Huntsman Corporation (HUN) Q4 2022 Earnings Call Transcript

Huntsman Corporation (NYSE:HUN) Q4 2022 Earnings Conference Call February 21, 2023 10:00 AM ET

Company Participants

Ivan Marcuse - Vice President of Investor Relations

Peter Huntsman - Chairman, President and Chief Executive Officer

Phil Lister - Executive Vice President and Chief Financial Officer

Conference Call Participants

David Begleiter - Deutsche Bank

Aleksey Yefremov - KeyBanc Capital Markets

Kevin McCarthy - Vertical Research Partners

Jeff Zekauskas - J.P. Morgan

Mike Harrison - Seaport Research Partners

Frank Mitsch - Fermium Research

Arun Viswanathan - RBC Capital Markets

Matthew DeYoe - Bank of America

Mike Sison - Wells Fargo

John Roberts - Credit Suisse

Josh Spector - UBS

Hassan Ahmed - Alembic Global

Operator

Greetings and invited to nan Huntsman Corporation Fourth Quarter 2022 Earnings Call. At this time, each participants are successful a listen-only mode. A question-and-answer convention will travel nan general presentation. [Operator Instructions] As a reminder, this convention is being recorded.

I would now for illustration to move nan telephone complete to, Ivan Marcuse, Vice President of Investor Relations. Thank you. You whitethorn begin.

Ivan Marcuse

Thank you, Darrel, and bully morning, everyone. Welcome to Huntsman's 4th fourth 2022 net call. Joining america connected nan telephone coming are Peter Huntsman, Chairman, CEO and President; and Phil Lister, Executive Vice President and CFO.

This morning, earlier nan marketplace opened, we released our net for nan 4th fourth '22 via property merchandise and posted to our Web site, huntsman.com. We besides posted a group of slides connected our Web tract which we will usage connected nan telephone this greeting while presenting our results. As a reminder, pursuing nan announcement of nan waste of our Textile Effects business, we are now treating Textile Effects arsenic discontinued operations successful our income and rate travel statements and held for waste connected nan equilibrium sheet.

During this call, we whitethorn make statements astir our projections aliases expectations for nan future. All specified statements are forward-looking statements. And while they bespeak our existent expectations, they impact risks and uncertainties and not guarantees of early performance. You should reappraisal our filings pinch nan SEC for much accusation regarding nan factors that could origin actual results to disagree materially from these projections aliases expectations. We do not scheme to publically update aliases revise immoderate forward-looking statements during nan quarter. We will besides mention to non-GAAP financial measures specified arsenic adjusted EBITDA, adjusted nett income aliases loss, and free rate flow. You tin find reconciliations to nan astir straight comparable GAAP financial measures successful our net merchandise which has been posted to our Web site, huntsman.com.

I'll now move nan telephone complete to Peter Huntsman, Chairman and CEO.

Peter Huntsman

Thank you, Ivan. Good morning, everyone. Thank you for taking nan clip to subordinate us.

Let's commencement retired present connected descent number five. Adjusted EBITDA for our Polyurethanes section successful nan 4th fourth was $37 million. Significant destocking crossed our markets, specifically successful Europe and North America, mixed pinch competitory pricing and historically precocious power costs placed unprecedented unit connected nan Polyurethanes business passim nan 4th quarter. Overall income measurement successful nan 4th declined 22% year-on-year, and 9% sequentially. The Americas and European regions accounted for each nan declines arsenic little request and important destocking importantly impacted income volumes.

Our Asian markets, chiefly China, did acquisition humble measurement maturation successful nan 4th owed to somewhat improved request successful insulation and automotive erstwhile compared to nan 4th fourth a twelvemonth ago. Europe request remained subdued. And from our vantage point, we're still intelligibly successful a recessionary economical environment. While power costs remained historically higher, those headwinds person improved. This betterment will thief to relieve immoderate of nan unit connected our European business arsenic we move done nan first-half of 2023. That said, falling costs and little request has triggered expanding pricing unit connected MDI, and that offset immoderate of nan use from little earthy state prices.

As we indicated connected our erstwhile net call, we are restructuring our business successful Europe to amended bespeak nan precocious power costs environment. In nan short-run, we are besides idling our smaller MDI statement successful Rotterdam for an extended play until extremity marketplace request improves. We person nary volition of remaining an manufacture daze absorber arsenic has been nan lawsuit these past quarters. To beryllium clear, Europe remains a halfway region for our Polyurethanes business. We will use for galore years to travel from nan region's needed thrust for improved power conservation and efficiency. We stay well-positioned to bring power redeeming solutions to some residential and commercialized building markets arsenic good arsenic innovative betterment to nan lightweighting of automobiles.

There is immoderate optimism that economical conditions and request successful China will amended arsenic 2023 unfolds owed to nan removal of nan Chinese government's Zero-COVID policies. How this optimism construe into accrued user spending and business activity remains to beryllium afloat seen. Post Chinese New Year's, we are seeing early signs of improved conditions successful pricing trends and mean request betterment successful areas specified arsenic acold chain, infrastructure, and definite consumer-related markets including furniture. China is nan world's largest MDI marketplace accounting for astir 40% of world capacity and demand. A steadily improving request business and imaginable economical stimulus would beryllium a catalyst for our Polyurethanes business.

Lower propylene oxide margins successful China drove our equity net little year-over-year. Our associated task contributed astir $10 cardinal successful equity net for nan quarter, beneath nan $22 cardinal reported a twelvemonth ago. One of nan top headwinds impacting our Q4 was, and continuing to situation our Polyurethanes business is nan precocious levels of destocking we've seen successful our Americas region, and particularly successful our building markets. Remember that two-thirds of our Polyurethanes Americas business goes into construction-related extremity markets, astir half into commercialized construction, and half into residential, of which 70% is related to caller residential builds.

Our building markets for composite wood products utilized successful residential and non-residential insulation markets were nether important downward unit passim nan 4th quarter. These trends person continued into nan first-half of Q1 arsenic we proceed to spot nan effect of higher liking rates and their effect connected downstream customer decision-making. We are hopeful that destocking successful nan Americas will easiness arsenic we move into nan typically seasonally stronger months of March and April. Giving america immoderate assurance successful this respect is that our spray foam business, which was nan first to spot destocking past year, reported level volumes year-over-year successful nan 4th quarter.

Our Huntsman Building Solutions spray foam business ended nan twelvemonth pinch $600 cardinal of yearly sales. While nan lodging marketplace whitethorn strengthen a much difficult twelvemonth than 2022 owed to higher liking rates, we stay connected nan correct broadside of power ratio drive, and we will use from some improved building codes and nan government's Inflation Reduction Act. Another affirmative inclination continuing to look for our Polyurethanes business is nan humble but dependable betterment we are seeing successful our world automotives level which saw 7% betterment globally successful nan 4th quarter, pinch each region seeing affirmative volumes during nan 4th quarter. Approximately 15% of our Polyurethanes portfolio ended up successful automotive successful Q4.

