The Urethane Blog
Everchem Updates
VOLUME XXI
September 14, 2023
Everchem’s exclusive Closers Only Club is reserved for only the highest caliber brass-baller salesmen in the chemical industry. Watch the hype video and be introduced to the top of the league: — read more
October 18, 2023
Stepan Company Q3: Earnings Miss, Lower Sales Volume, Dividend Hike & More
by Nabaparna Bhattacharya, Benzinga Editor
October 18, 2023 10:03 AM | 2 min read
Stepan Company
SCL+7.03%+ Free Alerts reported a third-quarter FY23 sales decrease of 22% year-on-year, to $562.226 million, missing the analyst consensus of $603.72 million owing to lower selling prices.
Adjusted EPS of $0.64 missed the analyst consensus of $0.75.
Net Sales from Surfactants fell 21% Y/Y, Polymers down 21%, and Specialty Products plunged 36%.
The lower selling prices were mainly attributable to the pass-through of lower raw material costs, less favorable product/customer mix, and competitive pressures.
Gross profit declined 39.9% Y/Y to $71.24 million. Total company sales volume decreased 9% versus the prior year.
Demand within the agricultural end market remained low due to continued customer and channel inventory destocking.
Adjusted EBITDA was $48 million versus $85.5 million in the prior year.
“Specific to the third quarter, Surfactant unit margins were lower versus the prior year due to less favorable product mix, high-cost raw material inventory carryover, and pricing pressure in Latin America from imported products. Specialty Product unit margins were significantly lower due to high-cost inventory and pricing pressure related to increased MCT import activity,” said Scott Behrens, President and Chief Executive Officer.
Dividend Raised: Stepan Company approved an increase of $0.010 per share, or 2.7%, on its quarterly cash dividend on its common stock. The dividend of $0.375 per share is payable on December 15, 2023, to common stockholders of record on November 30, 2023.
Outlook: The company expects the fourth quarter of 2023 to face challenges, including continued destocking within the agricultural end market and the normal low seasonal demand for Rigid Polyols.
Stepan Company expects to deliver $50 million in pre-tax savings in 2024, which will help offset future inflation and increased expenses associated with the planned commissioning of new Pasadena alkoxylation assets.
October 16, 2023
Covestro expands capacity for TPU films in Germany
MRC — Covestro has expanded its production capacities for thermoplastic polyurethane (TPU) films in the Platilon® range, as well as the associated infrastructure and logistics in Bomlitz, Lower Saxony, Germany, said the company.
This site of Epurex Films, a wholly owned subsidiary of Covestro, houses research & development, application development and production for the semi-finished products. The company has invested a low double-digit million Euro amount in the expansion of the center of excellence for TPU-Films.
The new capacity is intended to meet the growing global demand for multilayer TPU films. They are used in automotive interiors and construction, among other applications. Breathable, water-impermeable specialty films have also proven their worth in wound care and outdoor clothing.
“With this capacity expansion, we are strengthening our Bomlitz site and our position as a leading supplier of technical specialty films,” said Dr. Thorsten Dreier, Covestro’s Chief Technology Officer, at the inauguration. “At the same time, we are investing in promising technologies and applications and creating new jobs.”
For Aleta Richards, global head of the Specialty Films business entity, the expansion offers opportunities to respond even better to individual customer needs and offer more sustainable products. “For some time now, we have also been developing customer-specific solutions with films made from alternative raw materials, as we are also seeing increasing demand in this area. The development and production of partially biobased products is therefore to become a new focus at the Bomlitz site.”
Covestro is fully geared toward the circular economy and aims to become climate-neutral by 2035. In 2022 the Bomlitz site has switched its power supply completely to green electricity. Epurex Films is one of Covestro’s three competence centers for specialty films in Germany, along with Leverkusen and Dormagen.
We remind, Covestro is expanding its production capacities for thermoplastic polyurethane (TPU) Films in the Platilon® range, as well as the associated infrastructure and logistics. To this end, the company is investing a low double-digit million euro amount in its German center of excellence for the aforementioned films in Bomlitz, Lower Saxony.
https://www.mrchub.com/news/409776-covestro-expands-capacity-for-tpu-films-in-germany
October 16, 2023
TDI Market is Poised to Take Off Amidst Intensive Maintenance Plans
PUdaily | Updated: October 13, 2023
Not long after the restart of Wanhua Chemical’s facility in Yantai, several TDI facilities have started or are about to undergo maintenance. The maintenance plans of TDI suppliers in the fourth quarter of this year are intensively scheduled.
Table 1: Recent TDI Facility Maintenance Plans in China and South Korea
| Juli Chemical | Maintenance started on September 25, expected to last about 40 days. |
| Wanhua Chemical | Rumored to start maintenance on October 6, expected to last about 15 days. |
| Yinguang Chemical | Temporary shutdown for maintenance on October 9. |
| Hanwha | Maintenance started on October 13, expected to last about 25 days. |
| Cangzhou Dahua | Maintenance scheduled to start on October 20, expected to last for 1 month. |
| Covestro Shanghai | Maintenance to start in mid-November, expected to last about 40 days. |
| BASF Korea | Maintenance to start on November 17, expected to last about 25 days. |
Although TDI suppliers have typically concentrated their maintenance plans in the fourth quarter in previous years, this year the maintenance at Wanhua Chemical and Yinguang Chemical have exceeded industry expectations, and Cangzhou Dahua did not undergo maintenance last year. The maintenance duration of the facilities at Juli Chemical and Covestro is also longer than in previous years.
