Global Economic Considerations: The Corporation operates in a global, competitive environment, which gives rise to operating and market risk exposure.
Raw Materials: Availability of purchased feedstocks and energy, and the volatility of these costs, impact the Corporation's operating costs and add variability to earnings.
Supply/Demand Balance: Earnings generated by the Corporation vary based in part on the balance of supply relative to demand within the industry.
Financial Flexibility: Market conditions could reduce TDCC's financial flexibility, which could impact the financial flexibility of the Corporation.
Environmental Compliance: The costs of complying with evolving regulatory requirements could negatively impact the Corporation's financial results. Actual or alleged violations of environmental laws or permit requirements could result in restrictions or prohibitions on plant operations, substantial civil or criminal sanctions, as well as the assessment of strict liability and/or joint and several liability.
Litigation: The Corporation is party to a number of claims and lawsuits arising out of the normal course of business with respect to commercial matters, including product liability, governmental tax and regulation disputes, and other actions.
Health and Safety: Increased concerns regarding the safe use of chemicals and plastics in commerce and their potential impact on the environment have resulted in more restrictive regulations and could lead to new regulations.
Plastic Waste: Increased concerns regarding plastic waste in the environment, consumers selectively reducing their consumption of plastic products due to recycling concerns, or new or more restrictive regulations and rules related to plastic waste could reduce demand for the Corporation’s plastic products and could negatively impact the Corporation’s financial results.
Operational Event: A significant operational event could negatively impact the Corporation's results of operations.
Pension and Other Postretirement Benefits: Increased obligations and expenses related to the Corporation's defined benefit pension plans and other postretirement benefit plan could negatively affect UCC's financial condition and results of operations.
Cyber Threat: The risk of loss of the Corporation's intellectual property, trade secrets or other sensitive business information or disruption of operations could negatively impact the Corporation's financial results.
Total net sales were $1,042 million in the first quarter of 2020 compared with $1,278 million in the first quarter of 2019, a decrease of 18 percent. Net sales to related companies, principally to TDCC, and based on market prices for the related products, were $1,013 million in the first quarter of 2020 compared with $1,250 million in the first quarter of 2019, a decrease of 19 percent.
Average selling price decreased 19 percent in the first quarter of 2020 compared with the same quarter last year. Price decreased across all products, primarily in response to lower feedstock and other raw material costs, with the largest decreases in polyethylene, oxo alcohols, glycol ethers and ethanolamines. Volume was up 1 percent in the first quarter of 2020 compared with the first quarter of 2019. Volume increased across most product lines, with the most significant increases in ethylene oxide/ethylene glycol, driven by demand growth in the first quarter of 2020, and polyethylene, which was impacted by railcar shortages in the first quarter of 2019. These volume increases were partially offset by decreases in plastics used for wire and cable applications as a result of planned maintenance turnaround activity and other equipment maintenance in the first quarter of 2020, and volume decreases resulting from the Business Separation and the divestiture of the Corporation's acetone derivatives product line in the fourth quarter of 2019.
Cost of sales was $826 million in the first quarter of 2020 compared with $950 million in the first quarter of 2019, a decrease of 13 percent. The decline in cost of sales was driven primarily by lower feedstock and other raw material costs, the impact from the Business Separation and the divestiture of the Corporation's acetone derivatives product line in the fourth quarter of 2019.