As we announced past quarter, we are not waiting for markets to improve, but are taking decisive and proactive steps to make our institution much efficient, stronger, amended positioned for erstwhile nan existent challenging conditions abate. We discussed past 4th successful nan short-term successful Polyurethanes, we person adjusted MDI accumulation to lucifer demand, we will proceed to show and to set accordingly during 2023, some successful Rotterdam and astatine Geismar to guarantee that we aggressively negociate our moving superior pinch rate procreation arsenic our apical priority. Furthermore, we are moving guardant aggressively connected nan costs simplification plans we discussed past quarter. We are connected way of delivering arsenic planned.

This includes existing geographies that are not generating acceptable returns and consolidating further backmost agency functions. Most of these actions will beryllium completed by nan extremity of 2023, and it will little nan wide costs ground for Polyurethanes by astatine slightest $60 million. Looking guardant into nan first quarter, we expect to spot betterment complete nan 4th fourth contempt nan typically seasonality and lighter 4th owed successful portion to nan Chinese New Year. We should expect continued destocking successful nan United States, but that destocking should mean arsenic we move done nan quarter. Putting it each together arsenic we beryllium present today, we expect Polyurethanes adjusted EBITDA to nan first 4th to beryllium successful nan scope of $55 cardinal to $65 million.

Let's move to descent number six, Performance Products reported adjusted EBITDA of $61 cardinal for nan 4th quarter, which was a patient 20% separator contempt destocking headwinds that exasperated nan typically seasonality that we spot successful nan 4th quarter. The diminution successful adjusted EBITDA versus nan anterior twelvemonth was driven chiefly by a 32% diminution successful volumes year-over-year, but that was partially offset by a 23% betterment successful portion adaptable margins owing to our commercialized excellence initiatives and marketplace dynamics. The measurement diminution successful move was driven chiefly by little request and fierce destocking successful construction, coatings and adhesives, and industrial-related markets mostly successful nan Americas and European regions.

We person seen signs that destocking appears to beryllium moderating, but world request remains muted, and customers are keeping inventories debased arsenic they hold for improved visibility. As we mentioned, moreover pinch these macro challenges, we were capable to present EBITDA margins wrong our semipermanent expected range. These returns are owed successful ample portion to our ongoing commercialized excellence programme and charismatic manufacture dynamics we pointed to complete past year, arsenic good arsenic bully costs control. Maleic anhydride and our precocious molecular weight ethyleneamines proceed to connection beardown returns contempt a slowdown successful extremity marketplace volumes. As indicated connected anterior calls, we person seen important unit connected returns successful amines into our China and European upwind businesses.

And it remains to beryllium seen whether nan Chinese and nan E.U. governments' nationalist stance for much renewable power will travel to fruition and thrust improvements. Our remaining amines portfolio successful Performance Products is fragmented and highly diverse, and will use america some successful nan short and long-term. Capital investments successful our differentiated capacity amines serving insulation, EV battery, and semiconductor markets continues to move guardant connected schedule. As we've stated successful nan past, assuming unchangeable macro conditions, we expect these projects to commencement up successful 2023, and present much than $35 cardinal of EBITDA erstwhile they are afloat ramped up, and nan respective markets return to a much normalized level of demand.

Performance Products remains a highly charismatic section successful our view. And we proceed to prioritize strategical maturation via integrated finance and inorganic opportunities complete nan long-run. The first 4th is typically akin to nan 4th quarter. The first 4th will look reliable comparisons versus anterior twelvemonth owed to little wide volumes driven by destocking and nan much challenging world request environment. However, we do expect to enactment wrong our semipermanent EBITDA scope of 20% to 25%. And we expect Performance Products' first 4th adjusted EBITDA to beryllium successful nan scope of $60 cardinal to $70 million.

Let's move to descent number seven. Advanced Materials reported adjusted EBITDA of $41 cardinal successful nan quarter, which is beneath nan 4th fourth a twelvemonth agone owed chiefly to little income volumes, improved pricing and operation helped support EBITDA margins only modestly beneath nan anterior year. Despite nan 4th fourth decline, for nan full-year of 2022, Advanced Materials registered its champion ever year, and adjusted EBITDA margins were 18%, a 120 ground constituent betterment complete 2021. The income measurement diminution of 28% was owed successful portion to our existing of little separator commodity-type merchandise lines.

Excluding our deselection of definite merchandise lines, our halfway specialty volumes declined little than nan conception average, pinch overmuch of nan driblet attributed to destocking successful respective of our industrial-related markets, chiefly successful nan Americas and Europe. Total income fell little than volumes owed to favorable pricing and mix, which helped amended our portion separator by complete 20%. Our Aerospace business continues to show improving trends and accrued almost 20% compared to anterior year. We expect these trends to proceed done 2023, and beyond arsenic wide-body accumulation rates amended and airlines proceed to summation orders, our expectations stay that this important and profitable assemblage will return to pre-pandemic levels successful 2024.

Automotive revenues successful nan divisions accrued 7% compared to nan anterior twelvemonth arsenic income benefited from betterment successful world proviso chains mixed pinch continued favorable trends successful lightweighting and maturation of electrical vehicles. Like successful different divisions, continued destocking and cautious customer ordering patterns are weighing moderately connected income successful nan early portion of nan first quarter. In addition, we spot proceed headwinds successful our European infrastructure coatings business and further destocking successful our business markets specifically successful nan Americas. But retrieve that Advanced Materials has little than 10% vulnerability to worldwide commercialized and residential building market. We expect improved results successful nan first 4th successful 2023 driven by our aerospace and automotive businesses arsenic good arsenic continued effective costs controls.

Combining each of this, we expect nan first 4th adjusted EBITDA for this section to beryllium successful nan scope of $45 cardinal to $50 cardinal pinch higher EBITDA margins than we saw successful nan 4th quarter.

I'll now move nan clip complete to our Chief Financial Officer, Phil Lister. Phil?

Phil Lister

Thank you, Peter. Good morning.

Let's move to descent eight. Adjusted EBITDA for nan 4th 4 was $87 cardinal compared to $327 cardinal successful 4th 4 of 2021, and $271 cardinal successful 4th 3 of 2022. A diminution complete nan anterior twelvemonth was driven by reduced volumes crossed our portfolio arsenic good arsenic little portion margins successful our Polyurethanes division. Sequentially, volumes declined by 14% driven by nan important destocking successful Europe and successful North America.

Seasonally, we would usually expect to spot a sequential measurement diminution of astir 5% crossed our portfolio. As a reminder, astir 40% to 45% of our wide portfolio is linked to worldwide building by commercial, residential, and infrastructure spend. Unit margins successful Performance Products and Advanced Materials improved some year-on-year and sequentially pinch pricing remaining firm.

Polyurethanes portion margins declined arsenic weakening request led to value erosion successful nan 4th fourth while costs of income accrued year-on-year by complete $500 cardinal annualized driven by a important summation successful power costs and earthy materials. For nan full-year Huntsman's earthy worldly costs accrued by astir $1 billion. Of which, astir half was arsenic a consequence of accrued power cost.

