Epoxy
November 4, 2020
German Auto Update
German automotive improves but recovery may stall as second wave hits
Author: Morgan Condon
2020/11/04
LONDON (ICIS)–The German automotive sector performed better in October but the pace of recovery could stall before the end of the year, according to data from the Ifo Institute.
Newly imposed lockdowns in major European economies, including Germany, caused automotive industry’s expectations to decline for the fourth consecutive month as the restrictions could weigh heavily on economic activity.
However, current sentiment among automotive players increased to -0.2 points in October, up sharply from -20.4 points in September.
Both figures are up from the record low of -86.2 points posted in April.
Capacity utilisation rose to 86% in October, rising significantly from levels of 73% in July.
Companies are still planning to increase production, although at a more modest rate than in September.
Increased demand from the automotive sector has led to improved sentiment across various chemicals markets.
An upward tick in demand has provided some buoyancy for markets including polyethylene (PE), polymethyl methacrylate (PMMA), caprolactam (capro), methylene chloride (MEC), nylon, and toluene diisocyanate (TDI).
This has given some traction to chemicals producers; Germany’s Evonik said this week September demand for its materials, including from automotive, had been healthy.
“Replacement products like silica for tyres have led the way in the recovery but also nylon 6,6 has shown improving trends towards the end of the third quarter,” said Evonik’s CEO Christian Kullmann in a call with analysts.
The strength of automotive manufacturing was key in boosting sales in the specialty producer’s Smart Materials business unit.
Equity chemicals analysts at Baader Bank said Evonik’s Smart Materials division had “demonstrated stability” in inorganics such as hydrogen peroxide (H2)2) or catalysts.
“And [Evonik] benefited from improving trends in the automotive-related businesses.” said analyst Markus Mayer.
DRIVING FORCE
According to data from the European Automobile Manufacturers’ Association (ACEA), September was the first month to stem losses on the previous year, with an 8.4% increase compared to the same time a year prior.
Newly registered cars in Germany increased 5% in September, compared to the previous year, but this was not a boon to domestic industry as it was driven by demand for hybrid and electric vehicles (EVs).
While German manufacturers have some models available, there is a wider range from producers based in other countries.
Expectations declined for the fourth consecutive month in October, down sharply from 27.6 points in September to 17.7 points as new mobility restrictions kick in across Europe.
Order backlogs also shrank from September’s unusually high level of 51.5 points, down to 29.2 points in October.
Ifo’s research showed automobile manufacturers in Germany are looking to make further staff reductions.
CHANGING LANES
Although the domestic market may be suffering, Germany’s automotive industry is mainly reliant on exports.
Ifo said 74.8% of vehicles produced in 2019 were exported.
Dynamics for the export market are also expected to soften in coming months, falling from 31.3 points to 23.2 points in October.
Export demand already dropped 34% in January-September, year on year, with further losses prevented by more solid demand for German vehicles in China.
In 2019, China was the third largest export market for German producers, behind the UK and the US.
However, the course of the pandemic, hitting both the UK and the US hard, may erode the recovery.
“While the main European customer countries the UK, France, Italy or Spain, and also the US, are still firmly in the grip of the corona pandemic, the demand for German cars in China is picking up again noticeably,” said Ifo’s head for industrial organisation Oliver Falck.
Despite the challenges facing the automotive industry, German – and indeed European – chemicals makers could feel less impact as they are not confined to selling automotive materials and parts to domestic markets.
Buoyant demand in China and gradual recoveries in other regions could keep the automotive industry on stable ground to close off 2020.
However, as the pandemic can change course quickly, uncertainty is set to be the reigning trend for the time being.
Front page picture: Assembly line at a Volkswagen plant in Zwickau, east Germany
Source: Jens Meyer/AP/Shutterstock
Focus article by Morgan Condon
November 3, 2020
Propylene Update
October chemical grade propylene settled on the 28th up 0.5 cents/lb to $0.35/lb.
November 3, 2020
Propylene Update
October chemical grade propylene settled on the 28th up 0.5 cents/lb to $0.35/lb.
