Elkem silicones to ‘postpone investments’ amid weak results

Oslo – Elkem SA 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 NOK30 million (€2.6 million) during the first three months of 2023.

Segment revenue fell 20% year-on-year to NOK4.2 billion, 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.”

Moroever, continued the Sinochem-owned supplier, market sentiment was “still weak” going into the second quarter of this year.

Markets, it went on to say, remain challenging, due to 'weak sentiment in EU and US, and overcapacity in China'.

As a result, the Norway-based supplier said it was taking measures to “reduce costs, adjust production and postpone investments.”

However, Elkem said its silicone expansion projects are going ahead as planned with the 50% capacity increase in Zinghuo, China set for start-up in early 2024.

The project will see production of silicones there increase by 120 kilotonnes per annum (ktpa), with estimated additional sales of NOK4 billion per year.

In Roussillon, France, Elkem is investing NOK360 million to add 25% production capacity by the final quarter of the year. 

The project, said Elkem is "on schedule" and will add NOK2 billion to its annual sales.