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Better margins sees Bayer with good Q3 income–despite TDI returns

By Liz White, UT staffLeverkusen, Germany–Margins in the TDI (toluene diisocyanate) business are “not yet satisfactory,” declared Dr Hagen Noerenberg, chairman of Bayer MaterialScience AG. But the TDI sector is on the way to better margins, he added. The supply and demand situation for TDI is now “far more balanced in the US,” Noerenberg continued, going on to say that globally there is still some TDI overcapacity. The Bayer MaterialScience boss was speaking in an interview after the Bayer AG third quarter results meeting, at which the group reported net sales up 19.1 percent on Q3 2004, at Euro 6500 million, and earnings (EBIT) up a massive 227 percent at Euro 870 million. The balance of TDI supply and demand in the US has altered considerably this year with Bayer shutting its 50 kilotonnes per annum TDI plant at New Martinsville, West Virginia, earlier in the year and Lyondell more recently closing its 135 ktpa Lake Charles Louisiana TDI operation. “We couldn’t afford to keep it open,” said Noerenberg, referring to the New Martinsville unit. Meanwhile, in the US, TDI users are still suffering from shortages after the Gulf Coast hurricanes, but these are short term difficulties, Noerenberg said. Bayer paid Euro 33 million in the third quarter for reorganisation in the polyurethanes business, which group chairman Werner Wenning said was for the closure of the New Martinsville site.Sales in MaterialScience for Q3 were Euro 2649 million, an 18 percent rise over Q3 2004, with growth in the polyurethanes business of 13 percent, while polycarbonates saw 30 percent growth. EBIT for the materials business was Euro 366 million, a rise of 151 percent over Q3 2004. “we succeeded in implementing substantial price increases in the market in light of strong demand and the continuing high cost of raw materials,” Wenning commented. This is in contrast to 2004, while volumes were steady at the same level as those of the previous year, he added. These figures reflect Bayer MaterialScience’s success in achieving the necessary margin improvements by way of price increases in the major businesses,” the Bayer head commented. Propylene oxide supply is tight, agreed Noerenberg, commenting that it will remain so until Shell’s Nanhai PO operation comes on stream next year, Noerenberg added. Bayer, with a considerable amount of capacity for PO and polyether polyols, will go after the higher margin products, he continued. “

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