Dwindling biodiesel demand reduced Stepan's Q3 sales volumes

20 October 2009 22:57  [Source: ICIS news]

HOUSTON (ICIS news)--US intermediate and specialty chemical maker Stepan said on Tuesday dwindling biodiesel demand contributed to a third-quarter drop in surfactants business sales volumes despite the company's profitability in detergents.

"The biggest fall-off for us was in biodiesel," chief financial officer Jim Hurlbutt said in call with investors.

Stepan includes its soybean oil and methyl ester biodiesel additive production in its surfactants sector.

The wounded economy kept demand for diesel fuel use down, Hurlbutt said, and third-quarter surfactant sector sales volumes fell by 6%.Year-to-date volumes were down by 7%.

The Northfield, Illinois-based company boasted a profitable surfactant sector on its quarterly balance sheet as the consumer laundry and personal care products buoyed sales throughout the poor economy this year.

Lower commodity feedstock prices, cost-cutting initiatives and freight and logistical savings kept surfactants sector profit margins high in contrast with the lower volumes, Hurlbutt said.

Surfactants accounted for 73% of the company's sales in the third quarter while polymers made up 23% of business.

Polymer net profit declined by 27% year over year in the third quarter, hit hard by the lagging construction industry.

Hurlbutt said polyol prices were kept low by weak raw material costs, but sales volumes were down, specifically on commercial flat-roof insulation.

In Stepan's phthalic anhydride (PA) business, sales volumes were down by 5% year over year last quarter and posted a 14% decline in the first nine months of the year, Hurlbutt said.

The narrow drop in PA, even though demand remains low, is the result of the PA market's decline at the beginning of the economic downturn last year, Hurlbutt explained.

"PA has not shown much recovery," he said.

Stepan is a major US PA producer along with BASF, Koppers and ExxonMobil.

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By: Ryan Hickman
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