The Urethane Blog
October 22, 2024
Single-family starts trends upward in September
By Dakota Smith
October 18, 2024 | 10:32 am CDT
With the Federal Reserve beginning an easing of monetary policy and builder sentiment improving, single-family starts posted a modest gain in September while multifamily construction continued to weaken. The National Association of Home Builders says this is because of tight financing and an ongoing rise in completed apartments.
Overall housing starts decreased 0.5% in September to a seasonally adjusted annual rate of 1.35 million units, according to a report from the U.S. Department of Housing and Urban Development and the U.S. Census Bureau.
The September reading of 1.35 million starts is the number of housing units builders would begin if development kept this pace for the next 12 months. Within this overall number, single-family starts increased 2.7% to a 1.03 million seasonally adjusted annual rate. On a year-to-date basis, single-family construction is up 10.1%. The multifamily sector, which includes apartment buildings and condos, decreased 9.4% to an annualized 327,000 pace. This marks the weakest pace since May.
“Single-family construction increased in September, mirroring NAHB’s survey of builder confidence,” said Carl Harris, chairman of the National Association of Home Builders (NAHB) and custom home builder from Wichita, Kan. “In the long-run, the most effective way to tackle the nation’s housing affordability crisis is to increase the housing supply. And as the election looms, policymakers need to be focused on the supply-side of the market to let builders build.”
“While single-family home building increased in September, higher mortgage interest rates in October are likely to place a damper on growth in next month’s data,” said NAHB Chief Economist Robert Dietz. “Nonetheless, NAHB is forecasting a gradual, if uneven, decline for mortgage rates in the coming quarters, with corresponding increases for single-family construction. Multifamily construction will remain weak as completions of apartments are elevated.”
The number of single-family homes under active construction totaled 642,000 in September. After stabilizing recently, this is down just 4.5% from a year ago. The number of multifamily units under construction declined 3.4% in September to an 842,000 total. This is 16.5% lower than a year ago and is the smallest count since February 2022.
As a sign of the reversal for multifamily construction, the seasonally adjusted annual rate of multifamily construction was 680,000 in September. This was roughly twice the pace of multifamily starts, meaning for every two apartments finishing construction, only one new unit began construction. The pace of multifamily completions was up 41% compared to a year ago.
October 20, 2024
PRICING Global MDI and TDI markets face supply tightness and varied demand
MDI North America
The MDI market has been under pressure due to tight supply and demand continues to be healthy. Dow was reported to have declared force majeure at its 340 ktpa MDI plant in Freeport, Texas after hurricane Beryl and the turnaround is expected to be lifted after the producer completes a turnaround at the site in October. Demand for MDI has remained stable from most sectors. The construction sector is seeing good levels even though stats showed a decline in the housing sector. Prices could remain high as supply is tight due to turnarounds and demand is steady.
MDI Europe
The MDI market has been quiet as the holiday season was underway. Supply is still available even though operations have been reduced. Borsodchem maintenance at its MDI unit in Kazincbarcika, Hungary started at the end of July and completed mid-August. Huntsman is planning to have a turnaround at its Rozenburg, the Netherlands site in Q4. Covestro is reported to have its annual turnaround at its 400 ktpa MDI plant in Brunsbüttel, Germany during September. Demand was weak due to the holiday season in most of Europe. Demand from the insulation and other construction related applications are heard to be improving. Demand from the comfort industry is still weak. Demand from all sectors is expected to pick up somewhat from September as the market resumes after the summer period.
MDI China
The Chinese domestic MDI market price showed an upward trend in Q3 due to low supply availability. MDI units operated at around 50% capacity in August. On the demand side, there was little change in downstream orders, as the macroeconomy environment remained weak. Buyers reported that MDI prices remained high in the market. Most procurement was for immediate use, primarily in traditional industries such as foaming agents, spraying, and asphalt.
