Ashland estimates force majeure on European BDO to cost $15m-20m

HOUSTON (ICIS)–The force majeure at Ashland’s butanediol (BDO) plant in Europe earlier this month will cost an estimated $15m-20m, the US-based producer said on Wednesday.

Ashland also said that production at the plant in Marl, Germany will be suspended until late September at the earliest, “with volume expected to remain somewhat constrained into the first quarter of fiscal 2018″.

The statement came in an update that Ashland provided on the impact from a fire at the German plant that led to the shutdown of production on 10 August and the subsequent declaration of a force majeure in Europe on BDO, tetrahydrofuran (THF) and formaldehyde.

Ashland said there were no significant injuries from the incident.

The shutdown of the Marl facility makes Ashland unable to produce any BDO, THF or formaldehyde, significantly reducing the availability of product and thus leading to the force majeure in Europe.

Ashland also has a BDO unit in the US, with capacity of 65,000 tonnes/year, according to ICIS.

Sources close to the company and US BDO market watchers have said the European outage will not have an immediate impact on the American market.

But sources this week said that US producers had shipped BDO to Europe since the fire at the Marl plant to help Ashland meet customer obligations.

Ashland said the force majeure in Europe is limited to BDO, THF and formaldehyde and has no impact on the supply of any other Ashland products. 

Ashland said it will include the majority of the financial statement impact from the fire under “key items” when releasing earnings for the September quarter, therefore having no impact to adjusted results.

However, the lost profitability associated with any lost sales will impact adjusted results for Ashland’s Intermediates and Solvents (I&S) reportable segment.

The company now expects adjusted earnings before interest, tax, depreciation and amortization (EBITDA) for the I&S segment to be in the range of $5m-10m during the fiscal fourth quarter.