Epoxy
July 31, 2023
Olin Investor Highlights
Olin Corporation (OLN) Q2 2023 Earnings Call Transcript
Jul. 28, 2023 12:15 PM ETOlin Corporation (OLN)
138.98K Followers
Q2: 2023-07-27 Earnings Summary
EPS of $1.08 beats by $0.06 | Revenue of $1.70B (-34.91% Y/Y) misses by $168.30M
Olin Corporation (NYSE:OLN) Q2 2023 Earnings Conference Call July 28, 2023 9:00 AM ET
Company Participants
Steve Keenan – Director-Investor Relations
Scott Sutton – Chief Executive Officer
Todd Slater – Chief Financial Officer
Scott Sutton
Thanks, Steve, and good morning, everybody. Global market conditions continue to be quite poor. Additionally, our performance in the second quarter was not up to expectations, partially due to the previously announced Freeport vinyl chloride monomer plant operating issues, but also due to excessive Asian Epoxy resin exports and our associated Epoxy asset right sizing activities. These factors will result in a lower trough expectation for 2023 adjusted EBITDA. The bright spot in the second quarter was our purchase of 2.5% of our outstanding shares while simultaneously reducing net debt compared to the first quarter. Since January 1, 2022, we have purchased 21% of our outstanding shares.
In the third quarter, we expect Epoxy resins and system sales volumes to slightly improve relative to the second quarter. However, inventory reduction efforts will lead the business in negative EBITDA territory. While Winchester’s performance is expected to slightly improve in the third quarter, mainly due to international and domestic military growth, our Chlor Alkali and Vinyls business is expected to be slightly down, mainly due to execution of our leadership model as we see bottoming of ECU values in some geographies likely a positive sign for 2024.
This is our time to be testing, and I am confident that the Olin team is up to that test. It should be clear from Slide number 4 that Olin believes running a value strategy with lots of built-in free options, delivers more total cash for shareholders versus any alternative strategy. Looking forward, we are working on numerous initiatives to make sure both future peaks and troughs from that value strategy are higher than our previous results. Those initiatives are spelled out on Slide number 5.
Hassan Ahmed
Understood. And sorry, it’s – the peak side of it, I also wanted to sort of touch base on. You guys sort of flagged over $3 billion in the next peak, right? And if I take a look at what you guys on a quarterly basis were run rating in Q1 2022 and Q2 2022, it was over $850 million. And clearly, utilization rates weren’t as tight as they potentially could be in the next peak, right? And you hadn’t sort of restructured the Epoxy business as you are right now, right? So, I mean, from the sounds of it, $3 billion in the next peak actually sounds pretty bare bone, is that fair?
Scott Sutton
I mean – yes. I mean, Hassan, look, our outlook certainly says that the structure of Chlor Alkali only gets better over, over time. And it’s true that we’ve done some restructuring in our Epoxy business. But I will say that in order for Epoxy to get back to the levels it was that – that’s probably a couple of years out. So you’re going to see the next peak in Chlor Alkali while Epoxy is still recovering. And that’s why we put the next peak at somewhere just about $3 billion.
Hassan Ahmed
Understood. And one last one, if I may. On Dow’s earnings call, they basically talked about how their contract with you was renewed through 2035. Is there any sort of commentary you can give about? I know historically, sort of Olin’s talked about not really making any money on that contract. But is there any commentary you guys can give us about that renewed contract?
Scott Sutton
Yes. I would just agree that we did reach an agreement, and I think that’s going to be good for everybody in the future.
Steve Byrne
Hi, thank you. Just continuing on to this peak EBITDA discussion. Is it more driven by Chlor Alkali? And is your view on Epoxy a little more measured than it used to be? And with the former Chlor Alkali and – are you moving any further down the path of partnering on some downstream polymer capacity? Or is it a little too early for that?
