October 20, 2022

Imports to West Coast Continue to Fall

Container imports to Los Angeles and Long Beach are plummeting

Port of LA imports haven’t been this low in September since 2009

Greg Miller Follow on Twitter Wednesday, October 19, 2022

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September is usually a strong month for West Coast imports as U.S. companies bring in their year-end holiday goods. Not so in 2022.

On Wednesday, the Port of Los Angeles reported its lowest import total for September since 2009, amid the Great Recession. The day before, the neighboring Port of Long Beach posted its weakest import total for September since 2016.

Imports to Southern California ports are falling fast because shippers have shifted volumes to East and Gulf coast ports, fearing disruptions from West Coast port labor negotiations. Simultaneously, volumes are now pulling back nationwide due to falling demand.

Holiday imports ‘dropped precipitously’

“In the month of September is where the real story lies,” explained Gene Seroka, executive director of the Port of Los Angeles, during a news conference on Wednesday. 

Earlier this year, imports of durable goods bought heavily during the pandemic — furniture, appliances, etc. — began pulling back. In September, declines were heavily driven by reductions in holiday goods, as well.

“September is traditionally a high-volume month for end-of-year products,” said Seroka. “Think toys and games, clothing, footwear and other products. Those holiday gift items dropped precipitously compared to last September, mainly because they came in earlier. This year our peak season was in June and July, as savvy importers moved up the arrival of these goods to bring some certainty back to when they could get to market.”

Commenting on the shift to East and Gulf coast ports, Seroka said “concern over the dockworkers labor contract negotiations [was] a major factor contributing to volume declines.” He believes the shift “is likely to continue until a West Coast labor contract is in place — and that can’t happen soon enough.” The previous contract expired July 1.

Asked by American Shipper how October’s volumes are shaping up versus September’s, he said they will be “probably about the same or a little bit lighter. It’s going to be a soft October.”

LA September imports down 15% vs. August

The Port of Los Angeles reported total throughput of 709,873 twenty-foot equivalent units in September, down 21.5% year on year (y/y). Exports came in at 77,680 TEUS, up 2.6% y/y, while empties totaled 288,731 TEUs, down 19.8% y/y.

Loaded imports to Los Angeles totaled just 343,462 TEUs, down 26.6% y/y. Imports fell 15.1% sequentially versus August, following a 16.7% drop in August versus July.

Los Angeles’ imports reached their highest level this year in May. September imports were down 31.3% compared to that month. Imports in September were the lowest for any month since May 2020, when the U.S. was in the midst of COVID-19 lockdowns.

Long Beach September imports down 11% vs. August

The Port of Long Beach reported total throughput of 741,823 TEUs for September, down 0.9% y/y. Exports came in at 112,940 TEUs, up 1.9% y/y, and empties totaled 286,212 TEUs, up 7% y/y.

Long Beach handled 342,671 TEUs of imports in September, down 7.4% y/y and down 10.9% sequentially versus August. As in Los Angeles, Long Beach’s imports peaked this year in May. September was down 27.5% from that high. Monthly imports have not been this low since June 2020.

Port of Long Beach Executive Director Mario Cordero blamed the import decline on consumer and retail concerns about inflation, “leading to warehouses filled with inventory and fewer product orders from Asia.”

Fewer ships being worked at berths

The focus during the supply chain crisis was on the massive number of container ships at anchorages or loitering offshore as they waited for berths in Los Angeles or Long Beach. Statistics from the Marine Exchange of Southern California show a steep drop throughout this year, from a high of 109 waiting container ships Jan. 9 to just four on Wednesday, the lowest number since October 2020.

The Marine Exchange also collects data on the number of container ships at the berths in the two ports. This data also shows a major — and more recent — change.

As the supply crisis intensified, there were often over 30 ships at the two ports’ berths each day. Between August 2021 and February 2022, there were an average of 28.8 container vessels alongside in Los Angeles and Long Beach daily.

In recent weeks, however, the numbers have sunk to much lower levels. The average from Sept. 1 through Tuesday was 19 ships alongside, down over 30% from peak levels. There were 18 ships at the ports’ berths Tuesday. There were only 10 ships alongside on Sept. 12.

