Westlake Chemical expects improved 3Q demand

: Petrochemicals
23/08/03

US-based Westlake Chemical said it expects demand to rise in the third quarter before a typical seasonal downturn at the end of the year.

Westlake is cautiously optimistic that China's recently announced economic stimulus in its construction sector and improved US demand will boost demand, chief executive Albert Chao said today on an earnings conference call. Unplanned plant outages that reduced second-quarter profit by $50mn should be resolved in the third quarter, he said.

The company expects improved polyethylene (PE) prices, which bottomed out in the second quarter before gradually rising in July.

Westlake also expects PVC prices to improve on higher Asian demand, lower Chinese export capacity, and higher feedstock costs. The most recent assessed price for PVC sales contracts declined to 57.5c/lb or $1,268/t for the end of the second quarter, lower than the $1,356/t assessed in the first quarter and well below $2,137/t in second quarter 2022.

In the second quarter, plant outages and a reduction in export volumes to China drove lower sales of PE, epoxy, and polyvinyl chloride (PVC). Those declines were mitigated by higher caustic soda average selling prices and lower feedstock and energy costs.

Despite stronger domestic homebuilding and construction, China's slow recovery from the pandemic caused declines in company-wide demand, especially in PVC and epoxy exports.

Westlake's housing and infrastructure products business, consisting of finished products for building and construction, posted profit of $190mn, up by 33pc from the first quarter but down by 19pc from the same quarter last year.

The company's performance and essential materials business, consisting of vinyls and polymers for intermediate use, recorded profits of $215mn in second quarter, down 47pc from the first quarter and 78pc lower than a year earlier.

Total second-quarter profit fell to $297mn, down by 25pc from the previous quarter and down 65pc from a year earlier.

By Hannah Borai

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