SG&A costs will little by $19 cardinal year-on-year arsenic a consequence of our costs optimization program. We closed nan twelvemonth astatine 9% SG&A to income and improvements connected 2021 and up of our Investor Day commitments. Year-on-year overseas speech activity impacted nan business by astir $20 cardinal pinch a stronger U.S. dollar compared to 4th 4 of 2021. We besides saw a diminution successful our equity net from our China propylene oxide associated task pinch little request successful China facing unit connected margins. Adjusted EBITDA margins declined to 5% successful nan 4th driven by Polyurethanes astatine 3% while Performance Products and Advanced Materials continued to present higher returns astatine 20% and 15% respectively.

Let's move to descent nine. With our European restructuring, we person accrued our costs optimization target to $280 cardinal annualized tally complaint by nan extremity of 2023. As a reminder, astir half nan savings are coming from SG&A simplification and half from costs of sales. We closed nan twelvemonth pinch an annualized tally complaint of astir $190 cardinal compared to $160 cardinal astatine nan extremity of 4th three. More specifically, for our European restructuring, we person completed nan mostly of useful assembly discussions. We person immoderate use from European restructuring precocious successful nan 4th fourth pinch immoderate early headcount reductions.

The mostly of reductions and reshaping of our footprint successful Europe will hap during 2023 pinch a targeted annualized tally complaint of $40 cardinal of savings by nan extremity of nan year. In addition, our move to a caller world business work hubs successful Poland and Costa Rica continues astatine gait pinch astir 1 100 positions already filled. As portion of our continued attraction connected functional spend, we person besides completed nan handover of definite IT activity to a managed services third-party provider, redeeming astir $15 cardinal connected an annualized basis

Within Polyurethanes, we proceed to trim headcount we activity to align ongoing costs pinch existent profit margins. In 4th 1 2023, we will complete nan antecedently announced exits from our Southeast Asia business, which will adhd to nan already completed exit of our South American business successful 2022.

Overall, we stay assured of achieving our $280 cardinal annualized tally complaint target by nan extremity of 2023. Outside of our general costs optimization program, we stay focused connected continuously improving our costs guidelines to meet existent economical conditions, which see persistently precocious inflation. We'll beryllium highly vigilant of immoderate discretionary spend, peculiarly successful our European polyurethanes business fixed existent levels of profitability.

As Peter mentioned earlier, we will beryllium idling nan smaller of our 2 Rotterdam MDI units for an extended play owed to existent extremity marketplace demand. And we person besides idled 1 of our 3 lines successful Geismar, Louisiana until we spot sustained improvements successful nan North American building market. Both units tin beryllium brought backmost online arsenic request dictates. Combined, we expect to prevention astir $10 cardinal successful costs successful 2023.

Turning to descent 10, 4th fourth operating rate travel from continuing operations was beardown astatine $297 million. And we closed nan twelvemonth astatine $892 cardinal aliases 77% adjusted EBITDA conversion rate. Free rate travel for nan 4th fourth was $211 million, pinch $620 cardinal for nan full-year, $542 cardinal excluding nett proceeds from nan Albemarle litigation settlement. These figures equate to a free rate travel conversion complaint of 54% including nan Albemarle settlement, and 47% excluding Albemarle, some successful excess of our 40% target for 2022 group retired astatine our 2021 Investor Day.

Capital expenditure from continuing operations was $272 cardinal for 2022, $290 cardinal including textile effects, wrong nan guidance level we gave this clip past year. We are focusing intently now connected our walk connected projects and capacity products, targeting power redeeming installation semiconductors and electrical vehicles.

Given nan existent economical environment, we expect to trim superior expenditure successful 2023 compared to 2022 pinch a target scope of $240 cardinal to $250 million. Beyond CapEx, immoderate guidance connected different elements of rate travel successful 2023. Interest payments should beryllium akin to 2022. Our rate taxation complaint successful 2023 will beryllium a flimsy headwind compared to 2022 pinch full-year bonus, depreciation of our Geismar splitter task rolling off.

As we stated connected our Q3 net call, restructuring rate walk successful '23 will beryllium higher than successful 2022 arsenic we proceed to activity done our European restructuring program. Pension contributions are expected to supply a flimsy tailwind successful 2023 down $10 cardinal to astir $40 cardinal this year. Note pinch respect to pension, location will beryllium an adverse non-cash effect connected adjusted EBITDA of astir $40 cardinal successful 2023 compared to 2022.

Operating moving superior astatine nan extremity of 2022 was little astatine 11% of sales. And this remains a cardinal adaptable for 2023 rate flow, depending upon nan level of economical activity and earthy worldly costs that create during nan people of nan year. In nan short-term, we expect to spot a seasonal rate outflow successful 4th one, which will besides bespeak nan existent and little level of profitability, arsenic good arsenic our yearly security premiums.

Our equilibrium expanse remains strong, and we stay firmly committed to an finance people rating. We closed 2022 pinch $1.8 cardinal of liquidity and nett indebtedness leverage of 0.9 times. As a reminder, nan expected closure of our Textile Effects waste later this month, will adhd nett aft taxation rate proceeds of astir $0.5 billion, and we presently expect to make astatine slightest $400 cardinal of stock repurchases successful 2023.

Adjusted net per stock for nan 4th fourth were $0.04 per share, $3.13 for nan full-year. In 4th four, we repurchased astir $250 cardinal of shares astatine an mean value of $27.39. Our adjusted effective taxation rates was 20% for nan full-year. For modeling purposes successful 2023, we expect an summation successful our adjusted effective taxation complaint to astir 24% to 26%, owed successful portion for nan accounting effect from a valuation allowance successful our European polyurethanes business recorded successful Q4 2022. Our semipermanent anticipation remains an adjusted effective taxation complaint of 22% to 24%.

We've besides accrued our dividend by 12% to $0.95 per share, which will adhd astir $10 cardinal of nett rate outlay successful 2023. With this dividend summation mixed pinch stock repurchases, we would expect astir a 10% return of superior output to shareholders successful 2023 astatine existent levels of marketplace capitalization.

Peter backmost to you.

Peter Huntsman

Thank you, Phil. In conclusion, arsenic we adjacent this section connected 1 of our company's astir challenging quarters, I'd for illustration to return a fewer minutes and definitive what we are presently seeing successful nan industry, and what we are doing successful response. In nan 4th quarter, we saw 3 awesome headwinds that impacted our performance.

The first of these was nan adjacent grounds precocious costs of energy. To move into nan first quarter, we are seeing immoderate moderation successful power prices. However, up to nan coming time, Europe continues to spot state and corresponding inferior costs 7 to 10 times higher than successful North America. The alleviation that we are seeing has much to do pinch a mild wintertime successful Europe and business request destruction, alternatively than nan structural change. I do not spot a return successful nan coming years wherever prices will compete pinch North American state and utilities.

To mitigate this, we announced 4 months ago, a $40 cardinal costs savings scheme arsenic we recalibrate our European costs structure. We proceed to stay connected way to having this completed by nan extremity of this year. It does not people a retreat from our European market, but alternatively a longer-term committedness to compete and create shareholder worth successful nan shape of caller marketplace realities.

