US Huntsman assets in Europe spare from energy hit, but EU policies erratic – CEO

RIO DE JANEIRO (ICIS)–Huntsman’s assets in Europe are not energy intensive and have been spared from the energy crisis, but more broadly, the 27-country EU is still lacking a comprehensive policy to address the issue, the CEO at US chemicals major Huntsman said on Friday.

Peter Huntsman, one of the chemical industry’s most outspoken CEOs, said the company is not planning to divest any asset in Europe but said the region should stop its “nonsense” about reindustrialization and implement policies that create actual economic growth.

The CEO added he is feeling “bullish” about the coming quarters regarding demand, arguing the chemical industry had gone to “hell” and was just coming back from the steep low prices of 2023.

In North America, Huntsman said the construction industry should post a marked recovery in the coming quarters after two years in the doldrums because of high interest rates because, he argued, even with current interest rates, the industry will adapt.

Huntsman’s sales and earnings in the first quarter fell again, year on year, as higher sales volumes could not offset low selling prices; the company said, however, that a notable improvement in sales volumes quarter on quarter should be a signal that the recovery is underway.

Among others, Huntsman produces polyurethanes (PUs), which are widely used in the construction and automotive sectors.

EUROPE NONSENSE
Peter Huntsman on Friday first referred to the EU’s need to stop its “nonsense” about reindustrialisation, without elaborating further, but he was more measured when asked about the company’s assets in that region.

He nonetheless made clear that he thinks European governments have yet to formulate, two years into the region’s biggest energy crisis in decades, appropriate policies to address the issue.

“What I am most concerned about Europe is high energy costs. Most of our businesses there are not energy intensive assets, so they are competitive; in fact we have some strong businesses there, and our margins in Advanced Materials [the division] are stronger there than in other parts of the world,” said Huntsman, speaking to reporters and chemical equity analysts on Friday.

“There are businesses in Europe in which you will do OK, such as aerospace, lightweighting. But if you are energy intensive, if you produce fertilizers, glass, cement… you have some portfolio concerns there. Energy prices are too high, and this is not being addressed by governments, they still have to come up with realistic policies to address that.”

Europe’s construction has also taken a hit from the crisis after interest rates shot up to bring down inflation, with projects put on hold and many building companies in financial distress.

Huntsman’s CEO said he is not hoping for a strong recovery anymore in that sector in Europe, but simply for stability, which could come with governments taking more decisive action to prop up GDP growth.

“If we look at the past two years… We are looking for stability: it is the volatility that concerns us the most. We need to see Europe stop its the nonsense policies around reindustrialization and get the economy growing once again,” he said.

See Huntsman assets in Europe at bottom table.

NORTH AMERICA CONSTRUCTION
Peter Huntsman was feeling more optimistic about North America’s construction sector, where even if high interest rates stay for longer, builders will adapt to the situation, easing the way towards a recovery.

“US builders are doing two things: if interest rates were to stay where they are, they are going to adapt, perhaps building smaller units, and if rates do come down, that will open up demand quite a bit higher than it has been in the last couple of years. There are big gaps [in housing stock] which need to filled,” said Huntsman.

“I am increasingly feeling better and better [about an improvement in demand]. In Q1 we saw a lot of inventory drawdown, now we are seeing a slow, steady recovery as we try to get back to average inventory levels. By and large inventory levels feel pretty thin in MDI [methylene diphenyl diisocyanate] and we look forward to moderate growth in coming quarters.”

MDI is consumed mainly in PU foams, used in construction, refrigeration, packaging, and insulation. MDI is also used to make binders, elastomers, adhesives, sealants, coatings and fibers.

Huntsman’s CFO, Philip Lister, also at the press conference, added that in a normal year the company’s growth in volumes from the first quarter to the second would be around 5%, as construction and other seasonal activities enter their annual peak.

“This year, we are expecting more [than 5% growth],” said Lister.

CHINA ELECTRIC VEHICLES
Huntsman’s CEO said China’s electric vehicle (EV) sector continues to boom, although potential trade restrictions in the EU, after those imposed by the US, could start denting China’s dominance in that sector.

However, the company also knows what China’s dominance in the sector, thanks to the country’s strong public support for it, can mean for western producers: in 2023, Huntsman suspended an EV battery materials project in the US because of aggressive imports from China.

But the CEO added that even if China’s EV sector slowed down, the company would still be able to tap into other growing markets such as lightweighting or insulation, among others.

“The automotive sector continues to be one of the strongest areas of growth in China. How long that continues [remains to be seen], but probably for some time still,” said Huntsman.

“There is a broader question about [trade in the EV chain] with the US, which has been extremely limited, or Europe, where there is a lot of talk about limitations to China’s EVs.”

He added that despite sluggish activity in the residential construction sector because of financial woes in building companies, exemplified by the demise of major company Evergrande, subsectors such as energy conservation, insulation, building materials and infrastructure are still doing well.

“By and large we are seeing in China a slow but steady recovery in volumes and pricing. Elsewhere, I am getting more bullish. A year ago, we were in a nightmare, and we expected a recovery in the second half [of 2023] which didn’t happen and got worse and worse, until we found ourselves in hell,” said Huntsman.

“At the beginning of this year we have seen good, reliable, consistent growth. What we need to see is that growth continues in the second half of this year.”

HUNTSMAN ASSETS IN EUROPE

Product	Location	Capacity (in tonnes)
Aniline	Wilton, UK	340,000
Epoxy resins	Bergkamen, Germany	18,000
	Monthey, Switzerland	120,000
	Duxford, UK	10,000
Isocyanates	Runcorn, UK	70,000
Maleic anhydride (MA)	Moers, Germany	105,000
MDI	Rozenburg, The Netherlands	470,000
Nitrobenzenes	Wilton, UK	455,000
Polyalolef	Grimsby, UK	15,000
Polyester polyols	Huddersfield, UK	20,000
	Rozenburg, The Netherlands	86,000
Unsaturated polyester resins (UPRs)	Ternate, Italy	8,000

Source: ICIS Supply & Demand Database

Front page picture: Huntsman’s headquarters in The Woodlands, Texas 
Source: Huntsman

Additional reporting by Miguel Rodriguez-Fernandez