All posts by jlarareo@bloomberg.net

EU to Start Collecting Greenhouse Emissions Data

News Briefs

Beginning May 10, the European Union started gathering data to assign a fee for carbon and other greenhouse gas emissions on imported goods. The so-called Carbon Border Adjustment Mechanism (CBAM) will be phased in during the next 10 years.

The CBAM is designed to ensure the carbon price for imports is equal to that of EU-produced material. Companies importing fertilizers and other goods will need to begin reporting direct and indirect emissions of their goods beginning Oct. 1. The reporting process will end Jan. 31, 2024.

After the initial reporting period, the EU will analyze the data and come up with an appropriate carbon tax. The system is designed to go into effect in January 2026. At that time, importers will declare their imports of the previous year and the estimated greenhouse gas emissions related to those imports. Carbon-tax certificates will be calculated from weekly auction prices in Euros per CO2 metric tons emitted.

Initial collection of data will include fertilizers, cement, and electricity.The plan calls for most industries to be included in the CBAM by 2030.

AdvanSix 1Q Income Off Versus Year-Ago Record Quarter

Earnings, Indicators

AdvanSix reported a 44% drop in first-quarter net income, to $35 million on sales of $400.5 million, compared with the year-ago record quarter’s $63.1 million and $480 million, respectively. Adjusted EBITDA was $65.4 million, down from $103.2 million.

“As a diversified chemistry company, our first quarter performance reflects the resilience of our business model and our team’s ability and commitment to perform through various economic and industry conditions,” said Erin Kane, AdvanSix President and CEO. “We delivered solid earnings results in the current macro environment and against a record first quarter in the prior year period.”

“Our performance was achieved in an environment that saw nitrogen fertilizer pricing reset amid lower energy costs and improved supply,” she added. “While down from last year’s peak levels, ammonium sulfate value pricing remains robust and we continue to be well positioned to serve our key plant nutrients customers as the season progresses. While headwinds in consumer durables and building and construction end markets persist across portions of our nylon and chemical intermediates portfolio, North American acetone supply and demand continues to be balanced supporting our performance. With confidence in the health of our balance sheet, we continued to deploy a significant amount of capital through increased capital expenditures and $18 million of cash returned to shareholders in the form of share repurchases and dividends.”

The company said sales volume decreased approximately 9%, driven by cautious buying behavior for ammonium sulfate ahead of the start of the domestic planting season as a result of significant pricing declines year-over-year. Market-based pricing was unfavorable by 6% compared to the prior year primarily reflecting lower ammonium sulfate pricing. AS represented 28% of total sales for the quarter versus the year-ago 32%.

The company also cited soft end market demand, particularly in consumer durables and building and construction impacting portions of its nylon and chemical intermediates product lines. 

AdvanSix expects strong underlying agriculture and fertilizer industry fundamentals to continue through the domestic planting season. It anticipates improvement in second-quarter AS domestic sales volume in a lower nitrogen and raw material pricing environment.