We proceed to measure nan energy, regulatory and economical early of Europe. We will proceed to perchance spot further restructuring pinch our European footprint. The uncompetitive power business has caused nan 2nd headwind of our business, and inflationary resistance connected wide request for our products. In nan EU, this has been caused by rising power costs and mediocre power policies.

In nan U.S., we're seeing akin conditions owed to rising liking rates. We judge that our Rotterdam MDI works is 1 of nan much competitory MDI plants successful Europe. However, we will only nutrient that which we tin competitively sell, we will idle 1 of our 2 lines successful Rotterdam that represents astir a 3rd of our Rotterdam capacity. Our Geismar Louisiana MDI plant, we person closed 1 of our 3 lines that represents astir 30% of our output.

While some of these lines tin beryllium restarted, we will only do truthful erstwhile conditions warrant specified a move. We've besides taken a akin measurement successful our capacity products and to a lesser degree, our precocious materials divisions, truthful that we calibrate accumulation to existent demand. This will let america to make amended moving superior and walk done earthy worldly costs much effectively.

The past antagonistic impacts successful nan 4th fourth was an unusually beardown inventory simplification that was felt crossed each of our products, but peculiarly successful Europe and North American construction. I judge that for more, we spot things successful nan first 4th that inventory levels are very debased connected nan chemicals information of our customer's inventory. However, we person overmuch little visibility successful our customers vanished merchandise inventory.

Would a building worldly supplier support successful warehouses, aliases successful unsold houses are each portion of an inventory alteration that impacts our products. These are parts of it. There are parts of nan building worldly segments, wherever we proceed to spot destocking taking place. Other segments are operating their plants and mills astir just-in-time delivering. In nan aerospace, automotive and spray foam insulation, we spot overmuch tighter alteration than we do successful different areas.

We will proceed to negociate our moving superior accordingly. We push for higher prices to retrieve much of our nonaccomplishment margins. As we looked astatine nan remainder of nan first quarter, we proceed to spot gradual improvements crossed nan board. China continues to show signs of improved request and gradual improvements successful pricing arsenic nan system loosens its antecedently enforced COVID restrictions. Early visibility into marketplace conditions for Q2 are murky astatine best.

Regarding nan second-half of this year, I could spot a number of scenarios; it could mean hundreds of millions of dollars positively aliases negatively. To springiness a meaningful full-year outlook astatine this clip would beryllium speculation astatine best. What we will proceed to do is to respond pinch each variability successful nan macro marketplace and make decisions that create shareholder value. We will do this by remaining open-minded arsenic to our wide portfolio and wherever we create lasting value. We will proceed to measure our world footprint arsenic it pertains to our cost, from wherever we root our earthy materials to our internally-produced products.

We will sphere our beardown equilibrium expanse and deploy capital, arsenic was mentioned earlier successful this call, to heighten shareholder worth arsenic we bargain successful astatine slightest $400 cardinal of stock repurchases this twelvemonth and summation our dividend by 12%. We proceed to aggressively look astatine M&A opportunities, peculiarly successful our Performance Products and Advanced Materials divisions. But we will stay disciplined and not overpay for assets. I personally judge that nan steps that we person initiated and proceed to return going guardant will let america to return maximum advantage of immoderate comes our way. We person a beardown equilibrium sheet, awesome customer segments, a beardown attraction connected rate and moving capital, and will relentlessly lucifer our costs building to nan realities of nan marketplace.

In short, we are well-positioned to return advantage arsenic markets improve.

With that, Operator, why don't we return immoderate questions?

Question-and-Answer Session

Operator

Thank you. We will now beryllium conducting a question-and-answer session. [Operator Instructions] Our first mobility comes from nan statement of David Begleiter pinch Deutsche Bank. Please proceed pinch your question.

David Begleiter

Thank you. Good morning. Peter, you mentioned immoderate spot successful MDI pricing successful China recently. Could you springiness a small much colour what seeing successful nan state connected nan crushed correct now? Thank you.

Peter Huntsman

Yes, pursuing nan Chinese New Year, we've seen prices spell up to -- connected mean astir 15,800 a ton. Now, again, that's connected average. You're going to spot nan specialty broadside of that going up higher, and you're going to spot immoderate of nan much commoditized going down little than that. But that's up from wherever we were successful nan 4th quarter, of astir RMB 14,000 per ton. So, we are seeing immoderate advancement location successful pricing. We are seeing immoderate advancement successful demand. And, obviously, we dream that it continues. As we deliberation astir nan Chinese market, deliberation broadly astir 3 broader areas, that which is consumer-related growth, that which is what I would telephone stimulus-related aliases infrastructure spending and truthful forth, and past that which is export.

I deliberation nan export, and an extremity that we play very small successful by nan way, continues to stay beautiful sluggish. Consumer spending, now that would beryllium successful automotive and truthful forth, immoderate of nan areas that we compete successful is going to be, astatine this early point, successful this early view, that's going to beryllium nan stronger of nan three. And past we're gradually seeing nan uplift successful infrastructure stimulus spending. And that's going to beryllium arsenic you deliberation insulation, arsenic you deliberation astir immoderate of nan infrastructure projects, and truthful forth, that would require our products crossed nan board, renewable, energy, rewiring of -- re-cabling of a batch of nan power infrastructure. So, let's retrieve that China has been down galore segments, that system has been down for astir 2 years.

And this is not going to beryllium conscionable a post-Chinese New Year's group travel backmost to activity nan adjacent week and everything is moving astatine afloat capacity aliases not moving astatine afloat capacity. That intends it's going to beryllium a gradual betterment that we'll spot passim nan first, going into nan 2nd quarter. And peculiarly astir that user uplift and astir nan infrastructure uplift, I deliberation that we're going to proceed to spot improvements successful request and improvements successful pricing.

Operator

Thank you. Our adjacent mobility will travel from statement of Aleksey Yefremov pinch KeyBanc Capital Markets. Please proceed pinch your question.

Aleksey Yefremov

Thank you. Good morning, everyone. Peter, pinch each nan uncertainties -- acknowledging each nan uncertainties, would you opportunity that nan 2nd 4th is apt trending amended than nan first?

Peter Huntsman

Yes, I would opportunity that it surely is. Look, I would deliberation that each 1 of our quarters going passim nan year, I would hope, would beryllium trending better. But I deliberation that there's conscionable -- and I talked successful my prepared remarks astir nan murkiness that we're seeing successful nan wide market. I -- that suggests that nan further retired to that we spell done 2023 erstwhile we deliberation astir things for illustration GDP and a imaginable recession, China continuing to improve, building successful North America, these are going to stake flywheels that really are going to beryllium determining if we sewage thing that's approaching $1 cardinal a twelvemonth aliases not.

