Olin Q2 earnings miss on slow recovery in chlor-alkali, vinyls

Olin Corp. (Clayton, Missouri) has reported second-quarter net income of USD74 million, down 50% year over year from USD147 million, said the company.

Sales totaled USD1.644 billion, down 3.4% year over year. Adjusted earnings per share came to 66 cents, down 40% year over year and short of the analysts’ consensus estimate of 70 cents as compiled by S&P Capital IQ.

Adjusted EBITDA totaled USD278 million, down 21% year over year, but up 15% from the first quarter. Olin attributed the sequential improvement in part to seasonal demand improvement in the chlor-alkali products and vinyls business. Restructuring efforts helped lower costs and increase margins in the epoxy business, while results in the Winchester ammunition business were flat as higher military shipments were offset by lower commercial shipments and higher propellant costs.

Looking ahead, Olin sees caustic soda pricing supported by a tightening supply-demand balance. The company also expects sequential improvement in epoxy margins.

“The anticipated improvement in demand for our chlor-alkali products and vinyls business has been slower to develop than expected earlier this year, said Ken Lane, president and CEO. “Based on our current outlook and before considering the effect of Hurricane Beryl, we believe Olin’s second half 2024 adjusted EBITDA would have been comparable to first half 2024.”

Olin’s operations at Freeport, Texas, were significantly disrupted by Hurricane Beryl, which struck on July 8. The vinyl chloride monomer and phenol/acetone plants at Freeport remain offline. “We currently estimate that Olin’s third quarter 2024 adjusted EBITDA will be reduced by approximately $100 million due to incremental costs to restore operations, unabsorbed fixed manufacturing costs, and reduced profit from lost sales associated with the storm,” said Lane.

The chlor-alkali products and vinyls business turned in earnings of USD99 million, down 45% year over year, primarily the result of lower caustic soda pricing partially offset by decreased costs associated with products purchased from other parties, higher volumes, and lower raw material and operating costs, said the company. Sales totaled $920 million, down 8% year over year, as a maintenance turnaround and subsequent operating issues with the vinyl chloride monomer plant at Freeport increased costs and reduced sales.

The epoxy segment business turned in a loss of USD3 million, down from a loss of USD0.5 million in the year-ago quarter, on sales of USD318 million, down 4.8% year over year. Lower pricing was partially offset by increased volumes and lower raw material and operating costs, the company said.

The Winchester ammunition segment turned in earnings of USD70 million, up 8.6% year over year, on sales of USD406 million, up 11% year over year.

We remind, Olin Corporation announced a temporary shutdown at its Freeport, Texas, facility due to Hurricane Beryl. The company declared force majeure for its chlor-alkali and aromatics supply chain obligations. The disruption at its Freeport facilities will impact other Olin production and supply chains, including access to power, raw materials, and other services.

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Kemira Oyj said it is investing to expand the capacity of its sodium chlorate manufacturing facility at Ortigueira, Brazil, by more than 10%, said the company.

The investment is a priority for Kemira’s pulp and paper business since it will enable the company to respond to continued growth of the bleached pulp market in South America where Brazil is the leading producer, Kemira said. The additional capacity will be operational in the fourth quarter of 2024. Financial details have not been disclosed.

Sodium chlorate is the main component used in the production of chlorine dioxide, which is produced on-site at pulp mills. It is the primary bleaching agent for pulp, preserving pulp yield and providing superior strength compared with other oxidants, Kemira said. The company manufactures sodium chlorate using a proprietary process and renewable energy, it said.

We remind, Finnish chemical manufacturer Kemira left the Russian market in 2022 and is ceasing operations in the Russian Federation. Kemira employs 45 people in Russia. In 2021, the Russian market accounted for about 3% of the company's revenue, with most of it coming from the pulp and paper sector.

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Shell PLC has taken a positive final investment decision (FID) on a 100-MW electrolyzer planned for its Rheinland petrochemicals complex at Wesseling, Germany, the company said July 25, said the company.

