Dow has best quarterly earnings ever; Methanex retakes Geismar 3 project as methanol prices recover; American Chemistry Council sees advances in U.S. plan to modernize infrastructure
Dow has best quarterly earnings ever
The Dow Chemical Co. reported on July 22 that in the second quarter 2021 it had its best quarterly earnings ever, helped by higher prices amid strong demand for its plastic resin products.
Dow posted net sales of $13.9 billion in the second quarter, a 66% increase from a year ago.
Dow’s CEO Jim Fitterling said the company delivered the “strongest quarterly earnings performance in the company's history” with substantial growth in net sales and earnings.
“We achieved double-digit sales gains in all operating segments and businesses. A 66% increase in sales relative to the year-ago period was led by a local price improvement of 53% combined with a 9% volume increase,” he added.
The packaging and specialty plastics business revenue increased thanks to higher prices that offset volume decreases.
“Volumes declined year over year and sequentially due to lower polyethylene supply from the lingering effects of Winter Storm Uri and our own planned maintenance turnarounds. Compared to the prior quarter, the business delivered local price gains in all regions,” Fitterling said.
The company’s polyurethanes and construction chemicals businesses saw both greater prices and volumes, he said.
“Despite industry supply chain challenges across a number of end markets, including mobility, the business delivered sequential sales growth on increased local prices and volumes,” Fitterling said.
There have price increases across most commodities related to supply chain problems, low inventories and surging demand from a reopening economy.
Methanex retakes Geismar 3 project as methanol prices recover
John Floren, CEO of Canada-based, world's biggest methanol producer Methanex Corp.,said on July 29 during the second quarter earnings discussion that methanol prices recovered in 2021 and may surpass pre-pandemic levels before year’s end.
“We increased our average realized price in the second quarter to $376 per tonne, a $13 increase compared to the first quarter,” Floren said, according to a transcript of the call by Motley Fool.
Current methanol industry dynamics are favorable, supported by strong demand, low global inventory levels, and ongoing industry supply challenges. Inventories will continue tight in the third quarter, he added.
“We estimate that global methanol demand increased by approximately 3% in the second quarter compared to the first quarter. We anticipate that global methanol demand will surpass pre-pandemic level later this year,” Floren said.
Given the recovery, the company has re-evaluated market conditions and concluded that “new industry supply will be needed to meet growing methanol demand over the next 5 years.”
“We were pleased to announce that our board unanimously approved the restart of the construction of our Geismar 3 project, a unique project with significant capital and operating cost advantages,” he said.
The capital cost estimate for the project is up to $1.35 billion. The company deferred the project on April 1, 2020.
“We expect approximately $800 million to $900 million remaining capital cost after resuming construction in October 2021,” he added.
The project will have production capacity of 1.8 million tonnes of methanol. It is located next to the company’s two other methanol plants in Louisiana.
Besides Canada and the U.S. the company also has production assets in Chile, Egypt, New Zealand and Trinidad.
Methanol can be used to produce acetic acid which in turn produces vinyl acetate monomer. It can be also used as fuel for vehicles, including for some ships.
American Chemistry Council sees advances in U.S. plan to modernize infrastructure
The American Chemistry Council (ACC)’s President Chris Jahn said on Aug. 1 that he sees advances in work by U.S. legislators toward enacting bipartisan infrastructure legislation that would create demand for petrochemicals.
“We are encouraged to see that the Senate’s latest proposal contains numerous provisions that help promote the development and use of the advanced materials,” he said.
The legislation to support infrastructure spending could help expand the electric vehicle network, increase energy efficiency and upgrade drinking water systems.
Jahn also reiterated the association’s opposition to any plans to reinstate taxes directed to fund site remediation work. Those taxes haven’t been collected since the mid 1990s.
Separately, the ACC said on July 29 that through the approval on that day of several bills the House of Representatives had continued its recognition of the essential role of plastics and polymer composites.
“The Fiscal Year 2022 Energy & Water Appropriations Subcommittee report includes significant funding to support lower-carbon vehicles and to drive development of new technologies that use lightweight materials,” the ACC said.
“The report includes a combined $480 million for electric and hydrogen fuel cell vehicle deployment, battery manufacturing and recycling, and sustainable automotive plastics recovery and recycling,” the ACC added.
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