And past we request to spot things for illustration nan completion of nan deinventorying that's taking place, arsenic I said, connected what we're seeing from nan chemic side, a batch of that deinventorying is already done successful nan chemic side. But again, we're not going to spot building materials, and we're not going to spot customers restock their inventory connected nan chemic broadside until they're vanished goods. Then spell each nan measurement down into nan user areas, we're not going to spot our flip until that extremity of nan proviso concatenation and that extremity of nan inventory is cleaned up. We did talk about, successful nan call, that nan -- our reliance connected building and location -- and successful commercialized residential construction, peculiarly successful North America.

And that will scope thing from what we're seeing correct now successful retrofits, which is simply a stronger extremity of nan business than caller starts, spray foam, which is nan stronger extremity of nan business and what we're seeing successful OSB, for instance. So, location are various parts wrong that building segments that are increasing and aliases -- well, I should opportunity astatine slightest recovering nicely. And location are different areas that I deliberation we're going to person to proceed to spot inventories clear retired a small spot more. We're besides going to person to spot thing hap pinch liking rates wherever consumers consciousness that there's immoderate stableness and gives them immoderate logic to spell make what is usually nan largest azygous acquisition that group make successful their lives astir construction.

So, erstwhile we deliberation astir america hitting our potential, I deliberation that nan biggest variables I look towards arsenic -- is our inventory, building returning backmost to not afloat out, but surely amended than it is today, peculiarly successful North America, power being astatine a competitory complaint peculiarly successful Europe. Again, I'm gladsome to spot nan little prices successful Europe, but I'm acrophobic that little value is because you've seen a 25%-30% request driblet connected nan business side, which intends a monolithic deindustrialization that's taking place. And I deliberation that arsenic we look crossed nan Americas, you're going to astir apt spot much production, much gas, much lipid accumulation successful North America that'll beryllium moderating power prices passim 2023. And, of course, China needs to proceed to move forward. And again, successful each those areas, will request to spell done nan tile successful demand, but I deliberation that we request to spot a dependable betterment taking place.

Phil Lister

Aleksey, conscionable to add, typically, of course, you would spot a seasonal uptick from 4th 1 to 4th 2, a respective, arsenic we move done nan wintertime months, and building tends to prime up betwixt Q1 and Q2 arsenic well, which you should facet into your thought process.

Peter Huntsman

Yes.

Operator

Thank you. Our adjacent mobility comes from nan statement of Kevin McCarthy pinch Vertical Research Partners. Please proceed pinch your question.

Kevin McCarthy

Yes, bully morning. Peter, I person a two-part mobility connected your Polyurethanes business. First, for nan information that's exposed to construction, tin you punctual america really overmuch goes into caller structures versus retrofit of existing structures? And past secondly, what would you request to spot to see restarting nan idle lines astatine Rotterdam and Geismar?

Peter Huntsman

Well, arsenic we look astatine our North American business, fig that two-thirds of that is going to beryllium astir residential and one-third of that is going to beryllium commercial. And successful Europe, that's going to beryllium person to a 50-50 benignant of a number, it's going to beryllium overmuch much weighted towards commercialized than residential. And arsenic we deliberation astir our residential side, astir 30% of that is going to beryllium retrofitting, and astir 70% of that's going to beryllium caller location build, truthful again, that will up and down a small bit, and some of those are opportunities for nan states, and I deliberation that again arsenic we spot nan caller build slowdowns, we spot retrofit of location remodeling summation -- that's we are losing immoderate connected nan consecutive location side, but we are gaining immoderate connected nan consecutive location broadside connected nan retrofit side.

Operator

Thank you. Our adjacent mobility comes from nan statement of Jeff Zekauskas pinch J.P. Morgan. Please proceed pinch your question.

Jeff Zekauskas

Thanks very much. A two-part question, are Textile Effects inventories still successful your inventory connected your equilibrium expanse aliases are they successful a abstracted category? And secondly, erstwhile you talk -- erstwhile you look astatine your relationships pinch contractors successful nan United States, sometimes group consciousness that contractors are now finishing up their backlog, and past what will hap is simply a play of greater request weakness. Is that thing that you spot aliases that's thing that's much invisible to you?

Peter Huntsman

I'll return a stab astatine nan second portion of that, and fto Phil return nan Textile Effects portion of nan question. I deliberation that a batch of nan slowdown that we saw successful contractors finishing up their jobs, I deliberation that that takes into a batch of nan slowdown that we saw successful nan 4th fourth going into nan first quarter. I deliberation that nan inventories, arsenic I mentioned successful my prepared remarks, our inventories besides would see downstream inventories that would beryllium included successful unsold homes. Now we believe, again conscionable anecdotally, I don't want to talk arsenic though we cognize what's going on, connected each situation. But we judge that that proviso concatenation is spinning, nan inventory is spinning. And hopefully arsenic we get into March and April, we're hoping that we commencement to spot that we're going to spot a greater demand. But everything that we're seeing and everything that we're proceeding is that contractors, astatine this point, are moving connected very bladed inventories moving done that proviso chain.

Phil Lister

Jeff, to reply nan mobility connected Textile Effects, we recorded Textile Effects arsenic a discontinued cognition aliases held-for-sale connected nan equilibrium sheet, truthful that's excluding -- it's excluded from our numbers and everything that we've been providing to you successful position of our underlying rate travel capacity EBITDA, each excludes Textile Effects. The 11% moving -- operating moving superior percent of income I springiness to you successful nan book is besides excluding Textile Effects. Thank you.

Operator

Thank you. Our adjacent mobility comes from nan statement of Mike Harrison pinch Seaport Research Partners. Please proceed pinch your question.

Mike Harrison

Hi, bully morning. Was hoping that you could springiness america a small spot much of an update connected nan Performance Products, immoderate of nan superior investments you're making successful polyurethane catalysts, nan semiconductor cleans and ethylene carbonate for batteries. You talked astir nan EBITDA publication being a 2024 number, and benignant of contingent connected request being much normalized. But possibly springiness america a small amended consciousness of nan timing of immoderate of those commercialized sales, and I conjecture what your expectations are, I guess, successful '23 and going into '24? Thank you.

Peter Huntsman

So, Mike, bully greeting to you arsenic well. And I deliberation arsenic we look successful this, again, alternatively broad statement, if we had nan carbonate task done today, I deliberation that it's safe to opportunity that nan request for nan measurement is going to beryllium location 100% today. Now, that doesn't mean that nan pricing and nan margins are going to beryllium arsenic beardown arsenic they different would beryllium during a much robust clip period. But nan request is surely there, and we spot that task being completed immoderate clip during nan early portion of nan 4th quarter. And so, by nan clip you get qualifications done, and I would opportunity nan aforesaid point is going to beryllium connected nan -- that's for nan ULTRAPURE carbonates material.

As you look astatine nan ULTRAPURE amines merchandise that's going into nan semiconductor industry, again that will beryllium a 4th fourth event. And that will -- that merchandise is going to return longer to qualify. So, deliberation of that task being done successful nan 4th quarter, and astir apt taking nan first-half of adjacent twelvemonth to beryllium afloat qualified. And so, you're looking astatine astir apt nan mediate portion of '24. And earlier that installation is successful what I would see to beryllium fresh for a sold retired position. Again, we can't suffice nan materials until we're really producing nan materials. So, it's intolerable to pre-qualify those materials.

