Epoxy Comments from Huntsman Investors’ Call

Robert Koort

A couple more [indiscernible], if I could. In advanced materials, you guys cited raw material pressure. And I guess if I look through the epoxy chain, things like benzene, propylene, phenol, are all down year-on-year. So is this just selling inventory that have been produced back in the fall? Or is there some other raw materials or some other reasons you might be still seeing raw material pressure?

Peter Huntsman

Mostly, it’s all of our raw materials in China really across the board. I would say, it’s a regional effect that we are seeing on the business and also BPA in the quarter is up over where we were in previous quarters. And as you know, we have got a lot of contractual businesses there. Sometimes our raw materials will take us a quarter or so to drag through those raw material increases. But for the most part, that headwind is in China and I would expect in the second quarter that headwind ought to be flat. Just again, where I am looking at the business today, barring any explosions or government closures or anything, we ought to be pretty safe in the second quarter, I think, as far as raw material volatility.

Hassan Ahmed

Understood. Helpful. And as a follow-up, a couple of cross currents on the epoxy side of things. Through the course of the quarter we saw benzene going up, we saw propylene coming down. How did epoxy margins fare in Q1? And what’s your outlook for the balance of the year.

Peter Huntsman

I think, again when we look at epoxy, I kind of struggle with that because it’s not with our segment, but with us. I think we have gone so far downstream, traditionally epoxy, for us, a bulk liquid resin epoxy applications going into wind and sports equipment and so forth. I look at it far more now in aerospace, transportation, adhesives, coatings, down into those areas. And again, a lot of those have very sticky pricing. So when you see a spike, an unplanned spike in raw materials, as we saw in the fourth quarter, we will pass those price increases through but it’s going to be over a quarter or two. It’s not going to be instantaneous. And those contracts will continue to be honored. And so we will get the prices up. We will offset the raw material increases. But it’s not necessarily going to be on a quarter-per-quarter basis.

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