Industrial demand boosts earnings | July 31, 2017 Issue - Vol. 95 Issue 31 | Chemical & Engineering News
Volume 95 Issue 31 | p. 14 | News of The Week
Issue Date: July 31, 2017 | Web Date: July 28, 2017

Industrial demand boosts earnings

Dow, BASF, Covestro, DuPont say manufacturers’ need for materials drove increases in second quarter
Department: Business
Keywords: finance, materials, manufacturing, industrial biotechnology, polurethane, polycarbonate

Second quarter results

Broad demand for materials raises sales, earnings.

Source: Companies
Table shows percent change in sales and earnings at leading chemical companies in the second quarter of 2017.

Second quarter results

Broad demand for materials raises sales, earnings.

Source: Companies

Chemical firms reporting second-quarter earnings say manufacturers are demanding more materials of all kinds than they did a year ago. The theme marks a shift from 2016, when consumer markets drove earnings growth.

“Global economic activity is increasing, with notable strength in manufacturing, investment, and trade,” commented Dow Chemical CEO Andrew N. Liveris. Dow hiked prices 5% in the quarter and saw sales volumes rise 3% on strong demand for performance materials, plastics, and consumer chemicals.

Performance products, including dispersants and pigments, helped drive sales and earnings higher at BASF. Growth in demand for polyurethane intermediates and a rebound in performance products powered Huntsman Corp.’s earnings, which rose almost 65%.

At DuPont, volumes grew by 6% on favorable market conditions for electronic chemicals, performance materials, and materials for safety and protection. In a conference call with investors, CEO Ed Breen said DuPont’s industrial biosciences business was buoyed by increasing demand for Sorona polymers. In addition, volumes rose 8% in the agriculture segment, due in part to higher demand for crop protection chemicals.

Industrial buyers heated up the second quarter at Covestro, the former materials business of Bayer. The company said strong demand and constrained supply of intermediates caused polyurethane and polycarbonate prices to rise. As a result, earnings more than doubled to $568 million compared with the prior-year quarter. Covestro reported it is investing in additional plant capacity in Shanghai and other locations.

“We want to continue to take advantage of the ongoing robust demand for our products as much as we can,” said Markus Steilemann, Covestro’s chief commercial officer.

Similarly, Celanese saw demand grow in its acetyls and materials businesses, spurring it to raise earnings expectations for the year.

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