US Olin execs see caustic soda, chlorine price hikes stalled

27 April 2012 17:10  [Source: ICIS news]

HOUSTON (ICIS)--Executives of US-based chlor-alkali producer Olin said on Friday they see previously announced price increases for both caustic soda and chlorine as “stalled,” but expect the chlor-alkali business to remain steady in the second quarter.

CEO Joseph Rupp and other Olin executives spoke to analysts in an earnings call Friday, one day after the company reported a drop in its first-quarter net income to $38.7m (€29.4m) from $133.7m year on year, while first-quarter sales increased by 16.3% year on year to $507.2m.

359.7The company’s chlor-alkali sales were $359.7m, compared with $299.4m in the same period in the previous year, a 20.1% increase, it said.

Olin’s chlor-alkali segment earnings for the first quarter of 2012 grew by 64.6% year on year to $74.4m on higher volumes and higher prices, it added.

For the second quarter, the company said it expects its chlor-alkali segment earnings to improve, reflecting seasonally stronger chlorine and bleach demand, it said.

Rupp told analysts that the company had about an 80% chlor-alkali operating rate in the first quarter, substantially higher than 70% in the fourth quarter of 2011.

There were planned outages at five of its seven plants, and there were two customer outages, one planned and one unplanned, that are expected to continue into second quarter, Rupp said. The company said it expects to run its operating rate in the mid-80s in the second quarter, he said.

Rupp noted that Olin’s previous announcement of a $45/dmt (dry metric tonne) for caustic soda, which was followed by other major producers, has not taken hold and that the likelihood that it will be accepted by buyers is uncertain. Likewise, he said, the company’s $45/dmt price hike for chlorine, which was not followed by other producers, has also not taken hold and remains in limbo.

Nonetheless, Rupp said that there is still strong demand for caustic soda from Olin's customers.

The outlook for hydrochloric acid (HCl) is also strong, Rupp said, even though there has been some dampening in demand from the oil and natural gas production sector, where HCl is used in the hydraulic fracturing process.

($1 = €0.76)

Additional reporting by Samuel Wong

Follow Ken Fountain on Twitter.

 


By: Ken Fountain



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