Company says chlorine shipments to vinyl producers are up dramatically and that it expects that trend to continue
Chlorine demand is rising and Olin has announced a $50/tonne price increase, the US-based chemical producer said during a call with stock analysts on 28 January to discuss the company’s earnings.
Company officials said that Olin has put sales controls in place for chlorine and has been unable to fill some orders at particular plants.
The company made its price increase announcement late the previous week and, so far, no other producers have announced similar increases, company officials said during the call. Company officials said the increase was for the first quarter but did not specify whether it would affect February contract sales.
Meanwhile, price increases for caustic soda did not go through in the fourth quarter and the company does not expect announced increases of $40/tonne for January to be accepted in the market, company officials said during the call.
“In our portfolio, with our book of accounts, we saw prices (for caustic) go down in the fourth quarter,” said John McIntosh, senior vice president for operations.
Olin, the fourth-largest chlor-alkali producer in the US, reported Q4 2013 profit of $24.7m compared with $34.6m in the fourth quarter of 2012, the company said in a filing after the close of markets on 27 January.
The company, based in Clayton, Missourri, makes and sells caustic soda, chlorine, hydrochloric acid (HCl), potassium hydroxide, hydrogen and bleach products. It also makes and markets firearm ammunition through its Winchester brand.
Olin chairman and CEO Joseph Rupp said the lower results came on improving but still soft chlor-alkali results and record results in the Winchester division.
For all of 2013, the company reported yearly profits of $178.6m compared with $149.6m for calendar 2012, the company said.
Sales for 2013 came to $2.5bn compared with $2.2bn in 2012, the company said.
The Q4 sales in the chlor-alkali division came to $322.2m compared with $336.4m in fourth quarter 2012 as lower prices more than offset improved volumes, Rupp said. Earnings for the division were $30.7m for the quarter compared with $54.3m in the fourth quarter of 2012, the company said.
Looking forward, Rupp said that Q1 chlor-alkali returns were likely to be down from the first quarter of 2014 due to lower ECU (electro-chemical unit) netbacks partially offset by improved volumes and lower costs.
The company said that chlorine shipments to vinyl producers are up dramatically and that the company expects that trend to continue.
Rupp said that the company expects that trend to continue and create a more typical recovering with rising demand for chlorine from producers of polyvinyl chloride (PVC).
“We will see some pressure on caustic as we see increased demand for chlorine,” Rupp said.
For caustic, the company foresees further capacity rationalization and industry consolidation in 2014, Rupp said.
The company’s Winchester division is enjoying record sales, and with rising gun ownership and an estimated 8m new target shooters added to the consumer market in the past five years, it expected continued strength for its ammunition sales.