28 February 2013 11:35 [Source: ICIS news]
LONDON (ICIS)--Arkema’s fourth-quarter results match conditions in the acrylates sector, where producers have faced squeezed margins, despite healthy sales volumes.
Arkema’s fourth-quarter sales rose by 3.4% year on year to €1.45bn, while earnings before interest, tax, depreciation and amortisation (EBITDA) were up by 8.2% at €171m, the French specialty chemicals maker said in a statement on Thursday.
Although demand was steady in the fourth quarter, weakened macroeconomic conditions clouded visibility and tempered prices in the acrylates sector, while producers had tried to recoup margins that had eroded in 2012 on high feedstock costs.
October acrylates contract prices rolled over, while upstream propylene prices dipped by €20/tonne in October. Despite the decrease for feedstock propylene in November, acrylate esters contract prices increased slightly or rolled over that month, as producers focused on margin recovery. December acrylate esters contract prices fell by €17/tonne, in line with the upstream propylene decrease.October, November and December propylene contracts fell by a total of €57/tonne.
Looking ahead, acrylate esters producers are aiming for March price increases to recover margins, but initial discussions have met buyer resistance as demand has not yet picked up significantly. The March propylene contract price has risen by €55/tonne.
One acrylic acid (AA) producer explained that price hikes are being targeted because of higher US prices and margin recovery. “It is the low price level in the market, as well as the expensive raw material increases in Europe, that are forcing us to try to get some improvement on margins. We cannot keep the lag on the increase on our AA and esters prices while we get the increases on the raw materials and suffer with poor margins.”
“There is every need to increase the margins on the products after the demise during last year,” another producer said. “Demand remains good and seems to be looking likely to remain so in March and April, but visibility is still not great.”
Buying interest is expected to pick up in the next few weeks as activity from the construction sector typically ramps up in spring in Europe.
Arkema produces 250,000 tonnes/year of AA from its site in Carling, France, accounting for a large proportion of the European market.
($1 = €0.76)
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