Scott Sutton
Well, I would say, I mean, the big driver of it is certainly Chlor Alkali. There is no doubt Epoxy will improve, but the structure of the Epoxy industry, when you have a China, that’s probably added almost 20% to the world’s supply capability in the last 18 months or so, it’s going to take a little more time to recover. I mean I’d also call out our Winchester business as well. I mean that business has great fundamentals, particularly in the growth of international and domestic ammunition. So it’s those things that will get us there.
Mike Sison
Okay. And then just in terms of where your mid-cycle EBITDA could be? Is it sort of the delta between the peak and this year? Or is it a different number? And how long do you think it takes to sort of get to sort of a mid-cycle number?
Scott Sutton
Yes. Well, I would just say, Mike, that we expect 2024 to be better. There’s good signs to that. I think even though they are slowly maturing signs and 2025 looks even better than that. So it’s in that range.
Michael Leithead
Morning. First question on epoxy. When you look at Asian exports and the prices they’re selling for in the market, is your sense that producers there are below cash breakeven levels? And if so, how, if at all, does that change your thinking about how Olin should approach, say, the epoxy value chain?
Scott Sutton
Yes. Thanks for the question. I would just say, yes. I mean you got to remember in China that they’ve been operating with favorability of negative chlorine values, right, at potentially negative hydrochloric acid values. So those key inputs, which is just one input, has gone into the epoxy chain with somebody paying the producers of epoxy to take it. That’s totally different than any other geography, and it has nothing to do with covering any kind of level of fixed cost and certainly no return on capital. So yes, I think that’s a real issue. We’re going to consider what we’re going to do about proposing duties in certain geographies as well because this really can’t go on.
Jeff Zekauskas
Thanks very much. You’ve always spoken of negotiation of the Dow contract has a meaningful future benefit in 2025. Now it seems that Dow is going to take less chlorine and caustic because of what they’re doing in propylene oxide. Is it still a meaningful jump for Olin in 2025? Or is that no longer the case?
Scott Sutton
Yes. I would say it’s really a positive arrangement for Olin. And Jeff, I mean you’re right that one PO unit Dow has announced that they’re closing that. So that volume goes away. But other volumes at that same site remain, and the site in Louisiana becomes the site of focus for the bigger volumes.
Jeff Zekauskas
So we shouldn’t expect some meaningful contractual – some meaningful EBITDA benefit to you in 2025 because of the renegotiation of the contract. Is that correct?
Scott Sutton
No, I think it’s positive, Jeff.
Duffy Fischer
Yes. Good morning. Scott, I was hoping, can you just kind of summarize all the changes you’ve made to your epoxy footprint and what does that do to the upside coming out? I mean, how much capacity have we taken off when we get through this downturn, how much different is your footprint today?
Scott Sutton
Yes, I mean, we’ve made and are in the process of making quite a number of changes. Upstream, I’ll say that we exited a Cumene plant. We exited one of our BPA facilities. In the resin area, we reduced our capability both in Freeport, Texas and in strata [ph] and then at a few downstream plants, we reduced our capability in solids epoxy resin, and then we shut down a facility in Korea. So, yes, I mean, that has reduced our capability some. What I will say is that in epoxy, we had at least two of everything to begin with and sometimes three or four of everything. So we’ve gotten rid of that overhang. We’re much more efficient now, and it’s not going to take a massive amount of volume to put as closer to a higher capacity utilization, and we’re still working to get those costs out.
Aleksey Yefremov
Thanks, Scott. And coming back to your configuration with Dow, as you mentioned, Dow will shut some PO capacity at Freeport that will free up some of your chlor alkali capacity. Should we assume that that’s not used in any way? Or is it more likely that you’ll look for some other derivative opportunities either through joint ventures, other arrangements or even organic investments downstream of chlor alkali.
Scott Sutton
Well, I would just say it opens up possibilities, right? And those are sort of some of the free options that we have going forward and we haven’t made a decision about that.
Matthew Blair
Hey, good morning Scott and Todd, circling back to the Dow contracts, Scott, you mentioned it was a positive resolution there. Should we think about this as being more significant on the free cash flow side for you than the EBITDA side? Or can you give us any color on that?
