OSLO, Norway—Elkem S.A. is postponing investments and adjusting production within its silicones operations following weak first quarter results.
The business unit went in red with negative earnings of $2.7 million during the first three months of 2023. Segment revenue fell 20 percent year-on-year to about $389.9 million, impacted by lower sales prices, particularly in China.
Elkem linked the reversals to "a poor macroeconomic sentiment combined with overcapacity in China, which have negatively impacted demand and sales prices." Moreover, Elkem noted that market sentiment was "still weak" going into the second quarter of this year.
Markets, meanwhile, remain challenging due to "weak sentiment in (European Union) and U.S., and overcapacity in China." As a result, the Norway-based supplier said it was taking measures to "reduce costs, adjust production and postpone investments."
Elkem said its silicone expansion projects are going ahead as planned with the 50-percent capacity increase in Zinghuo, China set for start-up in early 2024. That project will see production of silicones increase by 120,000 metric tons per year, bringing with it estimated additional yearly sales of nearly $375 million.
In Roussillon, France, Elkem is investing about $33.5 million to add 25 percent more production capacity by the final quarter of the year. The project, said Elkem is on schedule and should add more than $185 milllion to its annual sales.
