Olin, the world's largest chlor-alkali producer, reported sharp losses in the second quarter as prices and demand for most products in its lineup cratered amid shutdowns related to the coronavirus outbreak.
The company Aug. 5 posted a Q2 net loss of $120.1 million, a drop from a $20 million loss in the same quarter a year ago.
"The chlor-alkali products and vinyls business experienced weaker broad-based customer demand from almost all end-use chemical customers," CEO John Fischer said in a statement.
Overall, chemical business sales have increased from the April low point and continued to rise in July, he said.
Customer order patterns 'remain volatile'
Fischer said, however, that the chlor-alkali and epoxy businesses "remain challenged by ... current economic conditions. Visibility around future demand continues to be limited and customer order patterns remain volatile."
Olin produces chlorine and chlorinated products, like bleach and hydrochloric acid, as well as chemicals used to make foam insulation. The company also uses chlorine to produce ethylene dichloride, a precursor to construction staple polyvinyl chloride which, in turn, makes pipes, window frames, vinyl siding, and other products.
In addition, Olin manufactures caustic soda, a byproduct of chlorine production, which is a key feedstock in alumina and pulp and paper industries.
The sharp decline in chlor-alkali rates tightened caustic soda supply, feeding a supply-driven price boost in export prices that peaked at $400/dmt FOB USG in mid-June before falling back to last be assessed Aug. 4 at $300/mt FOB.
At the same time, US caustic soda demand has waned on weaker alumina and pulp and paper demand. LAlumina, A 500,000 mt/year alumina plant in Burnside, Louisiana, was expected to close in August. International Paper, a major caustic soda buyer, reported July 30 an 8.9% decline in quarterly profits as demand for printing paper plunged amid widespread office and school closures.
Olin noted that its caustic soda pricing rose 8% during the quarter, while EDC prices fell 50% as chlorine and PVC demand plummeted. Sales in the chlor-alkali and vinyls segment reached $651.7 million in the quarter, down from $909.2 million in the same period of 2019.
Olin's executives will discuss quarterly results during an Aug. 6 conference call.