Amidst the contradiction between intensive maintenance plans and the recovery of demand, TDI suppliers, especially Covestro, have frequently raised their guide prices:
- On October 7, Covestro raised its opening price for October and only offered 50% of supplies to distributors in November, while providing 80% to direct customers.
- On October 8, Covestro stopped trading due to strong demand and extremely low inventory.
- On October 9, the price offered by the North China plant was raised to CNY 20,000/tonne. Covestro raised its fixed price to CNY 19,200/tonne.
- As of the latest update on October 11, Covestro has stopped trading again due to tight supply…
Looking back at October last year, the price of TDI surged from CNY 19,000/tonne to surpass CNY 26,000/tonne due to tight supply. And in the same period this year, with the same supply significantly reduced, the price level remains the same… Stay tuned for the subsequent market trend!
October 16, 2023
Wixom automotive supplier announces layoffs as UAW strike persists
Detroit Free Press
A Wixom-based automotive supplier announced it may need to lay off a substantial portion of its 171 hourly workers, citing “unforeseen business circumstances” at a time when similar companies are blaming the ongoing UAW strike for financial challenges.
This could become more common, as the strike against Ford Motor Co., General Motors and Stellantis moves through its second week.
In a document filed Thursday with the state, Eagle Industries, Inc. indicated “total laid off” employees as 171. The move affects plant workers, production and administration employees.
“As a result of unforeseen business circumstances, we are providing information in anticipation of a potential layoff at the worksite. The estimated number of workers is subject to change due to evolving business circumstances,” the company said in a statement provided to the state.
But Eagle Industries President John Bull said his company filed the paperwork as a precaution. While they employ approximately 171 hourly workers, he said any possible layoff would likely affect 55 to 60 employees.
“It 100% is related to the strike,” he said, noting that in general his business is actually hiring employees.
The company specializes in foam products for the automotive and other industries, according to its website. That includes a product called “EagleZorb,” used in components for vehicle doors, trim and other areas to help prevent injuries. Although there is no mention of specific clients on its website, an association that recognizes companies in the field noted Eagle components have been used in Ford vehicles.
Entering its 10th day, the UAW’s strike is designed to create sustained pressure on the Detroit Three auto manufacturers. That includes what the union considers targeted strikes at one large factory for each company and parts distribution centers for GM and Stellantis. All of these locations rely on third party suppliers to ensure their ongoing ability to function.
Experts noted the downstream impact of a lengthy strike on the related manufacturing industry. One analysis from the University of Michigan predicted 150,000 people in Michigan could lose their jobs if the strike lasts four weeks.
However, the analysis suggested suppliers might avoid layoffs for the first two weeks of a protracted strike. At that point, companies could be in real trouble.
“These growing spillover effects across the automotive supply chain produce successively larger spillovers to the broader economy, as well, as laid-off workers in the supply chain lose purchasing power and cut back on spending in other parts of the economy,” the analysis states.
A separate expert told the Free Press the current strike strategy may result in higher prices for people looking for cars or parts, something that might swing public opinion away from the UAW.
On Friday, union leaders indicated Ford appeared closer to offering an amenable contract than the other two companies. But there’s no indication any agreement with any of the companies is imminent.
October 12, 2023
Business Court judge approves sale of Klaussner business unit
- Richard Craver
- Oct 9, 2023
An N.C. Business Court judge approved on Oct. 2 a Canadian home furnishings manufacturer’s $7 million offer for the Prestige Fabricators business unit of defunct Klaussner Furniture Industries Inc. of Asheboro.
As part of the transaction, VPC Foam USA Inc. would acquire the leases for the 2206 Dumont St. and 905 N.C. South 49 facilities in Asheboro.
The Business Court has oversight of the Prestige properties via a complaint filed in the court by Bank of America Corp. related to its Klaussner loans.
VPC would enter into new leases for both facilities effective with the closing dale of the overall sale. VPC said in its offer that it “intends to operate the Prestige business and will hire a substantial number of former employees to work in the business.”
Klaussner listed in its WARN notice to the N.C. Commerce Department having 127 at its 905 N.C. 49 South, Asheboro plant and 26 at its 2206 Dumont St. plant.
Klaussner entered into federal bankruptcy protection on Aug. 8, immediately shutting down operations and is letting go of 893 employees following an inability to access additional funding from its lender. Klaussner had been in business since 1963.
Klaussner said the tipping point for the decision was that its lending source “unexpectedly refused to continue to fund the company’s operations. This outcome was not reasonably foreseeable, but due to these unexpected circumstances, Klaussner can no longer sustain its operations.”
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