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Business

Industrial demand boosts earnings

Dow, BASF, Covestro, DuPont say manufacturers’ need for materials drove increases in second quarter

by Melody M. Bomgardner
July 28, 2017 | APPEARED IN VOLUME 95, ISSUE 31

Second quarter results

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Broad demand for materials raises sales, earnings.

Source: Companies
.

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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