Using renewable electricity, the REFHYNE II facility is expected to produce up to 44 metric tons per day or 16,000 metric tons per year of green hydrogen partially to decarbonize site operations from 2027.

"Investing in REFHYNE II is a visible demonstration of our commitment to the hydrogen economy, which will play an important role in helping to decarbonize Shell's operations and customer products," said Shell's head of downstream, renewables and energy solutions, Huibert Vigeveno.

The decision to invest “illustrates what can be achieved with the right enabling conditions to deliver competitive projects,” he said.

The REFHYNE II project has been enabled by supportive policies, including EU targets for the use of renewable hydrogen, and the German regulatory framework and it has received funding from the EU’s Horizon 2020 research program, Shell said.

The statement did not detail the investment volume but said this was covered by the current framework announced at Shell’s November 2023 capital markets day of up to USD15 billion of investment into low-carbon energy solutions between 2023 and 2025.

ITM Power PLC (Sheffield, UK) is to supply the proton-exchange membrane (PEM) electrolyzer, it said in a separate statement. The project will benefit from REFHYNE I, a 10-MW PEM electrolyzer by ITM that has been operating at Rheinland since 2021, when it was Europe's biggest PEM electrolyzer. Since 2021, preparations have been under way to deliver REFHYNE II, it said.

Shell’s 200-MW Holland Hydrogen 1 electrolyzer at Rotterdam is planned to start operations in 2025 after an FID was taken in 2022 as Europe’s biggest such project to date.

Meanwhile, TotalEnergies SA said July 24 it had taken an FID for a Dutch offshore wind project that by 2028 will supply green electricity for 350 MW of electrolysis capacity, producing 40,000 metric tons per year of renewable hydrogen to help decarbonize the company’s north European refinery activities.

The cost of green hydrogen production via PEM electrolysis in the Netherlands was assessed at a USD5.61 per kilogram average in June based on Dutch month-ahead baseload power, according to Platts Hydrogen Price Wall.

We remnd, Shell Singapore, a unit of British oil and gas company Shell, has reached an agreement to sell its petrochemical and refining assets in Singapore to CAPGC, a joint venture between Chandra Asri Capital and Glencore Asian Holdings.

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MAIRE announced that NEXTCHEM (Sustainable Technology Solutions), through its subsidiary CONSER, has been awarded a feasibility study in North America by a leading industrial player to optimize an existing maleic anhydride (MAN) facility, which is part of a malic and fumaric acid manufacturing plant, as per Hydrocarbonprocessing.

The feasibility study will focus on the revamping of the facility by assessing possible opportunities to boost efficiency of the maleic anhydride production through the application of CONSER MAN proprietary technology, also in view of a potential capacity increase of the plant.

Among its several industrial applications, maleic anhydride is an intermediate for the production of malic acid and fumaric acid, which are used to enhance texture, flavor, and stability of food products. In particular, malic acid acts as an acidity regulator, helping maintain the desired pH levels and enhance the flavor of foods and beverages; furthermore, malic acid is also a precursor in the production of fumaric acid, another food additive used for similar purposes.

We remind, Mitsubishi Gas Chemical (MGC) plans to close its orthoxylene (OX) and phthalic anhydride (PA) production facilities at its Mizushima site in Japan by mid-January 2025.

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Russia intends to offset excess oil production as part of its OPEC+ commitments in October-November 2024, as well as in March-September 2025, and the corresponding schedule has been sent to the OPEC Secretariat, the Energy Ministry said.

The Energy Ministry's schedule indicates that Russia intends to reduce production to the required level in July.

We remind, Russian government is considering a ban on exports of diesel due to rising domestic prices, the Kommersant daily reported on Wednesday, citing several unnamed sources. Russia is the world's top seaborne exporter of diesel just ahead of the United States. Diesel is its top oil product export, at about 35 metric MMtpy, of which almost three-quarters is shipped via pipeline.

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