US Solutia expects raw material costs to rise 4.5% in 2012

15 December 2011 21:41  [Source: ICIS news]

NEW YORK (ICIS)--US-based specialty chemicals company Solutia expects raw material cost increases to moderate in 2012, rising by 4.5% after an estimated jump of 12% for 2011, senior executives said on Thursday.

The 4.5% rise represents approximately $30m (€23m) year-on-year on an absolute dollar basis, according to Jeffrey Quinn, Solutia’s chief executive.

Quinn spoke at the company’s annual media event coinciding with its investor day in New York.

Solutia expects raw material cost inflation to rise around 6% in its performance films and technical specialties segments, and about 3% in its advanced interlayers segment.

The company buys polyethylene terephthalate (PET) for its performance films business. It also buys vinyl acetate monomer (VAM) and ethylene vinyl acetate (EVA) for its advanced interlayers business.

Solutia said it has been mostly successful in passing on price increases to its customers, particularly in the performance films and technical specialties segment.

“It doesn’t seem that this has affected demand too much. We did see some of our customers delaying purchases; we had some destocking in our customer level in the second and third quarter and in a couple of our supply chains, including the materials that go into the electronics segment. But the supply chains seem to have normalized as we moved into the fourth quarter,” said Solutia CFO James Sullivan.

The company expects to see strong sales growth in its performance films business - from $290m in the last 12 months through the third quarter of 2011, to $550m in 2015, representing a 17% compound annual growth rate (CAGR).

($1 = €0.77)

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By: Feliza Mirasol
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