AnalysisArkema's Q3 results reflect Europe acrylates market

08 November 2012 15:34  [Source: ICIS news]

By Helena Strathearn

LONDON (ICIS)--Arkema’s third-quarter results reflect market conditions in the acrylates sector, where production margins have been under pressure despite healthy sales volumes.

Arkema’s third-quarter net profit rose by 6.4% year on year to €116m ($149m) and its sales rose by 1.2% year on year to €1.61bn in the third quarter, while earnings before interest, tax, depreciation and amortisation (EBITDA) were unchanged at €266m, the company’s results showed on Thursday.

Production margins in acrylates have been squeezed this year as raw material costs have increased, while buying interest has been lower than usual.

“It seems most people in the market have either suffered with poor margins or reduced volumes,” one producer previously said. “In our case, demand has been steady this year with 2011 and indeed previous years.”

The sector has struggled to keep pace with feedstock costs. August and September propylene contracts increased by a total of €225/tonne. Sellers have had to contend with price volatility upstream, as they have been unable to adequately compensate for the gains seen for propylene this year.

“The killer this year has been raw materials,” the producer had said.

July acrylates contract prices decreased on lower feedstock costs, good availability and softer demand. August contract prices then increased by €40-50/tonne on higher propylene costs, despite healthy supply, subdued summer demand and market uncertainty amid global economic instability. European September contract prices increased by €40-50/tonne, again because of higher propylene costs.

AA producers remain focused on improving margins, and aim to move prices up in November.

Looking ahead, next year’s demand is expected to mirror 2012 volumes.

French specialty chemicals maker Arkema produces 250,000 tonnes/year of AA from its site in Carling, France, accounting for a large proportion of the European market.

($1 = €0.78)

By: Helena Strathearn
+44 208 652 3214

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