Our priority remains to optimize free cash flow generation and we remain committed to our financial policy to deleverage towards 2x through the cycle. We demonstrated healthy free cash flow conversion in the first half of this year despite the difficult macro environment, but timing to achieve our targets remains dependent on selling prices, as we continue to focus on operational and commercial excellence and volume growth.
We maintain our forecast that we are on track to deliver robust volume growth in 2020. As we reach our run-rate production, we expect to benefit from a further step-up in volumes in 2021 compared to 2020. We expect this particularly in methanol, where we have finalized major turnarounds at OCI Beaumont in February and in the Netherlands in June.
In addition, we continue to optimize our capital structure to identify further cost-effective refinancing opportunities as demonstrated by a $385 million refinancing at Fertiglobe. We are ahead of plan in generating commercial synergies at Fertiglobe, and we will now also achieve significant interest savings for the group. This debut financing for Fertiglobe will reset the capital structure and centralise some of the operating company debt at the Fertiglobe holding level. We are pleased that the facility has attracted strong interest from the capital markets and will achieve a low interest rate, reflecting the leading competitive position of Fertiglobe and its healthy balance sheet.“
Outlook
Nitrogen
The outlook for nitrogen fertilizers for the remainder of the year and into 2021 is looking considerably more favourable than a few months ago:
Demand in several importing countries is expected to remain healthy, including South Asia, Latin America, East Africa and Australia
The outlook for the US has strengthened recently as the downward revision of corn acreage by the USDA has reduced expected corn stocks and the outlook for corn demand has strengthened as ethanol markets recover. In addition, global demand for corn has increased driven by purchases from China
We are anticipating a favourable fall application season in the US given the rapid pace of planting this spring and the maturity of the current corn crops, allowing for a potentially extended application window before winter
Following a record quarter for our calcium ammonium nitrate (CAN) volumes in Q2, our order book in Europe is looking healthy. Going forward, we expect nitrate prices to be supported by healthy demand and room to catch up with increases in urea prices
Higher domestic urea prices and demand in China, combined with temporary capacity shutdowns due to COVID-19 in China during the first half of 2020 limited the amount of urea available for export; full year Chinese exports are expected to be lower than in 2019
Industrial nitrogen markets have been weak in Q2 2020 as a result of GDP/industrial activity slowdown, but are showing signs of recovery:
Global ammonia prices have lagged urea as a result of weak industrial demand, but should benefit from a recovery in industrial markets, with further support from curtailment of high-cost capacity and the recent increase in natural gas prices
The fuel ethanol market in the US is recovering from trough conditions
Demand for Diesel Exhaust Fluid (DEF) in the US has also increased significantly recently with the rebound of road traffic, and IFCo is reaching record shipments at increasing pace in Q3 so far
Melamine demand in our core European markets is improving