MRC -- Industry operating rates and margins fell to a record low in Q3, according to Indorama Ventures, as the Thailand-based producer announced a fall in as earnings amid the weak economy, said the company.
Despite a year-on-year drop, EBITDA compared to the previous quarter rose 1% on the back of inventory gains in its integrated oxides and derivatives segment and volume growth for its fibres business.
Indorama’s polyethylene terephthalate (PET) activities were hit by low integrated PET margins in China, high feedstock costs in Western markets and lower margins in Europe and Brazil due to import pressure.
Production and sales volumes fell 11% and 5% respectively in line with destocking from buyers and industry operating rates falling to around 70%, which Indorama said are likely at a record low for the industry. This also weighed on margins, which are also at the bottom.
Operating cash flow rose on a year prior, resulting in free cash flow (FCF) of $52m so far this year. This was negative previously on the back of steeper feedstock costs, higher inventory volumes and Indorama's acquisition of Oxiteno.
Although inflationary pressures are expected to cool and there has been a pick-up in China’s economy in Q3, macroeconomic volatility is expected to assuage any meaningful recovery for the rest of 2023.
Volumes are expected to improve in 2024 across all segments as destocking activity comes to an end. Indorama anticipates improved margins on a modest market recovery.
We remind, Indorama Ventures Public Company Limited, a global sustainable chemical company, today announces that it has recycled 100 billion post-consumer PET bottles since February 2011. This has diverted 2.1 million tons of waste from the environment and saved 2.9 million tons of carbon footprint from the product lifecycles. Demonstrating its commitment to support the establishment of a circular economy for PET, in the last ten years Indorama Ventures has spent more than $1 billion towards waste collection of used PET bottles.