US Momentive warns on volatile raw materials, cites phenol spikes

HOUSTON (ICIS)–Momentive Specialty Chemicals’ raw material price environment remains volatile, especially for phenol, the CEO of the US-based firm warned on Wednesday.

“I should caution that raw material [prices] remain volatile, for instance we saw phenol spikes of 12% in the US and 10% in Europe in July,” Craig Morrison told analysts during Momentive’s second-quarter results conference call.

“We continue to remain vigilant on the pricing front to effectively manage the raw materials volatility,” he added.

As for the second quarter ended 30 June, Momentive saw a modest decline in raw material prices from the first quarter.

Year-over-year, second-quarter raw material prices were mixed, with phenol down 1% and urea down 3% while methanol rose 16%.

Momentive has two core businesses: epoxy, phenolic and coating resins, and forestry products resins.

Epoxy, phenolic and coating resins’ second-quarter earnings before interest, tax, depreciation and taxation (EBITDA) fell 1% year over year to $72m, with EBITDA margins falling to 8.5%, from 9.1% in the 2013 second quarter. The segment’s sales rose 8% to $862m, with sales up in all product lines except epoxy resins.

Forestry products resins’ second-quarter EBITDA rose 10% to $65m, with EBITDA margins rising to 13.7%, from 13.1% in the 2013 second quarters. The segment’s sales rose 5% to $475m on strong North American formaldehyde demand.

Additional reporting by Jonathan Lopez.