Advansix expects higher amsul prices yoy in Q3

US chemical producer AdvanSix expects ammonium sulfate prices to increase year over year in the third quarter on thin supply, but bearish agricultural fundamentals present a challenge for fertilizer demand.

AdvanSix started the third quarter with a "robust" summer fill program for amsul at higher price levels compared to a year earlier.

Amsul summer fill values for the Corn Belt released by the company in early July were about $55/st higher year over year.

AdvanSix will likely benefit from production outages in Texas following the landfall of Hurricane Beryl in July. Major amsul producer IOC in Pasadena shut down in preparation for the hurricane and remains offline.

The producer expects sales volumes to decline in the third quarter compared with the second, typical during the summer season. Additionally, weaker grain fundamentals could soften fertilizer demand further in the third quarter for AdvanSix.

Ample corn supplies reported by the US Department of Agriculture and falling corn prices in the US could cause farmers to further defer purchases of fertilizer. The supply-to-use corn ratio in the US is currently estimated at 14pc for the 2024-25 agricultural year, above the historical average, according to the USDA.

Longer term, AdvanSix expects agricultural demand for sulfur to grow 3-4pc/yr going forward. The company pointed towards growing recognition in the US and globally that the increase in yield from ammonium sulfate makes the fertilizer a worthwhile investment, including for soybean crops.

Total sales volumes across all product lines rose by 5pc in the second quarter on tighter supply in North America.

Revenue from ammonium sulfate was largely steady at nearly $140mn, moving up by less than 1pc from the same quarter last year.

AdvanSix continued its SUSTAIN program in the second quarter, an effort to convert more standard amsul into granular product. Over a third of the company's granular sales in the second quarter were attributed to increased granular conversion. Granular conversion at the plant reached 68pc year-to-date and is expected to reach 70pc by the end of year.

Revenue from Nylon sales increased by 11pc to $103mn, while caprolactam sales increased by 8pc to $81mn. Chemical intermediates sales increased by almost 7pc to $129mn.

AdvanSix generated $16.7mn in profits during the second quarter compared with $15.7mn a year prior.

By Meghan Yoyotte