ammonia processed will continue to expand, it said. It plans to finalize upgrades to the ammonia unit at Dorogobuzh by the end of the year, increasing its capacity to 130,000 mt/y (GM May 10, p. 31).

Agricultural-grade urea output – all of which is produced at the Veliky Novgorod site – was up 33 percent to 631,000 mt, reflecting the commissioning of the new urea-6 unit late last year (GM Nov. 30, 2018). Acron plans to complete the construction of a new urea granulation unit by the end of the current year, which it said will produce “premium” product.

The group said it also has continued to expand its technical-grade urea production, with first-half output up 12 percent year-over-year, to 60,000 mt.

Production of UAN increased alongside the expansion of urea output, and in the first six months of this year rose 29 percent from a year-ago, to 858,000 mt. Ammonium nitrate production increased 14 percent year-over-year, to 1.07 million mt, due to the expansion of nitric acid output. Acron commissioned two new nitric acid units, each with 135,000 mt/y capacity in the first half of the year (GM March 8, p. 25; June 28, p. 27). Construction of another nitric acid unit is underway, and is expected to be commissioned at the end of 2019.

But Acron’s group-wide complex fertilizer output was down 17 percent, to 1.056 million mt from 1.28 million mt a year-ago, which it attributed mainly to Dorogobuzh suspending its blend production due to weaker regional demand. However, in early 2019, the group brought on stream a new fertilizer blending unit at its Veliky Novgorod site (GM Jan. 25, p. 26), “significantly” expanding its product portfolio with blends, it said.

Group-wide NPK output decreased 13 percent, to 998,000 mt from the year-ago 1.15 million mt, due to a temporary reduction in apatite concentrate supply from the Oleniy Ruchey mine. Acron attributed this to factors such as a higher volume of overburden operations year-over-year and the lower phosphorus grade of the ore at this stage of underground mine development.

Six-month apatite concentrate production was 22 percent lower at 482,000 mt, down from the year-ago 619,000 mt. However, Acron expects apatite concentrate output will recover in the current third quarter to the level sufficient to utilize the full NPK capacity at the group’s production facilities. It expects that ore quality will improve and apatite concentrate output will go back up with further development of the underground mine.

Looking at price trends for key products, Acron noted the higher global urea prices during the second quarter 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-$300/mt FOB this year, the group noted.

Acron said given the growing demand, second-quarter Baltic FOB urea prices increased from $230-$270/mt. Citing industry experts, the group expects Baltic FOB prices for urea to remain relatively stable in the current third quarter and range from $260-$270/mt, and to grow modestly in the fourth quarter due to increased demand before the spring sowing season in the Northern Hemisphere.

For ammonium nitrate, second-quarter Baltic FOB prices rose on the back of higher urea prices, the group noted. But Baltic FOB prices of UAN, which fell during the first quarter due to a seasonal pullback in demand, did not recover significantly in the second quarter due to unfavorable weather conditions and a delay in seasonal demand in North America, a key UAN market.

To obtain higher netbacks, Acron said it continues to expand sales to end customers. This past May, the group began direct UAN supplies to Argentina (GM May 24, p. 29)

The group noted that NPK prices remained relatively stable in the second quarter, with the support from the positive price trend in the nitrogen segment offset by negative trends in the phosphate and potash segments. In the second quarter, the NPK premium over the basic product basket was approximately 20 percent, it said.

Average Indicative Prices, FOB Baltic/Black Sea ($/mt)

Data source: Acron Group