Huntsman: Chemical destocking cycle coming to an end

Recently, Huntsman CEO Peter Huntsman said that the global chemical destocking cycle may be coming to an end. Hopes for a recovery in the chemicals and materials sector came as construction and real estate sectors picked up operating rates across regions.

"In the North American market, especially in terms of methylene diphenyl diisocyanate (MDI) and construction demand, I believe that the long-term destocking period is coming to an end." Huntsman's second-quarter earnings conference call held on July 27 On the Internet, a relevant person said that the chemical market will usher in a bottoming out. Although fewer residential and commercial real estate projects are currently under construction compared with 12-18 months ago, "the order pattern shows that the destocking period has basically ended and the industry will enter an early recovery period," the person added.

Huntsman said this lengthy destocking period was the worst ever, surpassing even the 2008-2009 financial crisis. But with the recovery of housing and construction demand in North America and China, the destocking period of related chemicals and materials will come to an end. Data showed that U.S. housing starts surged 15.7% in May. Market growth in Asia and China is more modest and is expected to maintain this growth rate in the second half of 2023 if no related stimulus measures are taken.

Huntsman further pointed out that industry recovery will depend more on volume than pricing. Signs of recovery so far include double-digit quarter-over-quarter growth in composite lumber and insulation, single-digit quarter-on-quarter growth in polyurethane spray foam (PSF), and flat adhesives and sealants (ASE) materials.

He also said that Europe's housing and construction industries showed no signs of recovery, and the exodus of original equipment manufacturers (OEMs) in the region was worrying. "Original equipment manufacturers are leaving Europe and going to China, North America or the Middle East. If this deindustrialization continues, we will have to reassess the European market and cost structure." Huntsman said that Europe continues to increase with aggressive pricing pressure, but this policy does not address the growing problem of declining market competitiveness and deindustrialization in Europe, which is losing its export capacity.

According to reports, about two-thirds of Huntsman's polyurethane product portfolio in the Americas enters the construction end market, of which about 40% is for the commercial market and 60% for the residential market. However, its overall third-quarter earnings outlook is being challenged, with adjusted earnings before interest, taxes, depreciation, and amortization (EBITDA) expected to be flat or down for polyurethanes, performance products, and advanced materials.