This is getting closer to pre-COVID levels. The average number of ships at the ports’ berths daily in full-year 2019 was 14.8.

Click for more articles by Greg Miller 

October 20, 2022

Dow Quarterly Results

Dow reports third quarter 2022 results

Oct. 20, 2022 6:00 AM ETDow Inc. (DOW)

MIDLAND, Mich., Oct. 20, 2022 /PRNewswire/ — Dow (NYSE: DOW):

FINANCIAL HIGHLIGHTS

• GAAP earnings per share (EPS) was $1.02; Operating EPS¹ was $1.11, compared to $2.75 in the year-ago period and $2.31 in the prior quarter, reflecting margin compression due to higher energy costs, primarily in Europe, the Middle East, Africa and India (EMEAI).
• Net sales were $14.1 billion, down 5% versus the year-ago period, as gains in Performance Materials & Coatings were more than offset by declines in Industrial Intermediates & Infrastructure and Packaging & Specialty Plastics. Sequentially, sales were down 10% with declines in all operating segments and regions.
• Local price increased 3% versus the year-ago period, driven by Performance Materials & Coatings and Industrial Intermediates & Infrastructure. Sequentially, local price decreased 6% with declines in all operating segments and regions.
• Currency decreased net sales by 4% year-over-year and 1% versus the prior quarter due to broad-based strength of the U.S. dollar.
• Volume was down 4% versus the year-ago period, as a 12% decline in EMEAI more than offset 2% volume growth each in the U.S. & Canada and Asia Pacific. Sequentially, volume was down 3%, led by an 8% decline in EMEAI.
• Equity losses were $58 million, compared to equity earnings of $249 million in the year-ago period and $195 million in the prior quarter, led by margin compression in polyurethanes at Sadara and MEG at the Kuwait joint ventures.
• GAAP Net Income was $760 million. Operating EBIT¹ was $1.2 billion, down from $2.9 billion in the year-ago period, as gains in Performance Materials & Coatings were more than offset by higher raw material and energy costs as well as lower equity earnings. Operating EBIT decreased from $2.4 billion in the prior quarter due to margin compression across all operating segments.
• Cash provided by operating activities – continuing operations was $1.9 billion, down $779 million year-over-year and up $84 million compared to the prior quarter. Free cash flow¹ was $1.5 billion.
• Returns to shareholders totaled $1.3 billion, comprised of $800 million in share repurchases and $493 million in dividends in the quarter.

CEO QUOTE

Jim Fitterling, chairman and chief executive officer, commented on the quarter:

“In the third quarter, Team Dow managed significant macroeconomic headwinds as we swiftly initiated actions and aligned production with supply chain and logistics constraints, prioritized resources toward higher-value products, and reduced operational costs across the enterprise. As a result, we maintained our focus on cash flow generation and continued to execute on our capital allocation strategy, returning $1.3 billion to shareholders.

“Underlying demand remains resilient in the U.S., while high energy and feedstock costs are driving record inflation and impacting demand in the Eurozone, and ongoing lockdowns in China continue to pressure both consumer spending and infrastructure investments. Moving forward, our global scale, geographic diversity, and advantaged feedstock and derivative flexibility will continue to be the source of our distinct advantages. Our track record of employing a disciplined and balanced approach to capital allocation, focus on cash flow generation, and our strengthened balance sheet provide a solid foundation as we continue managing through these dynamic global conditions.”

Industrial Intermediates & Infrastructure

Industrial Intermediates & Infrastructure segment net sales were $4.1 billion, down 9% versus the year-ago period. Local price improved 5% year-over-year with gains in both businesses. Currency decreased net sales by 5%. Volume was down 9% year-over-year, as declines in Polyurethanes & Construction Chemicals were partly offset by gains in Industrial Solutions due to demand strength in pharmaceutical, agricultural, and energy applications. On a sequential basis, the segment recorded a net sales decline of 7% on lower local price and currency with stable volume.  

Equity losses for the segment were $114 million, a decrease of $236 million compared to the year-ago period. Competitive pricing pressures in propylene oxide derivatives and MEG due to supply additions in China, as well as lower demand in EMEAI were the main impacts. On a sequential basis, equity earnings decreased by $171 million primarily due to lower price at Sadara and the Kuwait joint ventures.

