polyurethane

Due to an unforeseen production outage at a supplier of nitric acid, Covestro’s European production facilities for the isocyanates MDI and TDI can currently only be operated at reduced capacity.

Covestro said it was forced to declare force majeure on Oct. 6. Force majeure refers to any natural and unavoidable catastrophe. A force majeure clause is included in contracts to remove liability when such events restrict participants from fulfilling their obligations.

The raw materials are key ingredients in the production of polyurethane foam, which is used in a variety of applications to create consumer and industrial products, including footwear, sportswear and outerwear, as well as furniture cushions and mattresses, insulation, coatings and adhesives.

Covestro said it is unable to fully compensate for the missing quantities of raw materials through purchases from other manufacturers. Its raw material supplier plans to restart its facility in the week of Dec. 11. On the basis of this information, Covestro said it’s striving to gradually restore its production output to a normal level.

“We deeply regret this restriction and hope to be able to resume full deliveries of MDI, TDI and by-products to our customers soon,” said chief executive officer Patrick Thomas. “Despite the extent of this issue, we in total do not expect a negative impact on our declared business targets for 2016.”

For the six months ended June 30, earnings before interest, taxes, depreciation and amortization rose 14.9 percent to 1.1 billion euros, or $1.2 billion, while sales fell 6.4 percent to 5.9 billion euros, or $6.5 billion. Net income of the Covestro Group, based in Leverkusen, Germany, gained 54.3 percent to 412 million euros, or $452.5 million.

Covestro’s main segments served are the automotive, electrical and electronics, construction and the sports and leisure industries, including textiles and footwear.

During the force majeure period, Covestro is keeping its customers and suppliers informed about the situation and is helping them to find alternate solutions.

Covestro is considered the largest manufacturer of PU in the world, according to ISOPA — the European Diisocyanate and Polyol Producers Association.

With 2015 sales of 12.1 billion euros, or $13.3 billion at current exchange, Covestro is among the world’s largest polymer companies. Covestro was spun off last year from Bayer AG, which invented polyurethane. Formerly known as Bayer MaterialScience, Covestro has 30 production sites around the world and employs about 15,800 people.