A Destocking Customer and a Pulled-Forward Turnaround

FutureFuel's chemicals plant at Batesville ran at 32 percent of nameplate in the third quarter, down from 55, because one dedicated customer paused orders to rebalance inventory and the company moved a second unit's turnaround into the gap. That same customer has committed $41 million of capital to the site over the next two years.

A specialty chemical plant in Arkansas ran at 32% of its nameplate capacity in the third quarter.

It ran at 55% in the same quarter last year, and at 65% in the quarter before this one. The nameplate it is measured against is 12% bigger than it was a year ago, so the fall in actual pounds is worse than the percentage makes it look.

Here is the part worth your attention. The customer who stopped ordering is the same customer writing checks to expand the plant.

"What happens to a dedicated unit when the buyer who funded it decides to destock?"

FutureFuel reported its third quarter on Monday, and the answer sits in the release in plain language. Two customer process units at Batesville were down at once.

One turnaround was planned. The other was pulled forward into a hole that a single buyer's inventory decision opened up.

The rest of this brief is for subscribers.