The Woodlands, Texas – Huntsman's polyurethane business seems to have turned a corner in the second quarter, in what was a tough first half for the business.
Adjusted EBITDA for polyurethanes in the quarter was $31m, compared with $156m in the same quarter in 2019. Earlier in the year Huntsman had released a trading statement pointing to the business breaking even in the quarter with volumes down 30% year on year.
Huntsman: I'd be shocked if somebody was trying to add tonnage
Volumes fell 15% because of declines in the US and Europe, although rebounding Chinese demand helped the number to this level. Differentiated businesses such as spray foam maintained their margins, but volume fell as coronavirus shutdowns hit the insulation, automotive and elastomer sectors.
In North America, spray foam, part of untsman Building Solutions, is the company's fastest growing business. Despite coronavirus shutdowns that business contributed $15m adjusted EBITDA in Q2.
CEO Peter Huntsman put the company's performance in the first half of 2020 to its move into downstream areas that now account for about two-thirds of demand. This, he said, included 1bn lb (450 kT) of what he considers to be polymeric commodity grade materials.
‘We'll incrementally expand our capacity as we can,’ he said. ‘But the focus has to be on how we add greater margin, greater consistency, greater reliability to the 3bn lbs. If we can get that 3bn lbs operating consistency at 15-20% EBITDA margin in the coming years, that will be a unique global franchise.'
In terms of MDI capacity in the second quarter, Peter Huntsman added: ‘ Europe is running at about 60%, Americas is probably at 70% and Asia is probably at 70%. So globally… about 66%.'
In July he said Europe was at 65%, and the Americas 75%. 'Asia is for us, about 95%,’ he claimed. ‘We're moving as much as we can right now in China.' He added that other producers were probably matching production to demand.
'I'd be shocked if somebody was trying to add tonnage in today's sort of market conditions. I think it would just be a colossal waste of shareholder money,' he said.
