Strong tailwinds for Carbonxt (ASX:CG1) activated carbon products outline bright outlook

Highlights

• Carbonxt’s core range products are experiencing greater demand following broad strength in the US market conditions.
• The price for PAC products has risen by ~40% compared to pre-COVID trading levels.
• Supply constraints along with growing demand for activated carbon products are some of the factors contributing to the price surge.
• The ASX-listed cleantech company plans to launch a new range of activated carbon pellets for industrial liquid applications.

Carbonxt Group Limited (ASX:CG1) is cheerful about the illustrious tailwinds thriving for its core range of Powdered Activated Carbon (PAC) products with the broadening strength in the US market conditions.

The US-focused cleantech company is witnessing high demand for its flagship PAC and AC products. Consequently, the spot price for PAC is now yielding an average premium of around 40% compared to pre-COVID levels. Also, to meet the growing demand, the company is planning to launch a new range of AC pellets soon.

CG1 shares gained 5.4% to trade at AU$0.195 on 01 June 2022, triggered by the update on upbeat trading conditions in the activated carbon products space.  

The encouraging market conditions have led to other positive trends for the entire suite of products hosted by Carbonxt. It has given way to a high-spirited outlook for the company by building high prospects for fresh client associations as well as renewals for existing customers.

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Exalted demand for Carbonxt’s PAC products

With the economic rebound from COVID-19, the overall demand for powdered activated carbon (PAC) products of the company has surged. There has been a rise in prices primarily due to increasing costs for raw materials, shipping, utilities, and labour. Also, there has been a price hike and unavailability of carbon products that were imported from outside North America.

The company is anticipating that the supply/demand factors that have caused the material uplift in PAC prices across the US markets will stay in place over the short-to-medium term.

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Carbonxt preps up to introduce a new range of AC Pellets

Image source: Company website

Carbonxt has hit another milestone with the development of a variety of new carbonised pellets. The new range has been designed for industrial liquid applications.

The manufacturing of the new pellet range is expected to begin in the month of June at the production facility based in Arden Hills, Minnesota.

The company is carrying out contract negotiations for its carbonised pellets that are manufactured at its new ACP facility in Kentucky. The facility is likely to become operational in early 2023. It will be a significant step to meet the near-term demands of its growing customer base.

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Carbonxt well poised to tap the opportunities

The positive uptake in market conditions for AC pellets will boost medium-term demand conditions for the company’s core verticals. Carbonxt is expecting price hike for ACP products as well as sustained uplift in the near future.

Overall, the company is gearing up to fulfil its commitment for the initial orders with profitable per-unit economics by adopting and implementing a flexible supply strategy. It is expecting a substantial rise in margin growth with the beginning of operations at its Kentucky production facility.

“It’s pleasing to continue the execution of our longer-term operational strategy amid these broader tailwinds for the sector, with a material uplift in the price point for established cleantech solutions proving to be sticky into the second half of the year.”

He further said, “With strong revenue momentum into the second half of the year, Carbonxt is well-placed to benefit from a step-change in growth once the new Kentucky facility is operational in early 2023.”

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