The Woodlands, Texas – President and ceo Peter Huntsman pinpointed Asia as the location for the “next wave” of MDI (methylene diphenyl diisocyanate) capacity but warned that markets would tighten before the additional capacity arrived.
Speaking of MDI Huntsman said: “As we look at the capacity utilisation going into the next year, we continue to believe that capacity utilisation will tighten throughout 2014 and 2015 it’s not until 2016 that you start to see some of the Asian wave of new capacity coming on.”
“Assuming everything gets dealt with and assuming it all comes on time you will see global capacity rates go down to about 89% utilisation rate in 2017,” he said.
Executive vice president and cfo Kimo Esplin added that if all MDI capacity arrived as announced, utilisation rates would be the same during 2016 and 2017 as they are today.
Peter Huntsman continued: “Plant utilisation will probably be in the mid-80s in Asia and it will probably in the low 90s, if not higher in Europe and North America, which is a good balance because the vast majority of global growth in MDI taking place in China, should be taking place in China over the next decade and Huntsman will position in China.”
He described the company’s North America position, where, he said, Huntsman is the largest producer, as “even better” and added “I quite like the trends that are shaping up.”
“We're not talking about any more than sort of utilisation rates that we're seeing today in the 2016, 2017 timeframe,” added Huntsman.
He also told analysts that January had brought a 16% hike in the cost of benzene which was likely to continue as the year progressed, he added.
“Just to give you an idea, $1 movement in benzene price you need about $0.085 per pound MDI pricing to improve offset that benzene,” he said.
Looking back on the fourth quarter of 2013, Huntsman said: “Compared to the previous year period, we saw favourable earnings growth from our MDI urethanes business.”
The company’s polyurethanes division reported adjusted earnings before tax as $173m (EUR127m) during the fourth quarter of 2013 – a 4% growth on the same period in 2012, as previously reported by Urethanes Technology International/UTECH-polyurethane.com
The company had continued to see strong demand for MDI, according to Huntsman. Revenue from the material increased 9% and the company’s sales volume grew 7% during the fourth quarter of 2013 compared to the same period in 2012, he said.
Performance products and pigments both saw attractive growth of 2% and 3% respectively, led primarily by increased sales volumes, he said. In the advanced materials, he said the company walked away from certain low-margin business which resulted in a 3% decrease in sales revenue.
In Europe, the company saw double-digit growth in its two largest markets, insulation and composite wood products. In the Asia Pacific region, growth was well-balanced across the insulation, appliance, automotive and furniture markets, he said.
“An improvement in North American housing demand drove double-digit growth for composite wood products, in the Americas region where we also saw attractive growth in the insulation, adhesive and furniture markets,” added Huntsman.
XE currency conversion: 12 February