27 February 2012 17:32 [Source: ICIS news]
LONDON (ICIS)--Slow demand for oxo chemicals and poor macroeconomic conditions affected Oxea’s fourth-quarter performance, the Luxembourg-headquartered company said during its earnings conference on Monday.
Demand in the European market, which accounts for almost half of Oxea’s revenue, started to shrink from mid-2011, when customers became hesitant to commit to large quantities, given low downstream demand and economic uncertainty in the European and global markets.
Although the slowdown in demand is a typical seasonal problem, discussions about another recession made a lot of customers reduce stocks to minimum levels, oxos producers said.
Softening domestic demand could only be partly compensated by higher export volumes to Asia for a limited period during the third quarter, the company said.
The high costs of European propylene contracts, currency exchange volatility and slower growth rates in the Asia-Pacific undermined the European oxo-chemical industry's competitiveness in the global market throughout most of 2011.
As export opportunities failed to materialise and fears of a double-dip recession grew, European producers were forced to bring the annual destocking cycle forward, gradually reducing operating rates to avoid starting the first quarter of 2012 with a loss.
Prices of oxo-alcohols, which are mainly used in construction, appliance and automotive industries, decreased throughout most of the second half of 2011 on poor buying interest, ample availability and strong domestic competition, with butanol values hitting a 20-month record low in December.
Oxea’s net income in the fourth quarter of 2011 fell to €8.7m ($11.8m) from €24.3m in the same period the year before, while net sales decreased by 6.5% on falling sales volumes.
The company’s outlook for the first quarter of 2012 is more optimistic, as low inventories has led to restocking activities and improving demand.
Demand has not been particularly strong in the first quarter, another European oxo-alcohols producer said. However, this has been more than offset by low inventory levels and production outages.
($1 = €0.74)
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