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November 10, 2020 03:24 PM

Trinseo cautiously optimistic about market recovery

European Rubber Journal Report
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    Trinseo’s synthetic rubber production plant in Schkopau, Germany

    BERWYN, Pa.—Trinseo S.A. has seen continued recovery in the automotive, tire and medical industries during the third quarter of 2020, and is "cautiously optimistic" that the trend will persist in the remaining quarter of the year.

    "The positive demand recovery we observed toward the end of the second quarter has seen momentum through the third quarter," Frank Bozich, Trinseo president and CEO, said in a third quarter earnings call Nov. 5.

    This, he said, led to "significant sequential quarterly volume improvement" in many applications, including tires.

    In the tire segment, according to Bozich, third quarter volume was flat year-on-year at 57,000 metric tons, but significantly higher than the 26,000 tons reported in the second quarter.

    "We're cautiously optimistic that this trend will persist for the duration of the quarter," Bozich said during the earnings call.

    Despite the pick-up in demand, Trinseo's synthetic rubber segment reported a 24 percent decline in sales to $79 million during the third quarter, due mainly to the pass through of lower raw material costs.

    Demand recovery in sales was paced by Asia and North America, Trinseo said in its third quarter results Nov. 5.

    Adjusted earnings (EBITDA) went into negative territory, at negative $2 million—nearly $10 million below the third quarter of 2019.

    Trinseo linked the earnings decline to lower margins from the impact of higher spot sales in emulsion styrene butadiene rubber (ESBR).

    In addition, lower fixed cost absorption from inventory reduction initiatives impacted earnings.

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