Outlook for ammonium sulphate remains bright through Q2 – AdvanSix
HOUSTON (ICIS)–The outlook for ammonium sulphate should remain bright through the peak of the demand season in the second quarter, the CEO of US producer AdvanSix said on Friday.
Cold and wet weather will delay the start of the season in the US, but the later start should not lower demand for ammonium sulphate, said Erin Kane, AdvanSix CEO. She made her comments during an earnings conference call.
AdvanSix sells about 75% of its fertilizer domestically to US customers.
AdvanSix makes the fertilizer along with caprolactam (capro) and ammonia at its Hopewell site in the US state of Virginia. Its capacity for ammonium sulphate is 3.4bn lb/year (1.5m tonnes/year) making it the world’s largest single-site producer of the fertilizer.
Higher prices for energy are supporting those for fertilizer, Kane said. In Europe, those high prices are limiting production, Kane said. Some countries have imposed restrictions on exports such as Russia and China, which is further limiting supplies.
The war between Russia and Ukraine has disrupted wheat shipments from those countries, which rank among the world’s largest exporters of the grain.
Meanwhile, corn futures are near $8/bushel and cotton is close to $1.50/lb, she said.
Kane described the conditions for ammonium sulphate as the best that the company has seen in a decade.
She cited estimates from the University of Illinois, which indicate that profits for corn and soybeans remain positive despite the rise in input costs.
In all, conditions point to farmers planting more grain in the next season, which should increase demand for fertilizer, she said.
Ammonium sulphate represents more than 30% of the sales of AdvanSix and more than half of its sales volumes.
Trinseo also noted improving demand for ammonium sulphate. It makes about 180,000 tonnes/year of the fertilizer in Europe as a by-product to its methyl methacrylate (MMA) production, which relies on a C3 MMA process.
Prices for acetone have started to increase because of the completion of turnarounds for plants that make methyl methacrylate (MMA), Kane said.
During the first quarter, Dow conducted a turnaround at its MMA plant in Deer Park, Texas.
Mitsubishi Chemical Methacrylates (MCM) completed a turnaround at an MMA plant in Tennessee during the first half of April.
AdvanSix also makes acetone and phenol as well as alpha methylstyrene (AMS) at its plant in Frankford plant in Philadelphia, Pennsylvania.
Healthy demand should continue for those other products, Kane said.
The first-quarter strength in nylon has continued into the second quarter, Kane said. In North America, demand remains healthy and supplies remain tight.
The recovery in commercial construction is supporting demand for nylon used to make carpet fibre, she said. Demand for packaging remains steady and engineered resins remain resilient.
She did note more impacts from shortages in glass fibre and additives for nylon used in automobiles.
AdvanSix makes nylon 6 at its Chesterfield plant in Chester, Virginia.
AdvanSix expects sales volumes to grow in the second quarter from the first quarter. For the year, earnings should rise significantly due, in part, to ammonium sulphate.
AdvanSix did not provide a specific earnings guidance in its first-quarter earnings release.
Shares in the company were trading slightly higher midday while the general stock market was down.
Additional reporting by Tarun Raizada