US Albemarle remains sceptical over Q4 demand - CEO

08 September 2009 23:04  [Source: ICIS news]

HOUSTON (ICIS news)--US specialty producer Albemarle said on Tuesday that forecasting fourth-quarter demand remains the biggest market uncertainty for the rest of the 2009 fiscal year.

“Some market indicators are pointing in a positive direction, while cautions from our customers and the broader industry make it difficult to project sustained growth at current levels through the fourth quarter,” CEO Mark Rohr said on a mid-quarter conference call.

The company said it had registered sequential third-quarter demand growth across most of its segments, and anticipated its catalysts and fine chemicals sectors to report sequential gains in both the third and fourth quarters.

In addition, Rohr said the catalyst segment should deliver a year-over-year gain over the next six months.

“The need to have FCC [fluid catalytic cracking] catalysts, especially upgrades, is profound, and that serves us pretty well,” Rohr said.

However, within polymer additives, an expected sequential gain this quarter could be offset by reduced fourth-quarter volumes due to weak holiday demand, the company said.

The reduced fourth-quarter demand would be due in large part to the automotive industry and the expiration of programmes such as “cash for clunkers”.

“The success of this programme will likely not carry over into the fourth quarter, where our experts project a slowdown in automotive sales,” Rohr said. “The automotive sector is very important to us.”

In addition, raw material costs were forecast to grow by $9m (€6.3m) and $13m in the third and fourth quarters, respectively, which could further pressure margins, he said.

As a result, the company said it would continue to keep its inventories at the lowest possible levels.

Albemarle’s second-quarter net profit fell to $38.5m from $61.7m, down 37.6% year on year.

Earlier Tuesday, Albemarle announced an alliance with MeadWestvaco Specialty Chemicals to cooperate in the emerging market for mercury removal products and services.

($1 = €0.70)

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By: Ben DuBose
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