Peter Huntsman cautiously optimistic for Q2

The Woodlands, Texas – Consumer confidence is the key to recovery in many downstream markets, Peter Huntsman CEO, Huntsman, told analysts in a recent conference call.
 

Taking the automotive industry as an example, he said: 'As we speak to our customers, I think there is very little inventory in the supply chain. I think you're going to see an impact of the improvement on a month-to-month basis, but again, when I talk about the visibility that we have… how many units of automobiles will Ford or GM or BMW be running at the end of May. That hasn't been told to us,' he said.

What happens at dealers and consumer sentiment and a number of other issues will drive the recovery, he added.

Huntsman also quantified how great the effect of the coronavirus pandemic had already been on his polyurethanes division. He said there was a 60% drop in orders for polyurethane across the board in April. The Americas were down 90%, and Asia about 20%, he said. May is down around 50% and June 35%.

In the composite wood and other construction sectors, demand for Huntsman's products in April were down 35%, and could be down by 20% in June. Elastomers could be down from 60% in April to 45% in June.

He told analysts: 'We will not be idling any of our MDI manufacturing facilities… We'll be matching the rate of production demand.' That is currently about 70% for Asia, 50% Americas and Europe around 60% of capacity. But, he warned: 'With a visibility before us of a matter of weeks of orders and so forth, I would use some caution.'

Looking regionally, he said that volumes in its Asia business were down 8% in the quarter with double digit falls in everything apart from insulation – up 11% – and footwear and Adhesives, Cast and Elastomers (ACE) down by single digits.

There were improving trends starting at the end of February through March. 'We are cautiously optimistic that the worst is behind us in ACE in China,' he added. 'Our expectations for May and June are for sequentially improving conditions.'

Comparing his company in January with the Huntsman that entered the financial crash in 2008, he said the polyurethanes business had entered the coronavirus pandemic with low stock levels of benzene, a key raw material for MDI. This means the company will be able to take advantage of low benzene prices soon after demand for MDI picks up.

The business is in a different shape, too. MDI capacity is 370 kT higher than it was in 2008. Downstream markets with more stable and higher margins represent a larger proportion of sales than in 2009.

Finally, he addressed business in China. 'I think that domestic business is doing quite well,' he said. 'Over the last quarter, China has gone from restocking to real growth. We've seen about 4% growth in the Chines business of our urethanes versus a year ago. And so, Asia all in all, is up about 1%.

'As we look to China, we are quite bullish about what we see. Europe… we are definitely coming from the bottom of this particular cycle and we see gradual rebuilding. The Americas are at that trough, and I think that in the coming weeks, you'll start to see that pickup of automotive, aerospace and so forth.'