July 16, 2012

 

Russia's Acron fertiliser output down in Q2 due to pricing dispute

 

 

Due to a pricing dispute with the supplier of a key component, Russia's Acron said on Friday (July 13) that domestic production of the company's main complex fertiliser fell by a third in the second quarter.

 

The Russian division of the company slashed production of nitrogen, phosphorus and potassium (NPK) fertiliser by roughly 30% in the second quarter, compared to the first three months of 2012, as supply of apatite concentrate, a key ingredient for its multiple-nutrient fertiliser production, fell short.

 

"This trend continues in the beginning of the third quarter as apatite concentrate supplies to Dorogobuzh have not been resumed and the complex fertiliser operations have been idle to date," Acron's acting Chief Executive Alexander Popov said in a statement.

 

The company has experienced cuts in the supplies of apatite concentrate from Apatit, after supplies were halted over a price dispute with Russian fertiliser group Phosagro, Apatit's owner.

 

Despite domestic challenges, Acron is currently looking to acquire Poland's Tarnow and has raised its bid to PLN1.96 billion (US$566.58 million) for the state-run chemical firm.

 

Acron's first-half total production output, however, was up 7% to 3.11 million tonnes from 2.9 million tonnes a year ago, largely supported by its nitrogen segment, which grew 16% in the first six months of 2012 to 1.42 million tonnes from 1.23 million tonnes a year ago.

 

"Losses from the forced shutdown of complex fertiliser operations were partially offset by conversion to nitrogen fertiliser production," Popov said.

 

Acron's Chinese Hongri asset also showed high operating results, boosting complex fertilisers output by 24% in the first six months of 2012.

 

Despite the domestic production setback, Acron remains upbeat on the global trends saying market conditions "remain predictable".

 

"The pricing environment is sustainable and currently supported by growing prices for agricultural commodities and strong demand for fertilisers from developing markets," Popov said.

 

Acron, which is one of Europe's top 10 mineral fertiliser groups, has assets in Canada, China, Estonia and Russia.