Scott Sutton
So, I would say it’s probably favorable for both parties on both sides, because there’s some real win-win elements of this, and that not only helps how we’re both running our day-to-day operations, but it also prevents inefficient investments on both parties side, which drives free cash flow. So, I would just say it’s a positive for both parties on both those fronts.
Matthew Blair
Sounds good. And then do you have any more commentary on the epoxy side. In terms of demand, could you talk about how things are going in areas like electronics and wind and autos?
Scott Sutton
Yes. I mean, look, the demand in all of those areas as well, at least in electronics was certainly sluggish. Automotive coatings at least in the U.S. has shown some recent recovery and you’ve seen some of that in the coatings company’s earnings announcement here. There is a nice portfolio of wind projects, and that’s one of the biggest outlets for our systems activities, but those projects go through stops and starts, and there’s been some level of inventory adjustment in those supply chains. But I would say all three of those areas as we move into 2024 are positive.
Frank Mitsch
Hey, good morning. If I could just point of clarification. The new terms on the Dow contract, did they take place when the old one was supposed to expire in October of 2025? Or is there a different effective date for the new terms?
Scott Sutton
Yes. I mean that’s roughly right. I mean, Frank, I won’t comment on all the different dates and all the different improvements, but I guess you can average it there.
Frank Mitsch
All right. Awesome. Thank you. And yes, I totally appreciate the difficulties in the epoxy business, and obviously, you’ve been taking number of steps to improve your own footprint. You’ve outlined some of them. And I know in the past, you’ve indicated that some of these actions should start to lead to a $50 million annual EBITDA improvement starting in the fourth quarter, given the degradation in the broader markets, how should we think about sort of these actions that Olin is proactively taking will start impacting your income statement.
Scott Sutton
Yes. I mean, principally, you’ll see it more in 2024. It’s actually being effective today and into the fourth quarter, Frank. But we’re having to clean up our inventory on the balance sheet a bit. And that is offsetting some of that underlying improvement that will expose itself after a couple of quarters here.
John Roberts
And then is any of the Parlay activity in epoxies? Or is it all in chlor alkali items?
Scott Sutton
Well, the majority of it is in chlor alkali. We’ve been successful at running that Parlay strategy in epoxy until capacity utilization got so low. And so we’ve reduced that participation there. It just doesn’t make sense to do it at the moment.
John Roberts
Do you have any longer-term targets for both total Parlay and the balance between Epoxy and chlor alkali?
Scott Sutton
Well, I wouldn’t say there’s a target for a balance between chlor alkali and epoxy. I would say that we’re going to do the right amount of Parlays so that we can keep a leadership strategy in place and keep our product values up even when our capacity utilization is low. So when our capacity utilization is very low, like it is now, you’re going to see big percentages. When it goes up, you might see some smaller percentages. However, I will say that Blue Water is out there trading more caustic and more EDC across the oceans and that trading activity will continue and grow no matter what our capacity utilization is.
July 28, 2023
Olin Epoxy Results
Olin Announces Second Quarter 2023 Results
Jul. 27, 2023 4:05 PM ETOlin Corporation (OLN)
Q2: 2023-07-27 Earnings Summary
EPS of $1.08 beats by $0.06 | Revenue of $1.70B (-34.91% Y/Y) misses by $168.30M
Highlights
- Second quarter 2023 net income of $146.9 million, or $1.13 per diluted share
- Quarterly adjusted EBITDA of $351.1 million
- Share repurchases of $186.9 million in second quarter 2023
- Expect 2023 adjusted EBITDA in the $1.4 billion range
CLAYTON, Mo., July 27, 2023 /PRNewswire/ — Olin Corporation (OLN) announced financial results for the second quarter ended June 30, 2023.
