Epoxy business is down! Olin Q2 2022 Net Income of $422.1 Million

Latest News: On July 28, Olin announced its financial results for the second quarter ended June 30, 2022: Sales for the second quarter of 2022 were $2,616.1 million, compared to $22.213 in the same period last year
$422.1 million in net income reported in the second quarter of 2022, compared to $355.8 million in the same period last year
US$100 million increased by 18.6%, and the growth of performance mainly came from chlor-alkali products and vinyl products.

Chairman, President and Chief Executive Officer Scott Sutton said: “Our second quarter Adjusted EBITDA
The performance continues to demonstrate how our models can adapt in real time to approaches that emphasize ‘value first’ rather than maximizing sales. Our chemical business has been challenged by a weak economic environment, particularly epoxy resins and chlorine derivatives such as dichloroethane, and our team has reduced operating rates to avoid incremental sales to the lower end of the market.

“As the recessionary economic environment continues to unfold in the third quarter of 2022, coupled with sequential increases in raw material and operating costs, primarily increasing gas and electricity costs. Olin’s third quarter 2022 adjusted
EBITDA will be about 15% lower than the second quarter of 2022.

The second quarter epoxy resin business overview

Epoxy resin sales were $772.7 million in the second quarter of 2022 compared to $8.50 in the second quarter of 2021
One hundred million U.S. dollars. The decline in epoxy resin sales was primarily due to lower volumes, partially offset by higher pricing. Segment earnings of $139.9 million in the second quarter of 2022 compared to $1.653 in the second quarter of 2021
One hundred million U.S. dollars. The decline in epoxy resin segment earnings of $25.4 million was primarily due to lower production and higher operating costs, primarily gas and electricity costs, partially offset by higher product margins as higher pricing was partially offset by higher benzene and propylene raw material costs.

Olin senior management holds conference call on July 29

Discussing financial results for the second quarter of 2022

Regarding the decline in Olin’s epoxy resin business in the second quarter, Scott
Sutton said: Olin’s sales of epoxy resin in the second quarter were lower than the first quarter. In fact, the quarterly transaction volume of epoxy resin fell to the lowest value in the history of the business. The biggest factor came from China. China accounts for at least 50% of the world’s epoxy resin consumption, but the current decline in China’s market consumption is far greater than the decline in supply, and China has reversed the trade flow and has actually become the leading supplier of epoxy resin and epichlorohydrin net exporter.

Olin used to export a large volume of epoxy resin to China. At this stage, China’s internal consumption and production do not match. Those epoxy resins that once entered China no longer exist. Most of the epoxy resin orders exported to China are sold by Asia. Other regions superseded (Taiwan, Korea, Japan). In addition, these several regions have been exporting large volumes of epoxy resin products to North America and Europe for several months, which is why our epoxy resin revenue declined.

Olin is running the epoxy business at nearly 50% operating rate, and given the severe energy situation in Europe, Olin expects Germany to cut the operating rate of epoxy resin and related upstream again by the end of the third quarter.