U.S. producer confident on growth prospects for fluorochemicals and fluoropolymers; Mexico-based ALFA reports declining earnings in fourth quarter 2022; Global ethylene market seen expanding just 2.7% in 2023

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Image courtesy of ALFA/ Alpek

U.S. producer confident on growth prospects for fluorochemicals and fluoropolymers

Mark Newman, president and CEO of the Chemours Company, said management is confident on growth prospects for both its TSS (thermal and specialized solutions segment, previously fluorochemicals) and APM (advance performance materials segment, previously fluoropolymers).

“We certainly expect, as I said at the opening, continued growth in line with our long-term forecast on TSS in 2023 (...) So, you know, really good growth there,” he said, according to a transcript of the call held on Feb. 10, 2023 by Motley Fool.

“On APM, you know, we remain sold out on a number of product lines. We're sold out on Teflon PFA. And yeah, while there is some weakness in the electronics market, you know, new semicon fabs, especially where a U.S. supply chain is favored, you know, are moving forward,” Newman added.

A softening economy could hurt its titanium dioxide business, said Sameer Ralhan, the company’s CFO. Titanium dioxide is a white pigment that can be used in coatings for airplanes, trains, autos.

“If you look at the low end side in the modest recession, what we have assumed is the U.S. will have a modest recession (…),” he said, according to comments transcribed by Motley Fool.

The fourth quarter of 2022 was relatively weak wit volumes “somewhat lower than expectation” for the TSS business (formerly fluorochemicals), he added.

The company divided in the fourth quarter of 2020 its former fluoroproducts segment into two new reportable segments: TSS and APM.

One well recognized company fluorochemical refrigerant brand used by many drivers of vehicles with air conditioning is Freon. Some brands for the APM (formerly fluoropolymers) segment include Teflon, Nafion (used in fuel cells and other applications), Krytox (lubricants). The company had over 6,000 employees at 30 sites as of 2021.

The Wilmington, Delaware-based company was formed after DuPont announced on Oct. 2013 plans to spin off its performance materials business into a new publicly traded company, completed in July 2015. Chemours is a combination of the word chemicals with the name DuPont de Nemours.

Mexico-based ALFA reports declining earnings in fourth quarter 2022

Mexico-based ALFA’s fourth quarter 2022 earnings, published on Feb. 15, reflected how conditions for petrochemical operators changed in the last quarter.

"Consolidated fourth quarter EBITDA of US $346 million was down 26% year over year.” ALFA’s president Alvaro Fernandez said in a message, according to a company statement.

Grupo Industrial Alfa owns Alpek. Alpek is a Mexican-owned chemical manufacturing company headquartered in Monterrey, Mexico. The company is one of the largest PET and PTA producers in the Americas and the sole producer of polypropylene and caprolactam in Mexico.

“Alpek successfully capitalized on an extended period of favorable macro trends in the global petrochemical industry until 4Q22. Those conditions changed at the close of the year as Brent oil average prices declined 22% from the peak in 2Q22; reference ocean freight rates dropped on average 52% quarter on quarter; and Asian polyester margins were below $400 per ton for the first time since 3Q21. Thus, Alpek's 4Q22 Comparable EBITDA was down 10% versus 4Q21,” Fernandez said.

For the full year, Alpek reported all-time high revenue, EBITDA and Capex. The company also paid out for 2022 record cash dividends, which included an extraordinary payment of $196 million to Alpek shareholders during the fourth quarter.

Martket sources had reported at the start of the year that market prices for plastic resins had reached a two-year low point at the start of the 2023.

Global ethylene market seen expanding just 2.7% in 2023

Growth in the global ethylene market will be limited this year by the effects of the Russia-Ukraine war, said ReportLinker.com, a research group, on Feb. 15.

The global ethylene-petrochemicals market will grow from $102.91 billion in 2022 to $105.71 billion in 2023 at a compound annual growth rate of 2.7%, it said.

The Russia-Ukraine war disrupted the chances of global economic recovery from the COVID-19 pandemic, at least in the short term. This may hurt demand for ethylene, according to the report.

The report named commodity price surges and supply chain disruptions causing inflation across goods and services. This has in turn had an impact on many markets across the globe, it said.

Major players in the ethylene-petrochemicals market are AkzoNobel, BASF, Borealis, Chevron Phillips Chemical Company LLC, China Petrochemical Corporation, China Petroleum & Chemical Corp., Clariant, Dow Chemical, Equistar, and ExxonMobil, according to the ReportLinker press release.

The report considered ethylene markets for polyethylene (plastics), as well as for ethylene oxide or ethylene glycol, ethylene dichloride, and styrene.

The main feedstocks of ethylene-petrochemicals are naphtha, ethane, propane, and butane. The main end-use industries in which ethylene is used are packaging, automotive, construction, agrochemicals, and textiles.

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