'Huntsman is expected to decline in MDI prices in coming months unless there is an unforeseen situation' CEO Peter Huntsman told Financial Analyst on a February 23 conference call.
Peter Huntsman said in the fourth quarter: 'Our MDI urethane business, which includes the propylene oxide, polyol and systems businesses, recorded adjusted EBITDA of $ 291 million.
In contrast, compared to $ 130 million in the same quarter of last year, compared with $ 254 million in the previous quarter, MDI sales were up 12% from the same period of the previous year and demand remained solid with all our MDI production plants operating at full capacity in the fourth quarter.
He said: 'We have benefited from the MDI price increase in the past quarter.'
Overall, the company received an additional profit of $ 85 million in the fourth quarter due to a shortage of supply in the MDI market, which he said has been used at over 95%.
He added: 'There are now about 400,000 tons of world-class factories, and if one or two of them have problems, it can have a huge impact on the price of MDI,' he added.
Geographically, the company reported a 16% increase in North American sales in construction applications in the fourth quarter.
In Europe, the number of MDIs increased by 22% in the quarter due to strong demand, and Rotterdam's bottlenecks to eliminate the additional capacity of 60,000 tons / year, the company in the tight market to provide more material.
India, the Middle East and Russia also experienced double-digit growth this quarter, with demand in early 2018 being positive in the region.
Sales in Asia have declined because the company geographically balanced production until the new Caojing plant in China was fully inaugurated, and production of the second phase of Caojing has already started, and Peter Huntsman said that this ability is increasing in the coming months. Said it will start contributing to its 2018 revenue.
The company estimates that about 75% of MDI Polyurethane is used in derivatives and formulations.
In the fourth quarter, our sales in differentiated 'systems' business increased 17% YoY.
He continues: "Industry demand for MDI worldwide continues to grow at a rate of 6% to 7% a year, and industry capacity needs to expand to about 400,000 tons / year, which equates to a world-class facility."
Huntsman said his company's view is that 'manufacturing capacity will increase to about 4% / year from 2016 to 2021.' Good supply and demand will continue, 'he said.
However, prices may decline after 2018, unless unforeseen events occur.
He said the company's strategy is to invest in organic growth, and it will look for acquisitions that will increase profit margins, most likely downstream MDI epoxies, amines and surfactants.