US A Schulman sees softening in transportation – CEO

HOUSTON (ICIS)–A Schulman is seeing softening in the transportation market, the CEO of the US-based producer of plastic compounds, powders, composites and resins said on Thursday.

Joseph Gingo, who was reinstalled as CEO in August, said that there was “some softening globally on transportation right now” that may prompt A Schulman to cut capacities. Transportation is an important customer market for the company.

The softening in transportation and automotive would come after the industry has held up “extremely well” up until now, Gingo told analysts during A Schulman’s fourth-quarter earnings call.

“We are concerned about transportation as we go forward,” he said.

“There’s nothing right now that says ‘oh, it’s dropping off the edge’, but it’s something that we are going to really watch,” he said.

Gingo also said that with uncertainties over the outcome of the 8 November US presidential election and trade with Mexico, A Schulman was in “wait-and-see” mode with regard to plans for its Mexican automotive business.

“As you are well aware, there is a lot of discussion in this election about what’s going to happen to imports out of Mexico, so, I think you are going to wait and see what happens in that case, you are not going to react prematurely, the election is only a few weeks off now,” he told analysts.

The US election campaign has seen much protectionist rhetoric, with Republican presidential candidate Donald Trump even saying that he would scrap the North American Free Trade Agreement (NAFTA) between the US, Canada and Mexico, and that he would build a wall on the Mexico border, if elected.

According to its website, A Schulman has four locations in Mexico, including one at San Luis Potosi. Belgium’s Solvay announced earlier on Thursday that it was building a polyamide compounding unit at San Luis Potosi.

The automotive industry is a major global consumer of petrochemicals which contributes more than a third of the raw material costs of an average vehicle. ICIS tracks the movement of petrochemical raw material costs in auto production both globally and regionally with the weighted ICIS Basket of Automotive Petrochemicals (IBAP).

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