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MOSCOW (MRC) -- Peter Huntsman, CEO of
Huntsman, is more bearish on the global economy than at the outset of the
COVID-19 pandemic. Resurgent growth in China shows light at the end of the
tunnel, but lockdowns and uncertainty continue to hinder recovery in the US and
Europe, reported Chemweek.
"Demand
probably has come back a bit slower than I had anticipated," he says. "Frankly,
I've been rather disappointed with the prolonged nature of these lockdowns. This
is just my personal opinion. I think that this entire lockdown situation has
become politicized in many parts of the world, particularly in the United
States."
Huntsman shared his views this morning with Lyn Tattum,
publisher of Chemical Week, during a webcast of IHS Markit's Chemical Executive
Conversations.
"When we look at the overall supply chain, and … the
number of retail outlets that are still closed globally, I think that rather
than a V- or a U-shaped recovery, we're probably going to see a W-shaped
recovery," he says. "So I think you're going to see a W. You're going to see
some good news and some positive results, and then you're probably going to see
the continuation of some bad news."
Demand has been fairly resilient in
the DIY and home construction segments, but there has been very little
improvement in the aerospace and textiles segments, he says.
"Areas that
we thought wouldn't have been that badly affected like textiles and clothing and
so forth actually have been absolutely devastated," Huntsman notes. "And the
entire United States and Western European economy—for the first time in
industrial history, in the month of March and going to April, for a prolonged
period of time, the United States (and) Europe did not assemble a single car,
did not build a single airplane."
Export-oriented demand in China also
remains severely depressed. "If you're doing business in China dependent on
export, which is about 15–20% of our business in China, you're going to see
about a 60–70% drop in business," says Huntsman.
However, demand driven
by China's domestic market is snapping back. "We're seeing that business
tracking about 95 to 100, 101% of where it was a year ago," Huntsman reports.
"In total, our business in China is probably down 5–10% from a year ago. That's
mostly because of the … export-oriented piece, but the Chinese-oriented
business, where you're investing in domestic automobiles, construction,
infrastructure projects, and so forth, those are going to remain. China is going
to continue to be a very strong market for us."
The economic chaos
surrounding the COVID-19 pandemic has not only depressed demand, it has also
thrown up hurdles to recovery. Although Huntsman entered the crisis with its
strongest balance sheet ever, many of its customers were not so fortunate, the
CEO points out. "A lot of them are going to start looking to us to be their
bank, [will] want us to start financing their receivables," he says. "But we're
not a bank, so we're going to have to work through those. We have to make sure
that credit and sales are working hand in glove better than they ever have,
perhaps."
As MRC reported
previously, in April 2020, to further aid in the fight against the COVID-19
pandemic, LyondellBasell (LBI) donated a key ingredient to Huntsman Corporation
to produce hand sanitizer for US first responders.
We remind
that, in January 2020, Indorama Ventures Public Company Limited (IVL), a
global chemical producer, completed its
acquisition of Huntsman’s world-class integrated oxides and derivative
businesses, including a large flagship site on the US Gulf Coast (USGC) at Port
Neches, as well as Chocolate Bayou and Dayton in Texas, Ankleshwar in India, and
Botany in Australia, as per IVL's press release.
The acquisition is a
profitable and growing end applications business along with unique products and
geographical profile among the crowded olefins space. It has a well-integrated
assets base with an extensive infrastructure and future expansion possibilities.
The area is adjacent to many USGC feedstock suppliers. The cash value of USD2.0
billion makes it the largest acquisition by Indorama Ventures ever and now our
capital employed is nicely spread over plastic, chemicals and fibers. The
transaction value translates to an EV/EBITDA of ~5.7x and is expected to add
substantial synergies to Indorama’s existing 450kta Ethane/Propane Cracker and
our 550kta EO/EG. IVL will now be integrated from Ethane to PET as well as the
high-margin EO and PO derivative businesses.
Ethylene and propylene are
feedstocks for producing polyethylene (PE) and polypropylene
(PP).
According to MRC's ScanPlast report,
Huntsman Corporation is a publicly traded global manufacturer and
marketer of differentiated and specialty chemicals with 2017 revenues of more
than USD8 billion. Its chemical products number in the thousands and are sold
worldwide to manufacturers serving a broad and diverse range of consumer and
industrial end markets. The company operate more than 75 manufacturing, R&D
and operations facilities in approximately 30 countries and employ approximately
10,000 associates within its four distinct business divisions. |
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