Second quarter 2023 reported net income was $146.9 million, or $1.13 per diluted share, which compares to second quarter 2022 reported net income of $422.1 million, or $2.76 per diluted share. Second quarter 2023 adjusted EBITDA of $351.1 million excludes depreciation and amortization expense of $136.8 million, gain on sale of our domestic private trucking fleet and operations of $27.0 million, and restructuring charges of $19.2 million. Second quarter 2022 adjusted EBITDA was $727.3 million. Sales in the second quarter 2023 were $1,702.7 million compared to $2,616.1 million in the second quarter 2022.
Scott Sutton, Chairman, President, and Chief Executive Officer, said, “In this challenging demand environment, Olin’s global team continues to prove our model’s resilience and the ability to deliver significantly higher trough level adjusted EBITDA and corresponding cash flows. Our investment grade balance sheet and strong cash flow allow Olin to successfully maintain our commercial discipline and “value-first” approach, which will fuel an accelerated earnings recovery once demand improves. We continue to prioritize share repurchases from excess cash flow with approximately 5% of outstanding shares repurchased so far in 2023.
“In light of the difficult global economic environment and continued operating issues with the vinyl chloride monomer Freeport, Texas facility, we expect third quarter 2023 results from our Chemical businesses to be lower than second quarter 2023 levels. We expect our Winchester business third quarter 2023 results to increase sequentially from second quarter 2023 as we anticipate international and domestic military growth. Overall, we expect Olin’s third quarter 2023 adjusted EBITDA to be approximately 10% lower than second quarter 2023 levels. We expect full year adjusted EBITDA to be in the range of $1.4 billion.”
EPOXY
Epoxy sales for the second quarter 2023 were $333.8 million compared to $772.7 million in the second quarter 2022. The decrease in Epoxy sales was primarily due to 24% lower resin and systems volumes and $206.9 million of lower cumene and bisphenol A sales. As part of the Epoxy business restructuring actions to right-size our global asset footprint to the most cost-effective asset base to support our strategic operating model, the Epoxy business ceased operations at our cumene facility in Terneuzen, Netherlands in first quarter 2023 and one of our bisphenol A production lines at our Stade, Germany facility in fourth quarter 2022. Second quarter 2023 segment loss was $0.5 million compared to segment earnings of $139.9 million in the second quarter 2022. The $140.4 million decrease in Epoxy segment earnings was primarily due to lower volumes and lower pricing, partially offset by lower raw material and operating costs, mainly decreased natural gas and electrical power costs. Epoxy second quarter 2023 results included depreciation and amortization expense of $15.2 million compared to $20.4 million in the second quarter 2022.
June 23, 2023
Olin Epoxy Moves
Olin Updates Second Quarter 2023 Outlook and Announces Additional Epoxy Restructuring Actions
Jun. 20, 2023 8:30 AM ETOlin Corporation (OLN)
CLAYTON, Mo., June 20, 2023 /PRNewswire/ — Olin Corporation (NYSE: OLN) announced today an updated outlook for the second quarter 2023. Olin’s second quarter 2023 adjusted EBITDA is expected to be in the $350 to $360 million range, which is lower than previously expected mainly due to an approximately $50 million impact from an extended vinyl chloride monomer plant turnaround and additionally due to a lower market participation rate by Olin in the face of deteriorating market conditions. The planned vinyl chloride monomer plant maintenance turnaround at the Freeport, Texas facility required an extension of approximately seven weeks and resulted in higher unabsorbed fixed manufacturing costs, reduced profit from lost sales, and higher turnaround expense. The vinyl chloride monomer plant has returned to operations at a reduced rate.
Olin also announced the decision to cease all operations at its Gumi, South Korea facility, reduce epoxy resin and upstream capacity at its Freeport, Texas facility, and reduce our sales and support staffing across Asia. Olin’s second quarter 2023 results are forecast to include approximately $12 million of restructuring charges associated with these plans of which approximately $6 million represents non-cash asset impairment charges. The cash component of these charges is expected to be paid over the next year.