TDI North America
The TDI supply situation in North America is heard to be stable and reports suggest supply is currently on the long side. Demand remains stable, with offtake volumes from the construction sector reported as steady. In terms of TDI prices, prices ended August on the softer side due to low demand levels and healthy supply. TDI prices are expected to be stable to higher in the short term as supply is expected to tighten somewhat in Q4 due to turnarounds.
TDI Europe
TDI supply in Europe has been reduced and is not expected to improve leading to price firming. Covestro is reported to have its annual turnaround at its TDI plant in Brunsbüttel, Germany during September. Demand has been slow over the last couple of months in some southern European countries as downstream plants were shut for the summer holidays. A summer slowdown had been expected but this year it has been worse than previous years. Demand usually picks up again in September as downstream plants return to operation following the summer holidays but so far this has not been the case. August was the weakest month of the year and September levels are really low so far in the month.
TDI China
The Chinese market firmed in August due to low supply levels as maintenance turnarounds took place at a number of plant. TDI units operated at around 50%. News of these significant maintenance activities spurred increased market activity, pushing prices up in August. However, a lack of further orders from buyers stabilised prices as the end date of the maintenance approached, TDI price softened in the last few days of August. Downstream demand remained weak in line with the traditional off-season. Upholstered furniture buyers maintained a high inventory level and resisted the price increase.
Polyether Polyols North America
The polyether polyol market in the US is balanced and stocks are being rebuilt and availability is sufficient. In general though, the supply/demand picture for polyether polyols remains balanced, and there are no reported problems with availability. Demand has been steady again in August, as it has been for much of the year so far. Demand for rigid polyether polyols into construction and appliances is stable and expected to remain so over the next few months. Demand into auto applications is also said to be steady but lower than expected. Demand for flexible polyether polyols into furniture and bedding is described as stable.
Polyether Polyols Europe
The polyether polyol market slowed further in August as demand declined. Supply levels are stable even though there are production issues upstream. A market participant mentioned concerns about PO availability, as there have been operational issues at some PO plants recently. Consumers say that the impact of these PO production issues on polyols, thus far, has been limited as inventories are sufficient to meet current demand levels. Demand has weakened during the summer months and a modest increase in demand is expected for September/October.
Polyether Polyols China
In China, polyether polyols prices have softened due to fluctuation in PO markets and weak demand. On the supply side, operating rates remain stable, and supply also remained steady. Polyether polyols prices softened due declining PO prices. Although buyers showed stronger purchasing intent mid-August, the increase in offtake volumes was not sustained, and prices eventually resumed their downward trend. Demand for polyether polyols saw non-significant improvement. Export orders remained robust, but major manufacturers are supply mostly to long-term contracts and adopted a wait-and-see attitude. Procurement in the distribution channel was mainly for immediate use.
Regina Sousa is a senior consultant at Tecnon Orbichem.
October 14, 2024
The closure of the TDI plant due to lack of competitiveness causes the first layoffs
The closure of the TDI (toluene diisocyanate) production plant, belonging to the Petrochemical company Río Tercero, begins to cause layoffs and suspensions of personnel, as the firm had anticipated.
On Sunday night, the Petrochemical Chemical Industries Staff Union of Río Tercero promoted a protest measure in front of the entrance to the chemical center, which consisted of the total closure of Savio Avenue in that sector for a few hours.
The action is a direct union response to the first telegrams of dismissal and dismissal of personnel that, they claim, were sent by the company to the workers via email. In principle, about 120 separations are mentioned.
The lack of competitiveness in the face of the national government’s opening of TDI imports from Asian countries was the cause alleged by the Piero group firm to close the main production unit of the local factory, although it stressed that it will remain active. the rest of the plants.
In that direction, Mayor Marcos Ferrer expressed his concern about the conflict, and blamed the national economic policies of indiscriminate opening of foreign products.
He argued that the national industry cannot compete on equal terms with Asia, due to the great asymmetry of tax, labor, and energy costs.
