THE WOODLANDS, Texas—Peter Huntsman, president and CEO of Huntsman Corp., pinpointed Asia as the location for the "next wave" of methylene diphenyl diisocyanate capacity but warned that markets would tighten before the additional capacity arrived.
"As we look at the capacity utilization going into the next year, we continue to believe that capacity utilization 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," Huntsman said. "Assuming everything gets dealt with and assuming it all comes on time you will see global capacity rates go down to about 89 percent utilization rate in 2017."
Kimo Esplin, executive vice president and chief financial officer. said if all MDI capacity arrived as announced, utilization rates would be the same in 2016 and 2017 as they are today.
Huntsman told analysts that January had brought a 16 percent hike in the cost of benzene which was likely to continue as the year progressed. He said a $1 increase in benzene price would generate about an 8 cent increase per pound in MDI to offset the cost.
Huntsman said the firm experienced favorable earnings in its MDI urethanes business in the fourth quarter of 2013. The company's polyurethanes division reported adjusted earnings before tax as $173 million during the fourth quarter of 2013—a 4 percent growth on the same period in 2012.
The firm said it continues to see strong demand for MDI and revenue from the material increased 9 percent. The company's sales volume grew 7 percent during the fourth quarter.
Performance products and pigments both saw attractive growth of 2 percent and 3 percent led primarily by increased sales volumes, Huntsman said.