“The restructuring actions announced on March 21, 2023, and in this announcement will complete the rightsizing of the Epoxy business and are expected to deliver $50 million of improved annual EBITDA beginning in fourth quarter 2023 continuing our commitment to elevate our Epoxy business earnings to a more sustainable level. Through these actions, we will have configured our global Epoxy asset capability to improve profitability through future recessions,” remarked Scott Sutton, Chairman, President, and Chief Executive Officer. “Both of our chemical businesses continue to experience a challenging demand environment. Our team remains focused on demonstrating our winning model’s resilience and ability to deliver significantly higher trough level adjusted EBITDA compared to Olin’s historical approach.”
June 13, 2023
Lanxess Increases Benzyl Alcohol Capacity
LANXESS doubles capacity for high-purity benzyl alcohol in North America
MOSCOW (MRC) — LANXESS has doubled its production capacity for benzyl alcohol at its site in Kalama, WA, US, to support the growth of its established customer base in the Americas, said the company.
The capacity expansion is the result of various technical upgrades. LANXESS also produces benzyl alcohol at its sites in Krefeld-Uerdingen (Germany), Botlek (Netherlands), and Nagda (India).
The LANXESS business unit Flavors & Fragrances develops and produces one of the world’s broadest portfolio of fragrances and flavours, preservatives, and animal nutrition products. Its substances are found in various everyday consumables, such as cosmetics and personal care products, detergents and cleaning agents, beverages, baked goods, candles, oils, and animal feed.
The portfolio also includes speciality chemicals for industrial applications, including pharmaceuticals, agrochemicals or the construction industry. The business unit operates production sites in five locations on three continents. The sites are “ISCC Plus” certified. Through the use of green electricity and sustainable raw materials, these sites will produce mass balance certified renewable alternatives for the entire product portfolio by end-2023, reflecting the business unit’s strong commitment to sustainability. The business unit has around 750 employees and is part of LANXESS’ Consumer Protection segment which generated sales of about EUR 2.4 bn in 2022.
We remind, LANXESS will be at the Battery Show Europe showcasing its portfolio for batteries for electric and hybrid vehicles, said the company. The event in Stuttgart is Europe’s largest trade fair for cutting-edge technologies and production processes in this fast-growing segment.
May 15, 2023
Westlake Epoxy Highlights from Earnings Call
Westlake Corporation (WLK) Q1 2023 Earnings Call Transcript
May 04, 2023 10:56 PM ETWestlake Corporation (WLK)
137.3K Followers
Q1: 2023-05-04 Earnings Summary
EPS of $3.09 beats by $0.94 | Revenue of $3.36B (-17.26% Y/Y) misses by $51.05M
Westlake Corporation (NYSE:WLK) Q1 2023 Earnings Conference Call May 4, 2023 11:00 AM ET
Company Participants
Jeff Holy – Vice President & Treasurer
Albert Chao – President and Chief Executive Officer
Steven Bender – Executive Vice President and Chief Financial Officer
Albert Chao
Thank you, Jeff. Good morning, everyone. We appreciate you joining us to discuss our first quarter 2023 results. For the first quarter of 2023, we achieved sales of $3.4 billion, net income of $394 million and EBITDA of $825 million. These solid results reflect significant improvement in volumes, margins and earnings from the fourth quarter of 2022 as customer destocking activity moderated, end market demand improved, and we benefited from lower feedstock fuel and power costs.
As demand improved in the first quarter, we shifted sales volumes from exports to domestic markets, contributing to better sales mix and higher integrated margins. We also benefited from lower feedstock and energy costs compared to the levels of 2022 as our globally advantaged low-cost feedstock and energy position in the U.S. Gulf Coast improved further, but we also saw lower energy costs in Europe as well. Our results for the first quarter also reflected the achievement of approximately $25 million of cost savings in this quarter towards our previously communicated $55 million to $105 million of targeted 2023 cost savings. Each of these factors supported solid improvement in our integrated margins on the fourth quarter of 2022.
Looking at our first quarter financial results, I’m particularly proud of our HIP segment performance, which maintained EBITDA margin of 20%, similar to the first quarter of 2022. These margins were achieved despite a 21% decline in volume when compared to the prior year period, which was driven by the decline in home building activity due to lower affordability from higher mortgage rates.