Operating EBIT was $167 million, compared to $713 million in the year-ago period and $426 million in the prior quarter, as lower EMEAI demand and increased energy and raw material costs were partly offset by higher prices. On a sequential basis, operating EBIT margins declined 560 basis points on lower price and higher energy costs.

Polyurethanes & Construction Chemicals business reported a net sales decrease compared to the year-ago period, as local price gains were more than offset by lower volumes due to inflationary pressures on demand in EMEAI and currency impacts. Sequentially, net sales declined as improved demand in mobility end-markets was more than offset by lower price and inflationary impacts on demand for consumer durables, industrial, and building & construction applications.

Industrial Solutions business reported a net sales increase compared to the year-ago period, driven by local price gains and strong demand for pharmaceutical, agricultural, and energy applications. Sequentially, net sales decreased as strong demand in energy, pharmaceutical, and mobility end-markets and increased catalyst sales were more than offset by price declines and currency impacts.

OUTLOOK

“In the near-term, we expect the macro environment to remain dynamic. As a result, we have outlined a playbook of actions that have the potential to deliver more than $1 billion in cost savings in 2023 while we continue to leverage our scale, geographic diversity and feedstock and derivative flexibility,” said Fitterling. “At the same time, we remain focused on advancing our Decarbonize and Grow strategy with higher-return investments that will extend our competitive advantages and industry leadership positions. Our strong financial position and balance sheet as well as our continued focus on cash flow generation give us ample flexibility to execute on our capital allocation priorities, including attractive shareholder remuneration, as we maximize value creation over the longer-term.”

https://seekingalpha.com/pr/18983750-dow-reports-third-quarter-2022-results?mailingid=29433026&messageid=2900&serial=29433026.12005

October 20, 2022

Dow Quarterly Results

Dow reports third quarter 2022 results

Oct. 20, 2022 6:00 AM ETDow Inc. (DOW)

MIDLAND, Mich., Oct. 20, 2022 /PRNewswire/ — Dow (NYSE: DOW):

FINANCIAL HIGHLIGHTS

• GAAP earnings per share (EPS) was $1.02; Operating EPS¹ was $1.11, compared to $2.75 in the year-ago period and $2.31 in the prior quarter, reflecting margin compression due to higher energy costs, primarily in Europe, the Middle East, Africa and India (EMEAI).
• Net sales were $14.1 billion, down 5% versus the year-ago period, as gains in Performance Materials & Coatings were more than offset by declines in Industrial Intermediates & Infrastructure and Packaging & Specialty Plastics. Sequentially, sales were down 10% with declines in all operating segments and regions.
• Local price increased 3% versus the year-ago period, driven by Performance Materials & Coatings and Industrial Intermediates & Infrastructure. Sequentially, local price decreased 6% with declines in all operating segments and regions.
• Currency decreased net sales by 4% year-over-year and 1% versus the prior quarter due to broad-based strength of the U.S. dollar.
• Volume was down 4% versus the year-ago period, as a 12% decline in EMEAI more than offset 2% volume growth each in the U.S. & Canada and Asia Pacific. Sequentially, volume was down 3%, led by an 8% decline in EMEAI.
• Equity losses were $58 million, compared to equity earnings of $249 million in the year-ago period and $195 million in the prior quarter, led by margin compression in polyurethanes at Sadara and MEG at the Kuwait joint ventures.
• GAAP Net Income was $760 million. Operating EBIT¹ was $1.2 billion, down from $2.9 billion in the year-ago period, as gains in Performance Materials & Coatings were more than offset by higher raw material and energy costs as well as lower equity earnings. Operating EBIT decreased from $2.4 billion in the prior quarter due to margin compression across all operating segments.
• Cash provided by operating activities – continuing operations was $1.9 billion, down $779 million year-over-year and up $84 million compared to the prior quarter. Free cash flow¹ was $1.5 billion.
• Returns to shareholders totaled $1.3 billion, comprised of $800 million in share repurchases and $493 million in dividends in the quarter.

