US Axiall expects vinyl operating rates to rise in Q2

06 May 2014 19:11 Source:ICIS News

HOUSTON (ICIS--US-based Axiall projects that it will attain vinyl operating rates above the industry average now that spring construction season is arriving and the company’s vinyl chloride monomer (VCM) plant is on the way to a full recovery, company executives said Tuesday.

“The first quarter was the first that our operating rates were below that of the industry,” Axiall CEO Paul Carrico told a group of investment analysts during a conference call to discuss the company’s financial results.

The company, formed in 2013 by Georgia Gulf's merger with PPG Industries's commodity chemicals business, on Monday reported disappointing financial results for first quarter 2014.

Severe winter weather and the VCM plant outage in Lake Charles, Louisiana, were blamed for most of the loss.

Freezing temperatures increased energy and logistics costs, delayed deliveries and reduced operating rates at the company’s US Gulf coast operations, Axiall Chief Financial Officer Greg Thompson said.

Carrico said that the VCM unit should be back to full commercial operating rates by the end of the quarter, a bit longer than earlier predictions.

Additionally, the peak season for vinyls demand for construction purposes is arriving, Carrico said. That should elevate industry chlor-alkali operating rates, increase margins and reduce costs, Carrico said.

“We expect in the second quarter we will run at our usual rates, above the industry average, Carrico said.

He said that the new caustic soda capacity brought to the market by Dow-Mitsui, Westlake and Occidental Chemical (OxyChem) has been largely absorbed in the market.

“The new capacity has moved to secure volume contracts for the 2014 supply,” Carrico said. “At this point, we feel like there’s no material change in the amount of caustic and chlorine being produced in the market than there was at this time last year.”

The company said that it expected to achieve synergies between the combined companies of $140m for the year.
By Bill Bowen