This demonstrates the benefit of our product mix and strength of our brands. The margin stability of these businesses along with the long-term growth opportunity in the U.S. housing market were key reasons why we invested in the HIP segment in 2021 through the acquisitions of Boral Building Products, LASCO Fittings and Dimex. We continue to have a positive long-term view of the U.S. housing market, driven by the deficit in new housing construction since the Great Recession in 2020 — 2008 and increasing demographic demand.
Turning to our PEM segment. We continue to operate with agility as we navigated the current market dynamics by shifting PVC and polyethylene sales volume back from export markets to rebounding domestic markets, while solid chlor-alkali markets drove higher average selling prices for both chlorine and caustic soda in North America. Lower feedstock energy prices, combined with our cost reduction actions, drove significant improvement in integrated margins from the fourth quarter of 2022. Overall, I’m very pleased with our first quarter performance and the team’s ability to successfully adjust to rapidly changing end market trends.
Steven Bender
Essential Materials sales in the first quarter of 2023 decreased $164 million over the first quarter of 2022, primarily driven by higher average selling prices for caustic soda. As compared to the first quarter of 2022, our earnings were impacted by lower integrated margins for all of our Performance Material products, including PVC, epoxy, polyethylene and lower production and sales volumes across most product lines. These headwinds were particularly — were partially offset by higher average selling prices and Essential Materials along with lower fuel and energy prices.
PEM’s segment EBITDA of $615 million in the first quarter increased $172 million from the fourth quarter of 2022 as a result of 6 key elements. Higher production and sales volumes, particularly in PVC and epoxy resins,
Essential Materials sales in the first quarter of 2023 decreased $164 million over the first quarter of 2022, primarily driven by higher average selling prices for caustic soda. As compared to the first quarter of 2022, our earnings were impacted by lower integrated margins for all of our Performance Material products, including PVC, epoxy, polyethylene and lower production and sales volumes across most product lines. These headwinds were particularly — were partially offset by higher average selling prices and Essential Materials along with lower fuel and energy prices.
PEM’s segment EBITDA of $615 million in the first quarter increased $172 million from the fourth quarter of 2022 as a result of 6 key elements. Higher production and sales volumes, particularly in PVC and epoxy resins,
Michael Sison
Nice start to the year. Albert, I think you mentioned that 2Q tends to be seasonally better than 1Q. As you said — as you look at demand and where integrated margins are for all your businesses, how do you think that plays out this year given things are weakening across the board?
Albert Chao
Yes. We’ve seen inventories destocking run its course and pretty much finished that destocking process. And we believe that customers are reordering as they see the demand. And we believe that the economy has stabilized through the changes in interest rate increase, and it should improve from the bottoms we’ve seen in the fourth quarter of 2022.
But having said that, the Fed just raised interest rates, and they could have repercussions in the economy going forward. But we believe that the U.S. economy is still quite long, domestic demand is quite strong. We’ve seen that in our — both in the PEM segment, polyethylene, PVC as well as in our HIP Building Materials business. So we are cautiously optimistic that we will see some improvements. It doesn’t mean that we’ll go back to 2022 or 2021 high levels before the interest rates start increasing.
Kevin McCarthy
Albert, in your press release, there is a comment that you saw increasing demand for epoxy resins which surprised me a little bit. Can you elaborate on what you’re seeing in the epoxy market with regard to demand and operating rates? And looking ahead, are you seeing any increased stability in the pricing function there?
Albert Chao
Sure, Kevin. Yes, we see epoxy demand improving, primarily in North America, still quite weak in Europe with a high cost position in Europe and also in Asia, it’s relatively weak. But we are seeing signs of improvement and the U.S. economy is still growing. We need more windmill blades and coatings as well as structural products. So we believe that the epoxy business should have a good position going forward, but not as, of course, robust as in 2021, 2022. But we believe the demand is there. And I think when the economy recovers, the increased demand in epoxy, especially in the U.S. with a lower cost position as well.
