US Eastman hopes trade dispute with China will settle in Q2

Source: ICIS News

2019/04/26

HOUSTON (ICIS)--Eastman is hoping that the US-China trade dispute will be settled at some point in the second quarter, thus removing uncertainties over the outlook for the Chinese economy, executives of the US-headquartered specialty chemicals producer said on Friday.

Containers at the port of Qingdao, China. Source: Sipa Asia/REX/Shutterstock

The trade issues affected Eastman in the first quarter, in particular its advanced materials, fibres, and additives & functional products segments, CEO Mark Costa and CFO Curt Espeland told analysts during the company’s Q1 earnings call.

The trade war not only impacts demand in China, but it also has an “associated impact” on Europe, in particular Germany, where industry relies on exporting to China, the executives said.

“We are dependent on [US] President [Donald] Trump settling the dispute with President Xi [Jinping]," Costa said.

“The timing of that is unknown, or the details."

Based on US press reports, the two countries seem to be making good progress in addressing the issues, with the odds of an escalation going down, Costa said.

However, in China there was “still a lot of caution and uncertainty”, and officials were “pretty quiet, they are being very careful about declaring any kind of victory or possible victory," he said.

“What we need is a trade settlement […] and the Chinese government to send the ‘all-clear’ signal to their companies and their consumers that things are going to go back to normal,” he added.

Meanwhile, destocking in China had mostly ended, and Eastman expects to see upside in its China-related business from Beijing’s measures to stimulate economic growth, he said.

Furthermore, Eastman could benefit from environmental and safety enforcement against chemical producers in the wake of last month’s fatal accident at a chemical park in China’s Jiangsu province.

“We do see an impact on a few producers that we compete with, being shut down for environmental inspection and things like that,” Costa added.

Peter Huntsman, CEO of US chemicals firm Huntsman, told ICIS in a recent interview that the US-China trade dispute will likely be resolved this year, boosting consumer sentiment and the chemicals sector.

As for the Jiangsu accident, Mark Rohr, CEO of US chemicals firm Celanese, said earlier this week that the province would now reduce the number of approved chemical production parks, affecting supplies and prices of chemicals in China.

Additional reporting by Joseph Chang

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