In that sense, he assured that he will begin negotiations with the Nation to attempt some dialogue that could lead to concrete measures to protect the industry, although he admitted that it is a very difficult option to achieve.
Regarding the layoffs, Ferrer said that he fears a domino effect in the rest of the industries in the chemical sector, mainly in the Military Factory, since Petrochemical buys almost all of the nitric acid production from him as an input for the TDI, which it will no longer produce.
Thus, there are fears for the future of the almost 60 workers affected by the operation of the state company’s nitric plant.
This Monday, at 10, a presentation by the chemical union is scheduled before the Provincial Labor Secretariat, in order to request a mandatory conciliation that takes the conflict back to its origin, to open a stage of negotiation.
Meanwhile, at 6:30 p.m. a protest march is called through the streets of the city.
TDI is the main input for the manufacture of foam rubber for mattresses and pillows, as well as accessories for the automotive industry.
October 14, 2024
HONEYWELL ANNOUNCES PLAN TO SPIN OFF ADVANCED MATERIALS BUSINESS TO SHAREOWNERS
Oct. 08, 2024 6:00 AM ETHoneywell International Inc. (HON)
- Independent company to be a leading provider of sustainability-focused specialty chemicals and materials with approximately $3.8 billion of revenue and an EBITDA margin greater than 25% expected in FY24
- Advanced Materials portfolio includes leading brands such as Solstice®, Spectra®, Hydranal® and Aclar®, among others
- Honeywell (HON) continues to simplify and optimize its portfolio around three compelling megatrends: automation, the future of aviation and energy transition
- Tax-free spin to shareowners targeted to be completed by the end of 2025 or early 2026
CHARLOTTE, N.C., Oct. 8, 2024 /PRNewswire/ — Honeywell (Nasdaq: HON) today announced a plan to spin off its Advanced Materials business into an independent, U.S. publicly traded company, which is targeted to be completed by the end of 2025 or early 2026. Honeywell expects to execute the planned spin in a tax-free manner to its shareowners.
As a leading global provider of sustainability-focused specialty chemicals and materials, this pure-play business will be well-positioned to benefit from an enhanced strategic focus and the financial flexibility to pursue innovation and growth opportunities through investment cycles. Further, the planned spin-off will enable Honeywell to progress its strategic priorities of accelerating organic growth, evolving its Accelerator operating system, and optimizing its portfolio.
“Given the sustained market demand for advanced specialty chemicals and materials around the globe, we are confident now is the right time for this business to grow independently, leveraging its leading technologies and deep customer relationships. As a sector leader, this new company will have a greater strategic focus on innovation, enabling it to develop new, more sustainable solutions and products with next-generation chemistry to create further value for shareowners,” said Vimal Kapur, Chairman and CEO of Honeywell.
Kapur added, “Today’s announcement is the latest step in the optimization of the Honeywell portfolio, a key priority I laid out in my first year leading the company. Through the powerful combination of strategic bolt-on acquisitions and subtractions of high quality but non-core business lines, we continue to enhance our portfolio mix and further tighten Honeywell’s alignment to three compelling megatrends: automation, the future of aviation, and energy transition—underpinned by our Accelerator business models.”
The planned spin-off is expected to create value for all stakeholders as both Honeywell and the Advanced Materials business will benefit from:
- A simplified strategic focus;
- A greater financial flexibility to pursue prioritized organic growth opportunities throughout investment cycles;
- An improved ability to customize capital allocation priorities in alignment with strategic focus; and
- Distinct investment profiles that position each company to unlock greater long-term value for shareowners.
Honeywell’s Continued Simplification and Portfolio Optimization
The planned spin-off of the Advanced Materials business follows four recent acquisitions Honeywell announced as part of its disciplined capital deployment strategy. The company is focused on high-return acquisitions that will drive future growth across its portfolio in alignment with the three powerful megatrends. In the past 12 months, Honeywell completed the acquisitions of: Carrier Access Solutions, Civitanavi, CAES and Air Products’ liquified natural gas (LNG) business.