John Roberts
You noted the increased exports of polyethylene and vinyls. Could you talk about some of the geographic shift that’s going on in epoxy. So we’ve got China epoxies moving into Europe. Are you shifting any of your geographic footprint in our epoxy sales as well?
Albert Chao
Yes. We are reacting to all the dynamics in the very competitive global marketplace. And as I said earlier, the China with its economy has been slowing in the past years or quarters, they exported the epoxy and as well as PVC to places like India and Europe. But we’re seeing that being slowing down the Chinese economy is improving, but things could change. So — but we are very cautious and colleagues and all the activities going on.
Duffy Fischer
Fair enough. And then one of your large competitors in epoxy has talked about doing some pretty significant restructuring of their assets, you’ve had years for about a year. As you look at it, do you have the right footprint, do you think an epoxy — or do you think you need to do some significant restructuring of your asset base as well?
Albert Chao
Yes, certainly, we are new to the epoxy business and have had ownership for a year. We find a lot opportunity to improve. And as we go forward, we’ll try to improve our positions.
Hassan Ahmed
Fair enough. So now on the epoxy side of it Albert, you obviously — the commentary sounded incrementally positive. So is it fair to assume that potentially Q4 and Q1 were the trough and sort of things start cycling up from there. And if that is the case, this inflection, will this be primarily sort of demand driven with sort of China picking up and the like? Or will it be partly demand driven and partly supply driven as well, where sort of — in that sort of positive commentary you’re being in maybe some capacity rationalization in the marketplace. Maybe less disruptive pricing. You talked obviously about China exporting less now. So I’m just trying to figure out supply and demand wise, what you guys have seen there.
Albert Chao
Yes, that’s a very good question. I think for PVC, we think you are right that Chinese demand increasing, especially real estate, which is a big component of the economy and the government tried to stimulate that part as well, that dimension increase of less export and pricing should improve and so as caustic. On the epoxy side, little bit different. It’s not that a big business and the Chinese are building.
Looking for the windmills and windmills are just getting back in China of new construction. Certainly, everybody needs a renewable energy and lower cost. So it takes time for that to come into this place. Meanwhile, as one of the earlier questions that they have been exporting the amount overseas. But as the year progresses in next year, I think next few years, definitely, the demand for epoxy globally will increase improve. But this year is still a — maybe it’s a bottom of the cycle year.
Turner Hinrichs
This is Turner Hinrichs on for Angel. I was wondering if you could give us a little more color on your epoxy business results, specifically how they compare to 1Q ’22 of last year and 4Q ’22 of last year as well. And as part of that, would you say your epoxy business is gaining share in the market? Or how is Westlake’s position evolving in light of the ongoing imports from Asia and strategic moves by one of your peers?
Steven Bender
So good question. So the market was meaningfully stronger in the first quarter of 2022. And so you certainly have seen a change in market dynamic in terms of demand first quarter of 2022. So I’d say that with the energy power circumstance that we have, let’s say, in Europe, European epoxy is in a much better position to be able to compete. But you’re right, there is still imports of Asian epoxy into the European market, though as the Asian markets begin to rebound, less so in terms of the volume of epoxy resins into that market.
When you think of the domestic market for our epoxy resin, as Albert noted earlier, it’s a stronger position that we see there in terms of overall market demand. And so I would say that the troughs that we saw in fourth quarter as everybody was destocking across all product chains, we certainly saw that really come to an end at the end of the fourth quarter.
And so I would say that we see some recovery as we get into ’23 with ’24 and beyond being stronger markets as we see greater demand for wind energy and windmill contracts being led in ’22, ’23 and ’24 and beyond. And those will take time before those windmills are constructed and the demand really gets much stronger. So I’d say ’23 is one of those years we see a strengthening of the market but not fully backed by any means back to the levels that we saw in ’21 and first quarter of ’22.
https://seekingalpha.com/article/4600294-westlake-corporation-wlk-q1-2023-earnings-call-transcript
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