Q1 results confirm impact of high oil prices

A month ago, the blog suggested that chemical companies would “report excellent results for Q1“. Its regular quarterly round-up, below, shows this expectation has been confirmed.

The blog was also pleased to see Huntsman CEO, Peter Huntsman, warn about the growing risks from high oil prices, unemployment, and economic fragility. As it noted last month, the history of the past 40 years shows high oil prices have always led to:

• An initial boom in volumes/margin as buyers rush to secure supplies
• Then a period of severe destocking, once oil prices stabilise

Sadly, many analysts only focused on the immediate short-term benefits. Some even upgraded their forecasts, on the assumption that good times are here to stay. The blog hopes they may prove correct, and that ‘this time is different’, but would not invest its own money on this basis.

Akzo Nobel. “Pricing and cost reduction actions are ongoing to mitigate the impact of higher prices”.
Arkema. “Acceleration in the group’s growth and its ability to pass on raw material cost increases through sales prices”.
Ashland. “Our pricing actions enabled us to maintain overall margins sequentially despite a significant increase in raw material costs”.
BASF. “What we have now on our books gives us some visibility for the next two months”.
Bayer. “Expects to be able to pass on the raw material cost increases to its customers by raising selling prices.”
Celanese. “Strong demand, combined with excellent execution of our strategies, more than offset rising material costs”.
ConocoPhillips. “High olefins and polyolefins margins”.
Dow Chemical. “Significant sales increases across all geographies and all operating segments through rigorous price and volume discipline”.
Dow Corning. “Q1 profits were softened by sharply rising materials and energy costs”.
DSM. “Improvement down to the company’s focus on innovation and its global customer base”.
DuPont. “Our science-powered innovation, keen focus on customers and disciplined execution contributed to delivering outstanding results”.
ENI. “Improvement in product margins, mainly in the olefins business”.
ExxonMobil. “Record chemical performance though volumes fell 3%”.
Huntsman. “Express caution regarding the macro-economic conditions of high oil prices, stubbornly high unemployment rates, and the fragility of the US and European economic recovery,”
INEOS. “Monthly olefin pricing ensured the recent increases in raw material costs were passed on fully in the quarter”.
LyondellBasell. “Margins increased in nearly all businesses despite significant raw material pricing pressures”.
Methanex. “Demand continues to be strong and industry conditions remain relatively balanced”.
Occidental. “Profits surged due to strong export sales, high margins and lower energy costs”.
Olin. “Expected Q2 to be better than Q1, reflecting continual uptrend in pricing and sales volumes”.
Orlen. “Macroeconomic factors connected with the increase in petrochemical margins”.
PetroChina. “Offset any losses from the impact of high and volatile crude oil prices by leveraging fully into its refining and chemicals operations”.
PPG. “Construction activity in developed regions remains low with no signs of imminent improvement”.
Reliance. “Earnings and sales increased by 18%”.
Rhodia. “Global economic growth should remain strong throughout the year, driven by sustained demand especially in fast growing countries”.
SABIC. “Q1 profit jumped 42%, due to increased production and sales volumes, and an improvement in sales prices”.
Shell. “Realised higher margins and sold more volume”.
Sherwin Williams. “US domestic demand remains soft”.
Sinopec. “Oil rose continuously, and domestic demand for natural gas, refined oil and chemical products grew steadily.”
TOTAL. “Improvement was driven mainly by the improvement in the petrochemicals environment”.
Westlake. “Abundant supply of shale gas production makes US ethylene derivatives globally competitive”.
Yara. “Improved fertilizer prices linked to tight agricultural markets have more than compensated for increased energy costs from last year”.

About Paul Hodges

Paul Hodges is Chairman of International eChem, trusted commercial advisers to the global chemical industry. The aim of this blog is to share ideas about the influences that may shape the chemical industry over the next 12 – 18 months. It will try to look behind today’s headlines, to understand what may happen next in important issues such oil prices, economic growth and the environment. We may also have some fun, investigating a few of the more offbeat events that take place from time to time. Please do join me and share your thoughts. Between us, we will hopefully develop useful insights into the key factors that will drive the industry's future performance.

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