Annual Report 2012

Seasonal fluctuations and fertiliser demand cycle

Seasonal fluctuations and the cycle of demand on the global fertiliser market are key risk factors for the industry. A fertiliser producer’s operating and financial results are directly influenced by its ability to adequately apportion product flows based on the intensity of agricultural activity in various regions of the world.

Acron Group supplies products to 60 countries on multiple continents, ensuring year-round capacity utilisation and independence from the sowing season in any particular region. With a clear understanding of key markets’ features, proper supply planning, long-term agreements and maintenance shutdowns restricted to the low season, the Group is able to minimise the impact of seasonal factors on its operating results.

Performance of key sales markets

China (Russian export and Hongri Acron sales)

China generates almost year-round demand for complex fertilisers, which allows for ongoing intense capacity utilisation at Hongri Acron facility in China and active supplies from Russia to the Chinese market. In 2012, the Group accounted for 30% of NPK imports to China.

Europe

The European mineral fertiliser market creates stable demand, with peak activity in H2. The wide range of supplied products and short transportation distance make the Group’s products attractive and competitive for European customers.

Latin America

Brazil, Argentina, Peru and Mexico are the major fertiliser consumers in the region. The climate in these countries allows farmers to harvest on average 2-3 times a year. As a result, Latin American consumers acquire fertilisers most of the year, with demand peaking in May-August.

Over the years, the high quality of Acron Group’s products has turned the corporate trademark into a quality standard. Long-term contracts for future delivery considerably mitigate demand cycle risks.

The US and Canada

The US generates year-round demand for nitrogen fertilisers, specifically UAN, with several peak seasons. The Group accounts for roughly 20% of aggregate UAN imports to the US and 90% of imports to Canada.

Southeast Asia

Asia is the key market for the Group’s NPK sales. The region sees intense agricultural activity during almost the entire calendar year. Consumer demand reaches its peak in H1, and sales under long-term contracts are made throughout the year.

The Group sees a great deal of promise in the Asian market and seeks to expand its sales in Asia. Acron Group’s share of NPK imports to Thailand in 2012 was over 55%.

CIS

In the CIS market, demand is very seasonal, with active sales in H1. The Group’s Russian production assets are located near its biggest CIS buyers, Ukraine and Belarus, ensuring minimal transportation costs and contributing to the competitiveness of Acron’s products.

Russia

Fertiliser sales in the Russian market are seasonal, peaking in February-May and November-December. With its own distribution network, which forms considerable stock reserve in the high season, the Group is the third largest fertiliser supplier in Russia.

Africa and other regions

Today, the percentage of supplies to Africa is not large and does not produce a significant effect on the general marketing policy; however, the Group has been gradually increasing fertiliser sales in this market.

Seasonal diversification of Acron Group sales
(quarterly indices calculated as a share of a maximum shipment to the region in that period)

Region Q1 Q2 Q3 Q4 Main products
China (Russian exports)         NPK
China (Hongri Acron sales)         NPK, bulk blends
Europe         Ammonia, AN, NPK, bulk blends, UAN
Latin America         AN, NPK, urea, UAN
The US and Canada         UAN, AN
Southeast Asia         NPK
CIS         NPK, AN
Russia         NPK, AN, industrial products
Africa and others         AN, urea

 

Back to top