US DuPont expects idled polymer capacity to stay down in Q3

HOUSTON (ICIS)–DuPont expects most of the polymer capacity that it idled in response to the automobile slowdown will remain down in the third quarter, the company said on Thursday.

DuPont had idled about half of the polymer capacity in its Transportation & Industrial segment, said CFO Lori Koch. She made her comments during an earnings conference call.

DuPont did not specify which plants were idled or which polymers were affected.

When demand recovers, DuPont could bring the capacity back up in two to three weeks, she said.

“Q3 will look a little bit more uptime than Q2, then we will see even more uptime as you head into Q4,” Koch said.

The product lines in Transportation & Industrial include Healthcare & Specialty; Industrial & Consumer; and Mobility Solutions.

Mobility Solutions produces Zytel nylon resins; Crastin polybutylene terephthalate (PBT) thermoplastic polyester resins; Rynite polyethylene terephthalate (PET) polyester resins; and Tynex nylon filaments.

DuPont’s polymers account for the majority of the segment’s exposure to the automobile industry, Koch said. These polymers are sold to tier 1 and tier 2 suppliers. The tier number corresponds to the suppliers’ distance from automobile producers, with tier 1 suppliers selling directly to the companies.

Because of DuPont’s position in the supply chain, it can take about a quarter for trends in the automobile industry to trickle down to the company, she said.

DuPont’s other major point of exposure is through its adhesives, she said. Those are sold directly to the producers.

Worldwide, second-quarter automobile production fell by 45% year on year, bringing the decline for the first half of the year to exceed 30%, Koch said.

The decline hit DuPont’s Transportation & Industrial segment. Second-quarter volumes in the segment fell by 28%. Sales fell by 34%.

The slowdown in the automobile industry led DuPont to report a $2.5bn noncash impairment charge in the segment during the second quarter.

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Thumbnail image shows automobiles Photo by Ng Han Guan/AP/REX/Shutterstock