US Hexion eyes H2 2022 recovery in China’s wind market – CEO

HOUSTON (ICIS)–Hexion’s resin sales into China’s wind energy market have been down significantly in H2 2021, but that market should recover in the second half of 2022, CEO Craig Rogerson said during the company’s Q3 earnings call on Friday.

The US-based adhesives, coatings and composites materials company supplies epoxy resins and systems to composite fabricators in the wind energy market. Last year, the wind market accounted for 17% of Hexion’s total sales.

Rogerson said that customers in China’s wind blade manufacturing sector could not pass through high epoxy costs in their government contracts, which largely explains why production of blades has been “way down this year”.

However, with blade inventories now at low levels, there was a base for a recovery to occur “probably not early in 2022, but sometime in the second half of 2022”, he said.

Furthermore, the targets for wind and other renewable energies under China’s five-year plan remain in place, despite the current downturn, he said.

Rogerson also noted that authorities in China have moved to temporarily shut down some local production of epichlorohydrin (ECH) because of tighter environmental rules.

As ECH is a precursor in basic epoxy resins and epoxy specialty resins production, tighter ECH availability plays into the costs of the epoxy resin chain.

Outside of China, the global wind power market was “relatively strong” for Hexion, the CEO noted.

OUTLOOK
Looking at Hexion’s overall Q4 outlook, the company expects to see continued strength in the epoxy business, as well as tailwinds in its adhesive products business from residential construction demand, Rogerson said.

Meanwhile, Hexion continues to work on strategic plans, announced late September, to potentially spin off its epoxy business and to undertake an initial public offering (IPO) for its adhesives and versatic product lines, he said.

The company has filed registration statements with the US Securities and Exchange Commission (SEC) for the possible IPO on the New York Stock Exchange, which could proceed later this quarter or in Q1 2022, subject to market conditions, he said.

Thumbnail shows wind turbines. Image by Shutterstock