THE WOODLANDS, Texas—Consumer confidence is the key to recovery in many downstream markets, Huntsman Corp. CEO Peter Huntsman told analysts in a recent conference call. Take, for example, the automotive industry.
"As we speak to our customers, I think there is very little inventory in the supply chain," Huntsman said. "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."
Huntsman contends, however, that consumer sentiment is just one of the many issues that will drive industry recovery.
The impact of the coronavirus pandemic has hit Huntsman's polyurethanes division particularly hard. In April, polyurethane orders fell by around 60 percent across the board. The Americas were down 90 percent and Asia fell by about 20 percent, he said.
Overall, orders for May are down around 50 percent, and June's orders by about 35 percent.
In the composite wood and other construction sectors, demand for Huntsman's products in April were down 35 percent, and could be down by 20 percent in June. Elastomers were down from 60 percent in April and to 45 percent in June.
Despite the drops in demand, Huntsman said the company has no plans for "idling any of our MDI manufacturing facilities. … We'll be matching the rate of production demand."
To this end, capacity is running at about 70 percent for Asia, 50 percent for the Americas, and 60 percent in Europe.
Looking regionally, Huntsman said that volumes in its Asia business were down 8 percent in the quarter with double digit falls in everything apart from insulation—which was up 11 percent—and footwear and Adhesives, Cast and Elastomers, which was down by single digits.
There were, however, "improving trends starting at the end of February through March. We are cautiously optimistic that the worst is behind us in ACE in China," Huntsman said. "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, Huntsman 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 better shape, too. Capacity for MDI is 370,00 metric tons higher than it was in 2008. Downstream markets with more stable and higher margins are a bigger share of sales than in 2009.
Finally, he addressed business in China.
"I think that domestic business is doing quite well." Huntsman said. "Over the last quarter, China has gone from restocking to real growth. We've seen about 4 percent growth in the Chinese business of our urethanes versus a year ago. And so, Asia all in all is up about 1 percent.
"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."