Huntsman reports robust sales performance, delivers optimistic growth outlook

US-based chemical manufacturer Huntsman delivered a positive outlook for its polyurethanes business, with executives spotlighting higher sales volumes and expectations of continued traction during the company's earnings call Aug. 6.

"Our sales volumes improved 9% year over year as well as sequentially, slightly above normal seasonality, and we expect our growth comparisons to continue to be favorable in the second half of the year," CEO Peter Huntsman said.

In North America, polyurethane sales volumes increased 21% year on year, with the CEO attributing this to "modest improvements in underlying demand" and a lack of destocking.

Despite the increased volumes, revenues for polyurethanes decreased on the year, driven by lower average methylene diphenyl diisocyanate, or MDI, sales prices. Huntsman described MDI demand as "trending in the right direction," having risen compared with the previous quarter, "but moving along ever so slowly."

"Cash discipline" remains a priority, the company said during the earnings call, emphasizing a focus on stronger year-on-year sales volumes through the rest of 2024, with higher overall capacity utilization rates positioned to drive this.

H2 expectations

Looking to the second half of the year, Huntsman cited expectations for "upward [price] movements," in line with supply tightness. This comes on the back of traction gained by price increases in May and June.

The CEO gave conservative expectations, anticipating similar levels to those observed in the second quarter. Huntsman provided expectations for "normal" seasonality, basing this on steady demand patterns, and adding that current inventories do not feel robust enough to accommodate massive drawdowns at the end of the year.

Regarding capacity utilization, Huntsman said there was "some room for expansion" but generally expects rates to stay in the low to mid-80% range. He added that the company aimed to have an inventory build toward the end of September, ahead of a Q4 turnaround at the Rotterdam facility's MDI unit.

Housing and construction

Huntsman pointed to North America as its "most sensitive region" to construction activity, adding that two-thirds of the company's polyurethane portfolio is tied to commercial and residential construction.

The CEO spotlighted lower interest rates as "material to the bottom line," with regard to their potential to stimulate housing market recovery, increased polyurethane demand and margin strength.

He added that when a housing recovery does occur, with hopes for this happening in 2025, he expects "a very sudden and strong rebound," adding that impacts may take "at least two quarters" to reverberate through the polyurethane market.

Polyurethanes include flexible foams used in furniture, automotive seats and bedding, and rigid foams, which uses include insulation, packaging and refrigeration.

Intermediate chemicals can be made into polyols, which are then reacted with isocyanates such as toluene diisocyanate, or TDI, to make polyurethanes.

Platts, part of S&P Global Commodity Insights, assessed DAP US Slabstock Polyether Polyols stable Aug. 6 at 71 cents/lb, while US Spot Toluene Diisocyanate, or TDI, was assessed at 88 cents/lb DAP US, also stable on the day.