November 2, 2020
Tosoh Results
Tosoh Reports Its Consolidated Results for Fiscal 2020
October 30, 2020 –
Tokyo, Japan—Tosoh Corporation is pleased to announce its consolidated results for the first half of fiscal 2021, from April 1, 2020, to September 30, 2020.
The company’s consolidated net sales amounted to ¥328.5 billion (US$3.1 billion), down ¥67.9 billion, or 17.1%, from the same period a year earlier. The decrease was attributable to a contraction in global demand caused by the spread of the coronavirus and to the resulting decline in overseas market conditions for naphtha and other products.
Operating income also decreased, ¥22.8 billion, or 56.3%, over the same period the preceding year, to ¥17.6 billion (US$164.6 million). Lower sales volumes, worsening trade conditions as declining sales prices exceeding the impact of lower raw material and fuel prices, and a deterioration in the difference between product receipt and payment contributed to the decrease in operating income.
Ordinary income was ¥18.0 billion (US$168.4 million), a decrease of ¥23.9 billion, or 57.1%, compared with the first half of fiscal 2020. Profit attributable to owners of the parent company totaled ¥11.7 billion ((US$109.4 million), a decrease of ¥15.1 billion, or 56.3%, over the same term the previous year.
During the period under review, the spread of the coronavirus brought about restrictions on economic and social activities and rapid declines in demand domestically and abroad. These conditions led to a rapid decline in both Japanese and global economies. As for the global economy, China, which resumed economic activity early, is experiencing an economic recovery. However, the number of infections continues to rise in Europe, the United States, and emerging countries. And the pace of recovery in demand varies by region, due to the different timing and extent of easing of restrictions on economic activity, as well as to regional economic measures. Given this, prolonged economic stagnation remains a concern.
Results by Business Segment
Chlor-alkali Group
The Chlor-alkali Group’s net sales decreased ¥28.4 billion, or 19.3%, to ¥119.0 billion (US$1.1 billion). Its operating income likewise fell, ¥10.3 billion, or 91.6%, to ¥0.9 billion (US$8.4 million), on account of the decline in sales prices exceeding the impact of lower raw material and fuel prices, as well as decreased shipments of urethane raw materials and polyvinyl chloride (PVC) resin.
An increase in production volume led to an increase in shipments of caustic soda, primarily for export. And product prices fell, reflecting the deterioration in overseas market conditions. Shipments of vinyl chloride monomer (VCM) rose in line with an increase in production volume, and worsening market conditions abroad and falling naphtha prices exerted downward pressure on product prices. The spread of coronavirus infection suppressed demand for PVC resin both domestically and overseas, leading to a decrease in shipments. And worsening market conditions abroad caused product prices to fall.
Domestic shipments of cement decreased due to sluggish demand.
Domestic and export shipments of methylene diphenyl diisocyanate (MDI) fell due to the impact of the coronavirus. Moreover, product prices fell, reflecting the decline in overseas markets. Shipments in Japan and abroad of hexamethylene diisocyanate (HDI) hardeners decreased as the spread of the coronavirus suppressed demand.
Specialty Group
Compared with the first half of the previous fiscal year, net sales by the Specialty Group decreased ¥7.5 billion, or 8.0%, to ¥86.7 billion (US$811.0 million). The group’s operating income also decreased, 26.5%, or ¥4.1 billion, to ¥11.3 billion (US$105.7 million). The decreases in net sales and operating income resulted from lower sales volume caused by the spread of the coronavirus.
The decline in demand brought about by the spread of the coronavirus led to a decrease in ethyleneamine domestic shipments.
Among the Specialty Group’s separation media-related products, shipments of packing materials for liquid chromatography, mostly to Europe and the United States, increased. Diagnostic-related product shipments, especially of in vitro diagnostic reagents bound for Europe, the United States, and China, fell due to sluggish demand attributable to the spread of the coronavirus.
Shipment of high-silica zeolites, mainly for automotive exhaust gas catalyst applications, decreased due to flagging demand caused by the coronavirus. Shipments of zirconia for decorative applications, however, increased. Shipments of quartz glass likewise increased, buoyed by a robust semiconductor market.
