Chemtrade Logistics Income Fund (TSE:CHE.UN) discussed its outlook for sulfur costs, capital spending at its North Vancouver facility, chlor-alkali pricing and UltraPure sulfuric acid operations during its second-quarter 2026 earnings call.
President and CEO Scott Rook said sulfur prices had risen sharply to near all-time highs, creating pressure in the company’s water solutions business. However, Chemtrade expects sulfur prices to be at or near a peak and to decline rather than continue increasing, though Rook said the timing remains uncertain.
“Every contract that’s coming on is based off of the latest high raw material profile,” Rook said. He added that Chemtrade works to raise prices as raw-material costs rise and tends to retain those price increases as input costs later fall.
North Vancouver Capital Plans and Legal Review
Management said its planned safety-related capital program at the North Vancouver site had been expected to be deployed over roughly four years, primarily during turnaround periods in 2028 and 2030. Some of the spending overlaps with regular turnaround and maintenance work, Rook said, meaning maintenance spending at the site could be lower as the project proceeds.
The company is facing an injunction-related judicial review concerning a city council decision related to the facility. Chemtrade said it expects a hearing in 2027, with a decision potentially arriving four to six months later. The timing of the ruling could affect the expected 2028 capital spending schedule.
Company representatives said part of the project would involve installing new liquefaction equipment on Chemtrade-owned land and ending use of older port-side equipment. The newer equipment is expected to require less maintenance during its initial years of operation.
Rook said Chemtrade was comfortable with its disclosed capital-cost range, while noting that the company remains in the design phase and will seek a more precise estimate after detailed engineering is completed. The company is also proceeding with requests for building permits from the district.
Management said its plan is for normal operations to continue while upgrades are completed, with minimal to no effect on the facility’s regular business cycle. Chemtrade intends to seek to join the judicial review proceeding and oppose the relief being sought. The company said it was not initially named as a respondent because the application seeks a review of the city council’s decision-making rather than actions by Chemtrade.
Second-Half EBITDA Expectations
Chemtrade maintained guidance calling for EBITDA to be approximately flat with the prior year. Management said the second half should benefit from easier comparisons in the Electrochemicals segment, where chlor-alkali prices had declined through 2025 before stabilizing more recently.
A company representative said much of the expected year-over-year normalization should occur in Electrochemicals. The Acid segment is also expected to continue outperforming the prior year, while a heavier turnaround schedule in the first half of 2026 should become lighter during the second half, according to Rook.
Looking toward 2027, Rook said water solutions should have a strong outlook based on raw-material movements and contracts currently renewing. He also cited expected contributions from UltraPure, continued strength in acid and regeneration operations, and the absence of a North Vancouver turnaround next year.
Caustic Soda and Chlorate Markets
Rook described the outlook for caustic soda pricing as a gradual and modest increase, while cautioning that the market has been volatile. He said the market has been affected by increased polyvinyl chloride production in China.
According to Rook, caustic prices rose to about C$500 per ton in May from roughly C$350 per ton or lower in the first quarter after the conflict involving Iran began, but later declined as China became more active in the market, particularly through PVC production.
On sodium chlorate, management said its volume outlook for 2026 remains generally flat, or potentially slightly ahead, and is unchanged for the rest of the year. Addressing the announced closure of Canfor’s Northwood mill, Rook said Chemtrade would not comment on individual customer arrangements but noted that some volume could potentially move to another Canfor mill.
The company also said its freight advantage associated with the Northwood site is less significant than it once was because Chemtrade discontinued sodium chlorate production at Prince George last year. It now supplies chlorate from its Brandon, Manitoba, plant and conducts some dissolving in Prince George.
UltraPure Ramp-Up
Rook said Chemtrade is increasing UltraPure sulfuric acid sales during the second half of 2026 to two advanced-node chip producers in North America. He said the company is qualified to supply acid for some of the most advanced chips produced in the region.
While management did not provide a utilization-rate forecast for the Cairo facility, Rook said the sales ramp remains on schedule and that Chemtrade expects the facility to fill up quickly through 2027 and 2028. The company is continuing work with additional potential customers and expects further qualifications during 2027.
On capital allocation, management said it continues to balance organic growth investments, distributions, share repurchases and leverage. The company said it had moderated buyback activity after leverage rose to 2.5 times following the Polytec acquisition, compared with 1.7 times when it had been repurchasing shares more aggressively.
About Chemtrade Logistics Income Fund (TSE:CHE.UN)
Chemtrade operates a diversified business providing industrial chemicals and services to customers in North America and around the world. Chemtrade is one of North America’s largest suppliers of sulphuric acid, spent acid processing services, inorganic coagulants for water treatment, sodium chlorate, sodium nitrite and sodium hydrosulphite. Chemtrade is also one of the largest producers of high purity sulphuric acid for the semiconductor industry in North America. Chemtrade is a leading regional supplier of sulphur, chlor-alkali products, and zinc oxide.
