AnalysisArkema's Q2 results reflect European acrylates market

01 August 2012 17:08  [Source: ICIS news]

By Helena Strathearn

LONDON (ICIS)--Arkema’s second-quarter results reflect market conditions in the acrylates sector, where lower feedstock costs would have affected profits despite healthy volumes.

Despite a 15.4% year-on-year increase in sales, Arkema's earnings before interest, tax, depreciation and amortisation (EBITDA) fell by 4.7% to €306m ($378m) during the period, the company's results showed on Wednesday.

Arkema produces 250,000 tonnes/year of acrylic acid from its site in Carling, France, accounting for a large proportion of the European market.

Although sales in the acrylates sector were largely healthy, lower feedstock propylene costs in the second quarter pushed prices down. 

AA and acrylate esters prices decreased in June and July on lower propylene costs. The €170/tonne decrease in propylene resulted in triple-digit decreases for most grades.

Demand in the second quarter picked up from the first, and was largely steady, although down by approximately 4% compared to the second quarter of 2011 when offtake was particularly healthy.

Orders continued to come in through the quarter, however, despite concerns regarding the wider economy and as the summer holiday period approached.  

“The high performance illustrates the Group’s resilience in a challenging macroeconomic environment, marked by contrasted market conditions between the various geographic regions of the world and the price fluctuations of raw materials,” Arkema said.

Looking ahead, the settlement of the August feedstock propylene contract at an increase of €120/tonne from July is likely to put some upward price pressure on the European acrylic acid industry in August.

One seller said buying interest should rise in the next few weeks as buyers will be seeking September volumes as stocks will need to be replenished.

While buyers and sellers hope that demand will pick up in September, most express some concern as to the strength of any rebound - because of macroeconomic instability - and are closely managing stocks.

($1 = €0.81)

By: Helena Strathearn
+44 208 652 3214

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