As we deliberation astir nan 3rd project, and that's astir polyurethane catalysts and different materials that will beryllium coming retired of our Petfurdo, Hungary site, evidently that's going to beryllium limited connected nan maturation of our spray foam business successful Europe. We spot that business continuing to grow; it's evidently starting astatine a very mini gait correct now. And we've -- elder guidance successful nan institution spent clip successful some nan U.K. and nan E.U. promoting and pushing for them to beryllium much fierce successful their Green New Deal, if you will, astir building insulation and power efficiencies. And I deliberation that we're going to proceed to make bully advancement there.

That will astir apt not beryllium a task erstwhile it's completed by nan extremity of this year. That will astir apt not beryllium a task that's sold retired connected day-one; it wasn't designed to beryllium that way. We request capacity arsenic we turn nan business complete nan adjacent mates of years. And so, each things being equal, we should be, I would imagine, astatine immoderate benignant of what I would opportunity a normalized tally complaint immoderate clip successful nan mediate of nan 3rd 4th of adjacent twelvemonth arsenic we get nan plants, nan products qualified, nan plants lined out, and arsenic we commencement to spot a return coming into nan spray foam. So, and that should beryllium astir a $35 million-ish benignant of a tally complaint erstwhile that takes place. But again, I want to beryllium perfectly clear, erstwhile nan plants commencement up 4th fourth -- opening of 4th fourth this year, don't expect to spot that benignant of tally complaint connected day-one, it will return immoderate clip to get qualified connected a number of these products.

Operator

Thank you. Our adjacent mobility comes from nan statement of Laurence Alexander pinch Jefferies. Please proceed pinch your question.

Unidentified Analyst

Hi, bully morning. This is Kevin [indiscernible] for Laurence. Thank you for taking my questions. I conjecture my first 1 was conscionable -- conscionable funny really consenting you are to flex your equilibrium expanse earlier you spot bid trends improve? And erstwhile you mention to greenish shoots successful China automotive and aerospace, conscionable wondering if you could possibly springiness a small much detail, I guess, really overmuch betterment are you seeing there?

Peter Huntsman

Yes, I would opportunity that what we're seeing successful aerospace successful China is simply a comparatively immaterial information of our aerospace business. The immense mostly of our request connected aerospace is going to beryllium betwixt Boeing and Airbus, and specifically astir nan Airbus 350, nan Boeing 787, and nan caller helping designs connected nan 777X. So, arsenic those models summation successful bid patterns, arsenic nan 777X is capable to travel online, which I judge is simply a 2024 event, we'll spot nan use from that. The Chinese automotive continues to beryllium a awesome business for us, and we're making much and much headways crossed each of our divisions, and peculiarly successful nan EV models for that conception of nan business.

Phil Lister

And for aerospace overall, globally, we highlighted astir a $90 cardinal EBITDA connected pre-pandemic levels. That dipped to astir $30 cardinal during nan pandemic. We're now backmost up to astir $50 million-$60 million. And we're assured that, by 2024, which is what we'd indicated, we'd beryllium backmost astatine pre-pandemic levels of profitability.

Peter Huntsman

And I want to make judge I understand your mobility connected flexing nan equilibrium sheet. Was that much of producing merchandise to meet request earlier it comes or, I'm sorry, I'm not judge I sewage nan constituent connected that one?

Unidentified Analyst

Yes. Yes, exactly, earlier -- exactly, earlier trends improve, and conscionable wondering, I conjecture --?

Peter Huntsman

No, I wouldn't beryllium successful favour of that. It's not that we're acrophobic of nan equilibrium sheet; I don't want to put immoderate much merchandise successful nan marketplace than needs to beryllium put successful nan market. And we request to spot genuine request improvements, and we request to spot pricing and margins description . And astatine that constituent we'll make decisions to adhd capacity. But successful these benignant of marketplace conditions, and I'm conscionable speaking for Huntsman, not speaking arsenic an industry, successful these benignant of marketplace conditions we don't request much tonnage going into nan marketplace astatine this time. Let's meet nan customer demands that we have, and those customers wherever we person contractual obligations, and truthful forth, to do so. And we're going to standard backmost accumulation successful areas wherever we're not capable to get an acceptable return.

Operator

Thank you. Our adjacent mobility comes from nan statement of Frank Mitsch pinch Fermium Research. Please proceed pinch your question.

Frank Mitsch

Thank you, and bully morning. I wanted to travel backmost to nan idling of nan MDI accommodation successful Rotterdam and successful Geismar. When did you bring those units down? What were your operating rates successful MDI successful 4Q? Where do you deliberation 1Q is going to travel out? And wherever do you deliberation you are comparative to nan industry?

Peter Huntsman

Well, Frank, first of each bully to perceive from you. I deliberation that comparative to nan manufacture that we are astir apt beautiful adjacent to nan industry. There is specified small transparency correct now. I would conjecture that nan operating rates correct now are location astir 70% globally. And I guidelines that ground our own. There are immoderate group that are retired location I admit that are putting a privilege connected measurement and -- complete value, we person looked astatine various programs, if you return authorities money, authorities subsidies successful various areas astir nan world, you tin do that. But they mightiness beryllium bully connected nan short-term, but longer word you are benignant of locked-in to keeping accommodation operating astatine beautiful higher rates. You can't trim your costs arsenic overmuch arsenic I deliberation you should beryllium capable to. And connected immoderate degree, you are making a woody pinch nan devil.

So, we looked astatine and we made a determination that shutdown our Geismar capacity successful nan 4th fourth of this year. Our Rotterdam installation is presently going done a turnaround correct now. And erstwhile that restarts, it will not beryllium restarting pinch each of it's -- pinch some of its line, conscionable a larger of nan lines successful Rotterdam. So, but that -- earlier nan turnaround, it's safe to opportunity that we were moderating accumulation astatine that installation arsenic well.

Phil Lister

And arsenic we said connected our call, Frank, if request dictates we tin restart those units comparatively quickly. But arsenic Peter says, we are going to make judge that we are matching efficaciously accumulation to extremity marketplace demand.

Operator

Thank you. Our adjacent mobility comes from nan statement of Arun Viswanathan pinch RBC Capital Markets. Please proceed pinch your questions.

Arun Viswanathan

Great. Thanks for taking my question. I conscionable wanted to inquire if you look astatine year-over-year, location is simply a diminution of possibly complete $200 cardinal moreover ex-textile. So, if you were to deliberation astir that, is location immoderate measurement you could thief america understand really overmuch of that is possibly surgery down into different buckets? Say price, volume, and past possibly decremental margin? And similarly, if you look up looks for illustration you are going to beryllium up successful nan scope of $40 cardinal sequentially connected EBITDA. And is location immoderate measurement you could benignant of break that retired into possibly immoderate those buckets? Thanks.

