By David Reed, UT EditorNorthfield, Illinois-Stepan Co, one of the leading suppliers of aromatic polyester polyols (APPs) for the rigid polyurethane foams industry, reports that it expects a net loss in the range of $0.5 million to $1.5 million for the quarter ended 31 Dec. 2005, owing to "record high natural gas prices, plant-production problems, deferred compensation expense and a provision for future asset retirement obligations," according to a 23 Jan. statement.But full-year net income is projected to be in the range of $12 to $13 million, up 20 percent as against net income for 2004 at $10.3 million, thanks to growth in sales volumes and some improvement in profit recovery, the statement indicated."Global surfactant sales volume grew and was in line with our expectations. We continue to seek recovery of higher costs in our surfactant selling prices," said F. Quinn Stepan, Jr, the firm's chief executive officer. "Polymer volume [covering its APP business] was weaker than the prior year quarter, but earnings benefited from recovering profit margins. The phthalic anhydride plant problems, which adversely affected our fourth quarter, are behind us and the plant is running at capacity. We are optimistic about the year ahead," said Quinn Stepan.The plant problem was at the firm's Joliet, Illinois, phthalic anhydride plant, which experienced a fire in an electrical substation caused by the use of an undersized transformer provided by the electrical utility company. This resulted in extended turnaround time and subsequent start-up problems which, in turn, led to lost sales volume and high maintenance costs. Stepan says it recorded a reserve for out of specification product generated during the outage and plant restart.In addition, the firm has lodged a claim against the electrical provider, but this has not yet been resolved and, accordingly, is not reflected in 2005 results, the statement added.The plant problem also exacerbated the problem of high natural gas prices, the firm explained. While a cold spell in Illinois led to high NG prices, the outage at the PA plant also meant the firm had to use more gas to generate steam which is normally produced by the PA unit.Financial matters resulted in extra charges totaling $1.3 million, the statement said.Stepan says it expects to report earnings for the fourth quarter and full year 2005 by mid-Feb, upon completion of its year-end audit."