Huntsman expects MDI levels to remain tight

THE WOODLANDS, Texas—MDI levels look set to stay tight well into this year, according to senior Huntsman Corp. executives who were speaking to analysts. The company's new splitter, due on stream in the second half of the fiscal year, is sold out before it starts operation.

CEO Peter Huntsman told the meeting that profitability not capacity is his company's aim.

"The MDI industry will be growing at 5 or 6 percent globally, I don't have a problem with us being essentially sold out," he said. "We have plenty of MDI, I think, in the world. Huntsman needs to have better MDI, better margins, low costs and be able to take a great business and make it even better."

Utilization rates are unusually high in the U.S., particularly when compared with the utilization in Europe where, he said, the percentage utilization was in the mid-80s.

"(It is) probably 110-120 percent in the Americas, and Asia is a little bit less than Europe," Huntsman said.

As for the inventory level, Tony Hankins, vice president of the polyurethanes business, said it's "as low as it's ever been in MDI.

"We see continued strong demand in North America," he continued. "I think that our customers are running on low inventory as well. We're flat out, we can't run any harder than we're running now. In Huntsman Building Solutions, we have an eight-week backlog in orders, so we can sell every molecule we make."

The company confirmed that it expects the MDI splitter in Geismar to be mechanically complete and to be on stream in the second half of the year. It is expected to contribute $45 million per year to EBITDA.