Olin Reports 3Q

Despite a slowing economy and hurricane-related outages, Olin OLN had a solid third quarter as the company continues to enjoy lofty caustic soda prices. Net unit prices in the chlor-alkali business were up 20% year over year and 12% sequentially, with the climb in caustic soda prices outpacing stagnating chlorine prices. Hurricane Gustav battered the firm's St. Gabriel, La., plant, resulting in $750,000 in damages and a 3% decline in chlor-alkali shipments during the quarter. While the supply side of the chlor-alkali market will likely remain tight for the foreseeable future, thanks primarily to lower operating rates in the face of anemic chlorine demand, we think that the demand picture for caustic soda could wither as the economy continues to cool. In particular, we expect weakness in key end markets like pulp and paper, alumina, and titanium dioxide, will likely weigh on caustic demand and eventually place downward pressure on prices.