The chemical industry suffered through a brutal second quarter as inflation and high energy prices crimped European demand for chemicals, and China struggled to rev up its economy. Some companies are resorting to shutting down plants as sales and earnings slip.
The German chemical maker Lanxess, which posted a loss for the quarter, aims to cut costs by about $110 million in the short term through measures like a hiring freeze in Europe. It also aims to cut roughly $165 million in annual structural costs by 2025.
The plan includes stopping hexane oxidation at its site in Krefeld-Uerdingen, Germany, by 2026. “The plant is not competitive due to the high energy intensity and due to the lagging demand,” CEO Matthias Zachert told analysts on a conference call.
Lanxess is also looking to sell its chromium oxide plant at the same location but will shutter the facility if it doesn’t find a buyer. The product is used as a pigment in the construction and ceramic industries.
“I’ve never seen construction in my professional life as bad as it is right now,” Zachert said.
Trinseo also posted a loss for the quarter and saw sales decline more than 32% versus the same quarter last year.
The US company plans to close its styrene plant in Terneuzen, the Netherlands, and has begun negotiations with the local works council. Last year, the company began shutting its styrene plant in Böhlen, Germany.
“With the elevated energy costs in Europe, styrene production in the region is some of the highest cost in the world,” Trinseo CEO Frank Bozich said during a conference call. He said the firm can buy styrene more cheaply than it can make it.
Chemours is closing at its titanium dioxide plant in Kuan Yin, Taiwan. After charges of about $150 million related to decommissioning the plant, the move will yield annual cost savings of $50 million.
During the quarter, Chemours’s sales fell 14%, while its profits dropped 45%.