PhosAgro Boosts 3Q, YTD Output, Sales

PhosAgro, Moscow, reported that its third-quarter fertilizer production and sales were up 2 percent and 9 percent, respectively, while nine-month production and sales rose by 10 percent and 13 percent, respectively.

Third-quarter fertilizer sales increased to 2.20 million mt, up from the year-ago 2.02 million mt. Nitrogen-based sales grew 48 percent to 458,200 mt, up from 309,400 mt, while phosphate-based sales and MCP were up 2 percent, at 1.74 million mt, up from 1.72 million mt. Third-quarter fertilizer production amounted to 2.13 million mt, up from 2.09 million mt.

Nine-month fertilizer sales increased to 6.87 million mt, up from 6.09 million mt. Nitrogen-based sales grew by 43 percent to 1.72 million mt, up from 1.20 million mt, and phosphate-based sales and MCP were 5 percent higher at 5.14 million mt, up from the year-ago 4.89 million mt. Nine-month fertilizer production increased to 6.68 million mt, up from 6.08 million mt.

“PhosAgro remains focused on organic growth, which, together with solid contributions from newly launched urea and ammonia lines, has helped the company to leverage its flexible sales strategy and maximize returns in the current ‘deficit’ market environment,” said PhosAgro CEO Andrey Guryev.

He noted that third-quarter production of MAP and NPK each increased by 14 percent year-on-year on the back of “robust” demand from Latin America and India, as well as seasonal demand in Russia. However, this was partially offset, he said, by declines in DAP and NPS volumes.

Third-quarter ammonia output was up 13 percent year-on-year to 411,900 mt following the launch of a new 760,000 mt/y ammonia plant at PhosAgro-Cherepovets last year (GM Aug. 11, 2017), although the third-quarter result was partially impacted by maintenance in September, which also affected urea production. Third quarter urea production was 14 percent higher year-on-year at 355,800 mt.

In the upstream sector, PhosAgro’s optimization program enabled it to increase the recovery ratio for phosphate rock beneficiation to over 93 percent at the company’s Beneficiation Plant number 3, which Guryev said is “the absolute maximum” level ever achieved at the plant.

In the first nine months of the year, the company’s sales to CIS markets decreased by almost 60 percent year-on-year after the halt of deliveries to Ukraine in May (GM June 1, p. 27). This, the CEO said, was fully offset by a more than 40 percent increase in sales to Europe and 30 percent year-on-year growth in Latin America thanks to the company’s expanded “on-the-ground” presence with new local offices. Nine-month sales to North America and India each rose by some 50 percent year-on-year.

Looking ahead to market conditions through to the end of the year, Guryev noted the first signs of liquidity cooling and a certain price slowdown prior to November-December, which is typically the down season for markets. However, he believes the depth of the correction will be limited, citing a further steepening in the global cash cost curve on the back of strong pricing in ammonia and sulfur, as well as a continued deficit of the supply side. In addition, he pointed to the high season in China, with local producers focused on the domestic market, as well as the beginning of the new buying season in Latin America, which is likely in December of January.

“The ramp-up of new units in Saudi Arabia remains the main wild card for the sector,” said Guryev, “with any delays likely to push the market further into deficit.”