Huntsman expects ‘more modest growth’ in China - execs

04 August 2011 18:28  [Source: ICIS news]

HOUSTON (ICIS)--China’s fight to contain inflation will slow down that country’s growth rates to a “more modest pace”, Huntsman chief financial officer Kimo Esplin said on Thursday.

Also dimming growth prospects in China is a slowdown in civil construction, Esplin told analysts during Huntsman's second-quarter results conference call.

The Chinese government measures to stem inflation by tightening access to capital have made it more difficult for smaller Huntsman downstream customers to finance working capital, Esplin said.

“In the near-term, we expect [China] to grow at a more modest pace than we have seen recently,” he said.

However, longer-term China continues to offer “tremendous growth opportunities” and Huntsman expects its business there to grow at a “multiple of whatever the underlying GDP is”, Esplin said.

CEO Peter Huntsman said in some of Huntsman’s end markets in China, such as electronics and wind power, customers are destocking on the back of tighter capital.

“But I don’t see that as really a long-term trend,” he added.

“I don’t see a slowdown, where all of a sudden the Chinese government has put the brakes on infrastructure projects and so forth", that would unusually affect Huntsman business, he said. 

Peter Huntsman also said the company is still waiting to receive government approval for its planned methyl di-p-phenylene isocyanate (MDI) expansion at Caojing, China.

The Chinese permitting process seemed to proceed at “snail’s pace”, Huntsman said.

“We are still working out over a year just to get the environmental permitting,” he added.

But he said there was nothing unique about Huntsman’s experience with obtaining permitting. BASF's MDI project in Chongqing, for example, also took a long time to get approvals, he said.

“I believe that a lot of these expansions announced in Asia, particularly in China, are going to be coming on substantially later than some in the markets have been publishing and have been speculating,” he added.

Huntsman’s share price fell by more than 20% in Thursday morning trading in New York, following the release of the company’s second-quarter results.

The shares traded at $14.12, down $3.87 or 21.5%, at 12:15 hours New York time (16:15 GMT), on the New York Stock Exchange.

($1 = €0.70)

For more on Huntsman, BASF and other producers visit ICIS company intelligence

By: Stefan Baumgarten
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