Russia’s PhosAgro to focus on new ammonia, urea production in 2017

LONDON (ICIS)–PhosAgro will focus on new production in 2017 which is very important for its future growth, the Russia-based fertilizer producer said on Monday.

Speaking to ICIS in London at a press roundtable, CEO Andrey Guryev said that the company will continue to show further optimisation of business processes, which it expects will give a 5-10% growth in volume this year.

PhosAgro is on track to finalise its new 500,000-tonne/year granulated urea line at Cherepovets, Russia in August/September.

The product will be earmarked for the export market which is planned to be sold on a spot basis. Most of the volume is likely to go to its distribution network in Europe and also sold to Latin America.

Guryev said that PhosAgro is launching granular urea, which has big added value for the company.

Moreover, the ammonia production facility at Cherepovets is on track to be commissioned end August and the first ammonia will be received end May/June. It will produce 760,000 tonnes/year, 500,000 tonnes of which is planned to be used internally at PhosAgro-Cherepovets, while the rest will be supplied to Balakovo either directly or through a swap scheme with other producers.

The producer will also focus on its sales strategy and further expansion in Europe, Russia, CIS in touch with premium markets eastern Europe, Poland, Ukraine as Europe, Latin America business is a priority.

Guryev said: “Europe and Latin America business is a priority; especially Europe, which is a natural market for PhosAgro due to the logistics advantage compared to competitors”.

He added that the company plans to increase its DAP sales to Europe for fertilizer blending.

PhosAgro is also planning to expand the grades of nitrogen, phosphorous, potassium (NPK) fertilizers and production volumes of NPS/NPKS at its Metachem plant.

The company continues to expand the share of NP/NPK in its portfolio and aims to reach premium markets.

At the moment, Metachem has an annual production of 100,000 tonnes of NPK. The main exporting country is Brazil where the NPKs are used for the soybeans and corn crops.

Guryev remains optimistic about 2017 despite the threat of oversupply, with both Morocco’s OCP and Saudi’s Ma’aden plants coming onstream this year.

He added that the extra supply will be offset by demand in Latin America which is expected to remain at levels of 2016 which was a record year.

PhosAgro posted a 64% increase year on year in net profit in 2016 on the back of higher sales, stronger domestic demand and currency tailwinds.

The domestic market saw last year a growth of 16% on all fertilizers which was the largest growth seen recently. PhosAgro supplied 2.1m tonnes in 2016, with a 27% share of the market.

PhosAgro sold 400,000 tonnes of third-party product to the domestic market and MAP/DAP deliveries to domestic market have a 69% share of the market, with NPK at a 55% share.

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