Honeywell is currently on pace to exceed its commitment to deploy at least $25 billion toward high-return capital expenditures, dividends, opportunistic share purchases and accretive acquisitions through 2025, with approximately $9 billion deployed towards acquisitions to date in 2024.
Following the completion of the planned spin of the Advanced Materials business, Honeywell will be positioned to further improve its organic sales growth, lower capital intensity, reduce cyclicality of sales and enhance free cash flow generation capability.
Advanced Materials
Upon completion of the spin-off, the Advanced Materials business will be a sustainability-focused specialty chemicals and materials pure play with leading positions across fluorine products, electronic materials, industrial grade fibers, and healthcare packaging solutions. The business offers technologies that include the breakthrough low global warming Solstice® hydrofluoro-olefin (HFO) technology, which has helped avoid the potential release of the equivalent of more than 326 million metric tons of carbon dioxide into the atmosphere.[1] Additionally, the business manufactures a wide variety of high-performance specialty materials technologies ranging from Spectra®, a fiber used in high-end armor technology to protect in law enforcement and military applications, to Hydranal®, the most trusted brand in Karl Fischer titration, to Aclar®, a high-performance pharmaceutical packaging material critical to preserving prescription drugs and keeping them safe.
Advanced Materials is expected to have FY24 estimated revenue of between $3.7 billion and $3.9 billion with an EBITDA margin greater than 25%. As a standalone company with a large-scale domestic manufacturing base, it will be positioned to benefit from a compelling investment profile and a more flexible and optimized capital allocation strategy.
Transaction Details
The planned spin-off transaction is targeted for completion by the end of 2025 or early 2026, subject to certain customary conditions, including, among others, the filing and effectiveness of applicable filings (including a Form 10 registration statement) with the U.S. Securities and Exchange Commission, assurance that the spin-off of the Advanced Materials business will be tax-free to Honeywell’s shareowners, receipt of applicable regulatory approvals and final approval by Honeywell’s board of directors. Approval by Honeywell’s shareowners is not required.
The spin transaction will not impact Honeywell’s FY24 guidance.
As the process progresses, Honeywell intends to provide additional information regarding the future management team and board of directors for the independent Advanced Materials company.
Goldman Sachs & Co. LLC is serving as financial advisor to Honeywell. Skadden, Arps, Slate, Meagher & Flom LLP is providing external legal counsel.
October 14, 2024
Dow Shuts Polyols Plant in Argentina
PUdaily | Updated: October 14, 2024
US chemical giant Dow Chemical Company revealed that, due to poor economic performance, it had made the decision to terminate the production of 50,000 tons per year of polyether polyols at its factory in San Lorenzo, Santa Fe Province, Argentina. Dow Chemical pointed out that the San Lorenzo factory had long been facing the issue of low operating rates due to an oversupply of polyols in the global market. Previously, the company had planned to cease polyurethane production activities at the factory in 2021, but was unable to do so at that time due to pressure from trade unions and the national government.
There is a discrepancy between Dow Chemical and the trade union regarding the number of employees affected by the factory closure. Dow Chemical claims that 40 employees will be affected, while the trade union insists that the number is 120.
According to local media reports from Santa Fe Province, the United Petrochemical Workers and Employees Union, representing the factory’s employees, accused the company of not notifying worker representatives when deciding to close the factory. In response, Dow Chemical stated that it had provided corresponding notifications to employees in accordance with Argentine labor laws. Dow Chemical also promised to maintain close cooperation with all stakeholders of the San Lorenzo factory to ensure an orderly and smooth transition process.
Furthermore, Dow Chemical maintains a significant business presence in Argentina, where it is the sole producer of polyethylene. Its main operating facilities are located in Bahia Blanca, south of Buenos Aires, where it owns 12 production plants and employs 3,000 workers.
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