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Isocyanates losses negate Lyondell gains in PO

By Patrick Raleigh, UT On-line news editorHouston, Texas- Reduced profitability in Lyondell Chemical Co.’s TDI (toluene diisocyanate) and MTBE fuel additives businesses during the third quarter more than offset improved results in its propylene oxide and derivatives segment. TDI margins for the three months to 30 Sept were significantly lower compared to the same period last year, Lyondell reported 23 Oct. Higher raw material and energy costs were not fully offset by price increases, the company explained. By contrast, margins in the PO and PO derivatives product areas improved as product prices rose slightly and raw material [propylene] prices fell, the firm said. The urethane chemicals and MTBE operations are key parts of Lyondell’s Intermediate Chemicals & Derivatives (IC&D) segment, which also produces methanol and styrene. For the unit as a whole, IC&D reported a 21-percent drop in operating earning (EBITDA) to $84 million. The decline was despite a 6.4-percent rise in sales volumes to 370 kilotonnes, versus the prior year quarter. The diverging trends in the PO and TDI units continued into 2003, a comparison with Lyondell’s second quarter 2003 results shows. Third quarter sales volumes for PO and its derivatives were 10 percent higher than in the preceding three months, according to Lyondell. PO margins benefited from lower propylene raw material prices, while sales prices remained relatively stable, the company said. Against that, “TDI continued to be negatively impacted [over the second and third quarters of 2003] by depressed prices coupled with increased raw material costs,” Lyondell stated. Summarising Lyondell’s third quarter, president and ceo Dan Smith said, “Results during the quarter were generally as anticipated as volumes returned to more typical levels for our core ethylene- and propylene oxide- based products …throughout the quarter, raw materials costs continued to be volatile.” Looking ahead, Smith noted signs of improvement in the global economy, but cautioned that these positive trends are being overshadowed by volatility in raw material and energy prices. “

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