Polymers weakness leads Mexico-based Orbia to revenue decline in first quarter 2023; CPChem´s propylene splitting plant, hexene unit set to start in second half; Labor supply for U.S. manufacturing seen as tight in April
Polymers weakness leads Mexico-based Orbia to revenue decline in first quarter 2023
Weakness in demand for polymer products made by the Mexico City-based company Orbia, formerly known as Mexichem, led to earning revenue declines, while at the same time the company saw rising financial costs after the Mexican peso appreciated against the U.S. dollar.
There was reduced demand for company products such as PVC plastic irrigation tubes for farming
“The decrease in revenues for the quarter was driven by Polymer Solutions, Building and Infrastructure and Precision Agriculture, primarily due to a slowdown in demand from a very strong prior year period,” the company said in a press release on April 26.
“Lower General Purpose PVC prices and weaker end markets in the context of the current macroeconomic environment were partially offset by strong demand in Connectivity Solutions and improved pricing across the Fluorinated Solutions product portfolio,” the company said.
Financial costs of $101 million increased as much as 138% largely driven by a foreign exchange loss due to the appreciation of the Mexican Peso and higher interest expense due to an increase in debt. These factors were partially offset by higher interest income from an increase in short-term rates, Orbia said.
CPChem says propylene splitting plant, 1-hexene unit set to start in second half of 2023
CPChem plans to start both its new 1-hexene unit in Old Ocean, Texas and a propylene splitting unit in Cedar Bayou in the second half of this year, according to comments provided by company CEO Mark Lashier during the company´s first quarter 2023 earnings discussion.
CPChem is also involved in construction of a world-scale project in partnership with Qatar Energy, both companies have confirmed.
Chevron Phillips Chemical and QatarEnergy announced on Nov. 16, 2022 plans to build an $8.5-billion ethylene and polyethylene integrated complex on the Texas side of the Sabine River at the Louisiana border, with CPChem owning 51% of the venture
This project, in Corpus Christi, Texas, had been originally announced in 2019 but was put on hold during the pandemic. The plant is only one of several ventures that the companies have worldwide.
“CPChem and Qatar Energy are jointly building world-scale petrochemical facilities on the U.S. Gulf Coast and in Ras Laffan, Qatar, with start-up at each facility expected in 2026,” it said.
CPChem officials reported that during the first quarter 2023 they saw “improved margins due to lower feedstock costs.”
Chemicals had first-quarter adjusted pre-tax income of $198 million, compared with $52 million in the previous quarter, company officials said during the call.
The increase was mainly due to improved margins from lower feedstock costs, higher sales volumes, and decreased utility costs, it added.
The polyethylene margin average for the industry rose by “$0.10 to $0.17 per pound during the quarter,” according to the information shared during the call.
Labor supply for U.S. manufacturing seen as tight
Manufacturing employment in April expanded by 11,000 positions following a contraction in March, according to data tracked and re-published by the North American chemical producers guild named The American Chemistry Council that includes the world´s biggest petrochemical companies both American and those from abroad that operate in the country.
“Average hourly earnings of all employees were up 4.4% year over year, faster than last month’s 4.3% year over year gain. From the separate household survey, the unemployment rate fell 0.1 points to 3.4%, the lowest since May 1969,” it said.
“The resilient labor market creates challenges for the Fed as it tries to cool persistent inflation, fed in part by a tight labor supply,” the American Chemistry Council said in a press release where it also discussed other indicators.
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