Peter Huntsman

Well, I haven't fixed awesome woody of thought connected nan various buckets successful nan past. But arsenic I look forward, astir apt safe to opportunity that that we are going to beryllium benefiting arsenic we look into nan adjacent 4th and nan 4th one. We are going to beryllium benefiting astir nan committee by pursuing earthy materials -- and first and foremost and little costs crossed each of region. And we do proceed successful nan 4th fourth -- excuse me, successful nan first 4th to spot immoderate pricing instability and measurement request successful definite areas of nan institution that would beryllium going against that. So, safe to opportunity that we will beryllium capable to spot higher net successful nan first 4th and going into nan 2nd 4th arsenic we spot earthy materials travel down. I deliberation that will astir apt beryllium much of nan driver successful nan first quarter, I deliberation improvements successful request and pricing will beryllium shown successful nan 2nd quarter.

Conversely if we look going backwards, I would ideate that nan -- successful immoderate of our businesses and peculiarly successful Performance Products and Adv Mats, a batch of nan segments present erstwhile you look astatine our adaptable separator connected a per lb basis, we haven't seen a awesome woody of movement. It's each astir volume. And successful Polyurethanes, immoderate of our extremity markets arsenic well, we haven't seen overmuch of an erosions connected margins either. So, it's a measurement drill. Others are much commoditized extremity of nan business, you person seen some separator and measurement dropping. But, I would opportunity that nan biggest azygous logic that we person seen a spread successful net from a twelvemonth agone that would surely beryllium astir measurement much truthful than thing else.

Operator

Thank you. Our adjacent mobility comes from nan statement of Matthew DeYoe pinch Bank of America. Please proceed pinch your question.

Matthew DeYoe

Good morning, everyone. I conjecture 2 things. One, quickly, are you connected nan hook for thing if Venator ends up firing aliases going bankrupt? And then, to [indiscernible], and two, if we nett retired nan little power costs, pinch nan little prices and volumes successful Europe, do you expect polyurethane profits tin amended successful Europe quarter-over-quarter aliases yes, I will time off it there.

Peter Huntsman

Well, I tin reply succinctly no, and yes, but no, we're not connected nan hook for thing pinch Venator, we person immoderate shares that you tin evidently publication successful our filings, but now we divested of that asset, what, 4 aliases 5 years ago, astatine this point. And so, nan elemental reply to your first is no. And yes, I judge that arsenic we look astatine our polyurethanes business, we surely would dream to beryllium expanding volumes connected nan backmost of falling power prices and costs subject and moving prices wherever we can.

Phil Lister

Matt, connected Venator, we mark-to-market and we've sewage $6 cardinal connected nan equilibrium expanse astatine nan extremity of nan 4th quarter. So, it's de minimis and immoderate equilibrium expanse perspective.

Operator

Thank you. Our adjacent mobility comes from nan statement of Mike Sison pinch Wells Fargo. Please proceed pinch your question.

Mike Sison

Hey, bully morning. Happy Mardi Gras. In descent eight, wherever you person adjusted EBITDA span polyurethanes is down $180 cardinal aliases so. And I deliberation you guys said it was mostly volume. So, if nan restocking ends, aliases I'm sorry, destocking ends, really overmuch of that 180 comes back. And if location is simply a restocking event, arsenic possibly things get better, hopefully, do you get each that back, and past some?

Phil Lister

Yes, Mike. I deliberation if you look astatine nan year-on-year for polyurethane, I deliberation it is simply a operation of measurement down year-on-year some successful nan Americas and successful Europe, arsenic we've said, and it is besides a portion separator decline. Even though year-on-year, there's really a flimsy value summation year-on-year Q4 to Q4 obviously, there's been a overmuch much important effect connected adaptable costs.

I deliberation we indicated a half cardinal dollar summation connected costs of income year-on-year. As we move guardant and we said from Q4 to Q1, we would expect immoderate portion separator improvements from Q4 to Q1 connected polyurethanes, peculiarly pinch little those still precocious earthy state prices. And of course, benzene has started to emergence arsenic well. But we would expect immoderate portion separator improvements. It really past becomes a chat astir volume, nan things that Pete has talked astir successful position of China, and besides erstwhile instruction comes backmost overall. But we are expecting betterment successful Q4 to Q1 successful polyurethanes.

Operator

Thank you. Our adjacent mobility comes from nan statement of John Roberts pinch Credit Suisse. Please proceed pinch your question.

John Roberts

Thank you. Why is nan minimum of $400 cardinal nan correct number for 2023 buybacks? And should we look astatine nan quality betwixt nan Textile proceeds and nan $400 cardinal is what you mightiness dream to do for acquisitions?

Phil Lister

No, I deliberation that we've looked astatine our wide scheme connected rate deployment. We look astatine our dividend. We look astatine stock buybacks, we look astatine our integrated soul superior needs and investments, and past we would for illustration to deliberation that we support immoderate powder barren for M&A. And rather frankly, if location is nary M&A, that's why we opportunity astatine slightest $400 million, if we can't find a bully worth connected nan M&A front, we'll support buying our ain company.

So, I deliberation that is we equilibrium that and we return our champion look passim nan entirety of nan twelvemonth and rate needs and truthful distant successful our expected rate generation. Yes, we want to make judge that we're focused connected each 4 of those areas betwixt stock buyback, dividends, soul and external. So, correct now, opening of nan year, let's support immoderate barren powder for nan M&A opportunities that we see. And that's thing that we're very aggressively pursuing. But arsenic I said, my comments we're not going to, we're not going to overpay, truthful we'll support looking.

Operator

Thank you. Our adjacent mobility comes from nan statement of Josh Spector pinch UBS. Please proceed pinch your question.

Josh Spector

Yes, hi. Thanks for squeezing maine successful here. Just a speedy 1 connected Europe, conscionable you are beautiful clear you're going to spot immoderate use of little costs. But wondering, fixed your usage of surcharges earlier successful nan twelvemonth past year, is that thing we request to see successful position of being a dampening effect of immoderate of that use arsenic it rolls done aliases is that thing that shouldn't beryllium a large issue?

Peter Huntsman

No, I don't spot it arsenic re-baiting surcharges and surcharges we put successful nan clip to for higher power costs, we transferred those surcharges were put into imperishable value increases. And I deliberation that nan surcharge for america was nan champion measurement that we tin respond quickly to nan precocious surge that we saw successful power prices and earthy materials that we're taking place. And so, if we get successful that business again, this adjacent summer, I dream we don't, but if we do, that's thing that we'll apt beryllium implementing again. As I said successful my earlier comments, we're not going to beryllium continued to beryllium nan daze absorber betwixt power prices, power producers and nan eventual consumers. So, we'll proceed to deploy immoderate we person to offset power volatility.

Operator

Thank you. Our adjacent mobility comes from nan statement of P.J. Juvekar pinch Citi. Please proceed pinch your question.

Unidentified Analyst

Hi, bully morning, Peter. It's [indiscernible] connected for P.J. What was nan EBITDA net connected your HBS income of $600 million? And what do you expect income to spell adjacent twelvemonth pinch little caller build activity? And really overmuch of it is non-U.S.? And tin you talk astir your aspirations for increasing internationally?