CEO QUOTE

Jim Fitterling, chairman and chief executive officer, commented on the quarter:

“In the third quarter, Team Dow managed significant macroeconomic headwinds as we swiftly initiated actions and aligned production with supply chain and logistics constraints, prioritized resources toward higher-value products, and reduced operational costs across the enterprise. As a result, we maintained our focus on cash flow generation and continued to execute on our capital allocation strategy, returning $1.3 billion to shareholders.

“Underlying demand remains resilient in the U.S., while high energy and feedstock costs are driving record inflation and impacting demand in the Eurozone, and ongoing lockdowns in China continue to pressure both consumer spending and infrastructure investments. Moving forward, our global scale, geographic diversity, and advantaged feedstock and derivative flexibility will continue to be the source of our distinct advantages. Our track record of employing a disciplined and balanced approach to capital allocation, focus on cash flow generation, and our strengthened balance sheet provide a solid foundation as we continue managing through these dynamic global conditions.”

Industrial Intermediates & Infrastructure

Industrial Intermediates & Infrastructure segment net sales were $4.1 billion, down 9% versus the year-ago period. Local price improved 5% year-over-year with gains in both businesses. Currency decreased net sales by 5%. Volume was down 9% year-over-year, as declines in Polyurethanes & Construction Chemicals were partly offset by gains in Industrial Solutions due to demand strength in pharmaceutical, agricultural, and energy applications. On a sequential basis, the segment recorded a net sales decline of 7% on lower local price and currency with stable volume.  

Equity losses for the segment were $114 million, a decrease of $236 million compared to the year-ago period. Competitive pricing pressures in propylene oxide derivatives and MEG due to supply additions in China, as well as lower demand in EMEAI were the main impacts. On a sequential basis, equity earnings decreased by $171 million primarily due to lower price at Sadara and the Kuwait joint ventures.

Operating EBIT was $167 million, compared to $713 million in the year-ago period and $426 million in the prior quarter, as lower EMEAI demand and increased energy and raw material costs were partly offset by higher prices. On a sequential basis, operating EBIT margins declined 560 basis points on lower price and higher energy costs.

Polyurethanes & Construction Chemicals business reported a net sales decrease compared to the year-ago period, as local price gains were more than offset by lower volumes due to inflationary pressures on demand in EMEAI and currency impacts. Sequentially, net sales declined as improved demand in mobility end-markets was more than offset by lower price and inflationary impacts on demand for consumer durables, industrial, and building & construction applications.

Industrial Solutions business reported a net sales increase compared to the year-ago period, driven by local price gains and strong demand for pharmaceutical, agricultural, and energy applications. Sequentially, net sales decreased as strong demand in energy, pharmaceutical, and mobility end-markets and increased catalyst sales were more than offset by price declines and currency impacts.

OUTLOOK

“In the near-term, we expect the macro environment to remain dynamic. As a result, we have outlined a playbook of actions that have the potential to deliver more than $1 billion in cost savings in 2023 while we continue to leverage our scale, geographic diversity and feedstock and derivative flexibility,” said Fitterling. “At the same time, we remain focused on advancing our Decarbonize and Grow strategy with higher-return investments that will extend our competitive advantages and industry leadership positions. Our strong financial position and balance sheet as well as our continued focus on cash flow generation give us ample flexibility to execute on our capital allocation priorities, including attractive shareholder remuneration, as we maximize value creation over the longer-term.”

https://seekingalpha.com/pr/18983750-dow-reports-third-quarter-2022-results?mailingid=29433026&messageid=2900&serial=29433026.12005

October 19, 2022

Stepan Results

Stepan Reports Record Third Quarter Results and Record Nine Month Earnings

PR Newswire

NORTHBROOK, Ill., Oct. 19, 2022 /PRNewswire/ — Stepan Company (NYSE: SCL) today reported:

Third Quarter Highlights

• Reported net income was a record $39.4 million, or $1.71 per diluted share versus $36.9 million, or $1.59 per diluted share, in the prior year. Adjusted net income* was a record $46.3 million, or $2.01 per diluted share, versus $36.4 million, or $1.57 per diluted share, in the prior year. Total Company sales volume decreased 8% versus the prior year.
• Surfactant operating income was $39.0 million versus $34.5 million in the prior year. This increase was primarily driven by improved product and customer mix that was partially offset by an 8% decline in global sales volume. The sales volume decline was primarily due to lower global commodity laundry demand and raw material constraints in North America. Higher demand in the Functional Products and Institutional Cleaning end markets partially offset the above.
• Polymer operating income was $31.9 million versus $19.8 million in the prior year. This increase was primarily attributable to margin recovery and improved mix that was partially offset by a 10% decrease in global sales volume. The volume decrease was primarily due to an 8% decline in global Rigid Polyol demand driven by double digit declines in Europe and Asia.
• Specialty Product operating income was $9.7 million versus $2.4 million in the prior year. This increase was primarily attributable to improved margins and customer mix within the medium chain triglycerides (MCTs) product line.
• The Company increased its pre-tax environmental reserve from $23.2 million to $33.5 million in the current year quarter. This increase was primarily due to revised environmental remediation cost estimates for the Company’s Maywood, New Jersey site.
• The effect of foreign currency translation negatively impacted net income by $2.4 million, or $0.11 per diluted share, versus the prior year.
• The Company increased its quarterly cash dividend in the fourth quarter of 2022 by $0.03 per share, or 9.0%, marking the 55^th consecutive year that the Company has increased its cash dividend to stockholders.

YTD Highlights

• Reported net income for the first nine months of 2022 was a record $136.3 million, or $5.90 per diluted share, versus $120.8 million, or $5.19 per diluted share, in the prior year. Adjusted net income* was a record $140.0 million, or $6.06 per diluted share, versus $121.0 million, or $5.20 per diluted share, in the prior year. Total Company sales volume was down 3% compared to the first nine months of 2021.

*  Adjusted net income is a non-GAAP measure which excludes deferred compensation income/expense, cash-settled stock appreciation rights (SARs) income/expense, certain environmental remediation-related costs as well as other significant and infrequent/non-recurring items. See Table II for reconciliations of non-GAAP adjusted net income and earnings per diluted share.

“The Company had strong performance for the first nine months of 2022 and delivered record results, despite ongoing supply chain challenges.  Reported net income was up 13% versus the first nine months of 2021 while adjusted net income was up 16%,” said Scott Behrens, President and Chief Executive Officer. “For the quarter, Surfactant operating income was up 13%  largely due to improved product and customer mix.  This improvement was driven by growth in our Functional Products business as a result of elevated crop and energy prices, which offset an 8% decline in sales volume primarily within our Consumer Products business.  Our Polymer income was up 61% due to margin recovery and improved mix that was partially offset by a 10% decline in sales volume.  Our Specialty Product results improved significantly due to margin improvement and favorable customer mix.” 

Outlook

“The Company delivered record third quarter and nine-month results and we expect to deliver record full year earnings again in 2022.  For the fourth quarter we anticipate approximately $8 million of incremental expense related to planned maintenance activity in our North American Phthalic Anhydride plant and low 1,4 dioxane transition costs,” said Scott Behrens, President and Chief Executive Officer.  “From a segment perspective, we believe that Surfactants, Polymers and Specialty Products should all deliver full year earnings growth versus prior year.  Surfactant volumes within the Functional Products and Industrial Cleaning end markets are expected to show full year growth over 2021.  Despite short-term volatility and challenges, we believe that the long-term outlook for Rigid Polyols will remain attractive as energy conservation efforts and more stringent building codes are expected to continue.  Looking forward to the next few quarters, we believe the Company will be challenged by slowing global economic growth, weakening consumer and construction demand, continued inflationary pressures and a stronger U.S. dollar.  Despite this projected macro environment, we remain committed to executing our long-term growth strategy.”     

https://smb.middlesboronews.com/article/Stepan-Reports-Record-Third-Quarter-Results-and-Record-Nine-Month-Earnings?storyId=634fd850b4ed3a46c52845e2

October 19, 2022

Stepan Results

Stepan Reports Record Third Quarter Results and Record Nine Month Earnings

PR Newswire

NORTHBROOK, Ill., Oct. 19, 2022 /PRNewswire/ — Stepan Company (NYSE: SCL) today reported:

Third Quarter Highlights

• Reported net income was a record $39.4 million, or $1.71 per diluted share versus $36.9 million, or $1.59 per diluted share, in the prior year. Adjusted net income* was a record $46.3 million, or $2.01 per diluted share, versus $36.4 million, or $1.57 per diluted share, in the prior year. Total Company sales volume decreased 8% versus the prior year.
• Surfactant operating income was $39.0 million versus $34.5 million in the prior year. This increase was primarily driven by improved product and customer mix that was partially offset by an 8% decline in global sales volume. The sales volume decline was primarily due to lower global commodity laundry demand and raw material constraints in North America. Higher demand in the Functional Products and Institutional Cleaning end markets partially offset the above.
• Polymer operating income was $31.9 million versus $19.8 million in the prior year. This increase was primarily attributable to margin recovery and improved mix that was partially offset by a 10% decrease in global sales volume. The volume decrease was primarily due to an 8% decline in global Rigid Polyol demand driven by double digit declines in Europe and Asia.
• Specialty Product operating income was $9.7 million versus $2.4 million in the prior year. This increase was primarily attributable to improved margins and customer mix within the medium chain triglycerides (MCTs) product line.
• The Company increased its pre-tax environmental reserve from $23.2 million to $33.5 million in the current year quarter. This increase was primarily due to revised environmental remediation cost estimates for the Company’s Maywood, New Jersey site.
• The effect of foreign currency translation negatively impacted net income by $2.4 million, or $0.11 per diluted share, versus the prior year.
• The Company increased its quarterly cash dividend in the fourth quarter of 2022 by $0.03 per share, or 9.0%, marking the 55^th consecutive year that the Company has increased its cash dividend to stockholders.

YTD Highlights

• Reported net income for the first nine months of 2022 was a record $136.3 million, or $5.90 per diluted share, versus $120.8 million, or $5.19 per diluted share, in the prior year. Adjusted net income* was a record $140.0 million, or $6.06 per diluted share, versus $121.0 million, or $5.20 per diluted share, in the prior year. Total Company sales volume was down 3% compared to the first nine months of 2021.

*  Adjusted net income is a non-GAAP measure which excludes deferred compensation income/expense, cash-settled stock appreciation rights (SARs) income/expense, certain environmental remediation-related costs as well as other significant and infrequent/non-recurring items. See Table II for reconciliations of non-GAAP adjusted net income and earnings per diluted share.

“The Company had strong performance for the first nine months of 2022 and delivered record results, despite ongoing supply chain challenges.  Reported net income was up 13% versus the first nine months of 2021 while adjusted net income was up 16%,” said Scott Behrens, President and Chief Executive Officer. “For the quarter, Surfactant operating income was up 13%  largely due to improved product and customer mix.  This improvement was driven by growth in our Functional Products business as a result of elevated crop and energy prices, which offset an 8% decline in sales volume primarily within our Consumer Products business.  Our Polymer income was up 61% due to margin recovery and improved mix that was partially offset by a 10% decline in sales volume.  Our Specialty Product results improved significantly due to margin improvement and favorable customer mix.” 

Outlook

“The Company delivered record third quarter and nine-month results and we expect to deliver record full year earnings again in 2022.  For the fourth quarter we anticipate approximately $8 million of incremental expense related to planned maintenance activity in our North American Phthalic Anhydride plant and low 1,4 dioxane transition costs,” said Scott Behrens, President and Chief Executive Officer.  “From a segment perspective, we believe that Surfactants, Polymers and Specialty Products should all deliver full year earnings growth versus prior year.  Surfactant volumes within the Functional Products and Industrial Cleaning end markets are expected to show full year growth over 2021.  Despite short-term volatility and challenges, we believe that the long-term outlook for Rigid Polyols will remain attractive as energy conservation efforts and more stringent building codes are expected to continue.  Looking forward to the next few quarters, we believe the Company will be challenged by slowing global economic growth, weakening consumer and construction demand, continued inflationary pressures and a stronger U.S. dollar.  Despite this projected macro environment, we remain committed to executing our long-term growth strategy.”     

https://smb.middlesboronews.com/article/Stepan-Reports-Record-Third-Quarter-Results-and-Record-Nine-Month-Earnings?storyId=634fd850b4ed3a46c52845e2