November 2, 2020
Tosoh Results
Tosoh Reports Its Consolidated Results for Fiscal 2020
October 30, 2020 –
Tokyo, Japan—Tosoh Corporation is pleased to announce its consolidated results for the first half of fiscal 2021, from April 1, 2020, to September 30, 2020.
The company’s consolidated net sales amounted to ¥328.5 billion (US$3.1 billion), down ¥67.9 billion, or 17.1%, from the same period a year earlier. The decrease was attributable to a contraction in global demand caused by the spread of the coronavirus and to the resulting decline in overseas market conditions for naphtha and other products.
Operating income also decreased, ¥22.8 billion, or 56.3%, over the same period the preceding year, to ¥17.6 billion (US$164.6 million). Lower sales volumes, worsening trade conditions as declining sales prices exceeding the impact of lower raw material and fuel prices, and a deterioration in the difference between product receipt and payment contributed to the decrease in operating income.
Ordinary income was ¥18.0 billion (US$168.4 million), a decrease of ¥23.9 billion, or 57.1%, compared with the first half of fiscal 2020. Profit attributable to owners of the parent company totaled ¥11.7 billion ((US$109.4 million), a decrease of ¥15.1 billion, or 56.3%, over the same term the previous year.
During the period under review, the spread of the coronavirus brought about restrictions on economic and social activities and rapid declines in demand domestically and abroad. These conditions led to a rapid decline in both Japanese and global economies. As for the global economy, China, which resumed economic activity early, is experiencing an economic recovery. However, the number of infections continues to rise in Europe, the United States, and emerging countries. And the pace of recovery in demand varies by region, due to the different timing and extent of easing of restrictions on economic activity, as well as to regional economic measures. Given this, prolonged economic stagnation remains a concern.
Results by Business Segment
Chlor-alkali Group
The Chlor-alkali Group’s net sales decreased ¥28.4 billion, or 19.3%, to ¥119.0 billion (US$1.1 billion). Its operating income likewise fell, ¥10.3 billion, or 91.6%, to ¥0.9 billion (US$8.4 million), on account of the decline in sales prices exceeding the impact of lower raw material and fuel prices, as well as decreased shipments of urethane raw materials and polyvinyl chloride (PVC) resin.
An increase in production volume led to an increase in shipments of caustic soda, primarily for export. And product prices fell, reflecting the deterioration in overseas market conditions. Shipments of vinyl chloride monomer (VCM) rose in line with an increase in production volume, and worsening market conditions abroad and falling naphtha prices exerted downward pressure on product prices. The spread of coronavirus infection suppressed demand for PVC resin both domestically and overseas, leading to a decrease in shipments. And worsening market conditions abroad caused product prices to fall.
Domestic shipments of cement decreased due to sluggish demand.
Domestic and export shipments of methylene diphenyl diisocyanate (MDI) fell due to the impact of the coronavirus. Moreover, product prices fell, reflecting the decline in overseas markets. Shipments in Japan and abroad of hexamethylene diisocyanate (HDI) hardeners decreased as the spread of the coronavirus suppressed demand.
Specialty Group
Compared with the first half of the previous fiscal year, net sales by the Specialty Group decreased ¥7.5 billion, or 8.0%, to ¥86.7 billion (US$811.0 million). The group’s operating income also decreased, 26.5%, or ¥4.1 billion, to ¥11.3 billion (US$105.7 million). The decreases in net sales and operating income resulted from lower sales volume caused by the spread of the coronavirus.
The decline in demand brought about by the spread of the coronavirus led to a decrease in ethyleneamine domestic shipments.
Among the Specialty Group’s separation media-related products, shipments of packing materials for liquid chromatography, mostly to Europe and the United States, increased. Diagnostic-related product shipments, especially of in vitro diagnostic reagents bound for Europe, the United States, and China, fell due to sluggish demand attributable to the spread of the coronavirus.
Shipment of high-silica zeolites, mainly for automotive exhaust gas catalyst applications, decreased due to flagging demand caused by the coronavirus. Shipments of zirconia for decorative applications, however, increased. Shipments of quartz glass likewise increased, buoyed by a robust semiconductor market.
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