Peter Huntsman

Yes, truthful we don't disclose our EBITDA for HBS. Overall, you tin evidently way nan income we give, we springiness that, we look astatine our integrated margins crossed that business and thrust nan business appropriately. As we said, betwixt Q3 and Q4, we could spot reasonably level volumes overall. And surely Q4 complete Q4 gives america immoderate portion that possibly immoderate of nan destocking has finished. In position of our world business overall, that spray foam is needed much than anyplace complete successful Europe. And you deliberation astir nan U.K., you deliberation astir immoderate Western Europe, which is needed, it is simply a comparatively smaller portion of our business wide sub 10% correct now. However, we would expect that to turn complete nan adjacent 3 to 5 years, peculiarly successful nan European scenery that really needs power efficiency.

Phil Lister

I would conscionable note, arsenic we look astatine expanding that business successful Europe, we're capable to do it pinch our coming configuration of assets there, meaning that we will not person to make an finance successful strategy houses aliases accommodation to beryllium capable to proceed to turn nan European market. But we're besides focused connected nan Asian markets arsenic well. And again, it's not conscionable america that there's conscionable not a batch of polyurethane spray foam. Those are very, very perfect markets for america to beryllium expanding successful complete nan coming years, but correct now that nan Lion's stock of our attraction and mostly and betterment successful earnings. And that business continued betterment will beryllium successful North America. And pinch that operator, why don't we return 1 much question, and past we'll wrap it up. I deliberation we've sewage a small spot complete clip here.

Operator

Thank you. Yes, our last mobility comes from nan statement of Hassan Ahmed pinch Alembic Global. Please proceed pinch your question.

Hassan Ahmed

Good morning, Peter and Phil, acknowledgment for taking nan question. Look, a mobility astir nan adjacent and medium-term MDI supply. I mean, you guys talked astir your income benignant of matching your proviso to nan little demand, right, wrong MDI. I mean from what I'm seeing nan remainder of nan manufacture is doing nan same. Would you benignant of deliberation that that subject will continue, I mean obviously, you guys will, but for nan remainder of nan manufacture arsenic request comes back, truthful that's connected nan near-term broadside of it. And connected nan mean word broadside of it, what are you guys seeing successful position of nan manufacture participants whitethorn beryllium rationalizing capacity, whitethorn beryllium reconsidering description s successful nan like?

Peter Huntsman

Well, evidently I can't remark connected what nan title is doing aliases really agelong and to what grade they've unopen backmost capacity. So, I deliberation it astir apt varies from subordinate to player, but I'd only beryllium speculating astatine that point. Long-term arsenic we look astatine MDI, I would conscionable remind, it whitethorn look for illustration I'm talking astir a decade agone but if we spell backmost conscionable a year-ago, if we spell backmost to pre-COVID times and successful nan station COVID times, this manufacture continues to beryllium a very robust industry, MDI, it continues to switch different products, and it continues to turn amended than GDP rates. And we were fundamentally sold retired earlier we saw nan meltdown successful Europe astir power prices. When I opportunity we, I'm not conscionable talking astir Huntsman, I deliberation arsenic an industry, we were sold out, we were successful discussions pinch a number of a very ample customers that we're talking about, wanting multi-year contracts and wanting to bargain capacity wrong our facilities, and truthful forth, benignant of topics that we've ne'er had earlier pinch customers.

And so, location has not been a batch alteration connected nan wide building of nan market, nan marketplace is still going to beryllium growing, wherever it will request astatine slightest 1 world standard installation that travel connected each 9 to 12 months, and astir of that request is going to beryllium taking spot successful China. And astir of that caller building will beryllium taking spot successful China. But arsenic you look retired complete nan horizon, and you deliberation astir nan number of caller accommodation that are going to be, they're going to beryllium built, there's what 1 aliases 2 that person moreover been announced.

And complete nan people of nan adjacent 5 to 7 years, nevertheless agelong it takes to build 1 of these, I deliberation that location is going to beryllium a very morganatic mobility astir Europe. And arsenic I look astatine nan costs per ton of European MDI crude production, now, again, I'm not talking astir nan vanished product, nan crude production, that's power intensity, and dependency connected nan value of crude oil, and specifically benzene. And I look astatine that crude accumulation successful Europe, pinch nan precocious energy, precocious regulatory costs and comparison that to nan Americas. And I comparison that to nan Middle East, I comparison that to Asia, if location is going to beryllium a multi $100 per ton costs differential, it's now going to beryllium built into Europe, I questioned immoderate of nan semipermanent competitiveness of debased costs polymeric MDI, peculiarly astir today's pricing, and really that survives.

You've sewage producers successful MDI, for nan much commoditized rates successful Europe that are losing money today. And that's what today's power prices. And so, I'm benignant of astatine a nonaccomplishment arsenic to really that really changes that, really that move changes successful Europe. And so, my comments and I talked about, we proceed to look astatine our portfolio, we proceed to look astatine wherever we root not only our earthy materials, but wherever we root our soul proviso of crude MDI and nan components to make a molecule of MDI.

I don't deliberation that that I personally don't consciousness that we're done answering that mobility arsenic to what that world footprint yet looks like. Because if you spell backmost 2 years ago, it's not I'll conscionable punctual you that successful 2021, European prices for a ton of MDI was really nan lowest costs, excuse me, 2020, nan adjacent of 2020, European MDI prices for Huntsman connected a per ton ground were astir 875 per ton, Geismar location astir 950, and they were astir 925 successful [indiscernible].

Now, my constituent successful that is that each 3 of those regions were wrong 10s of dollars to each other. You couldn't spend to move merchandise from region to region, and really beryllium competitory because nan manufacturing ground successful each 3 regions was fundamentally nan same. And you're looking astatine what, $250 to $350, $400 a ton to move product. Now you're looking astatine adaptable costs to nutrient a ton of MDI. This past twelvemonth was arsenic overmuch arsenic $1,000 per ton difference. And arsenic we look astatine that costs quality today, you're talking astir successful excess, from nan lowest to nan highest wrong Huntsman successful excess of $500 a ton, which evidently covers freight.

And that's nan benignant of a dispersed and benignant of a delta that I don't deliberation you can, if that's going to proceed connected a longer-term ground and if what we spot coming is arsenic bully arsenic it's going to get successful Europe, we've sewage to proceed to inquire ourselves, what benignant of footprint do we request successful Europe to stay competitive, to create shareholder worth and we're going to proceed to look astatine that and to make judge that we're moving quickly to effort to reside immoderate of those sorts of issues. So, sorry, that's a agelong rambling answer, but it gets to nan bosom of what we're seeing successful Europe and nan deindustrialization, and a batch of nan chemic segments that we are seeing successful Europe, and really we request to beryllium responding to it connected nan short-term and longer position we look astatine complete nan adjacent mates of years, I'm not judge those answers person each been wholly satisfied, astatine slightest not to my satisfaction.

And Operator, I deliberation that beautiful overmuch sums up our convention here.

Operator

Thank you. Yes, that does reason today's teleconference. We admit your participation. You whitethorn disconnect your lines astatine this time, and bask nan remainder of your day.