Huntsman Corp. CEO Peter Huntsman is telling investment analysts that consumer confidence is the key to recovery for many firms in downstream markets.
In a recent conference call with analysts, Huntsman pointed to the auto industry as one example.
"As we speak to our customers, I think there is very little inventory in the supply chain. I think you're going to see an impact of the improvement on a month-to-month basis, but again, when I talk about the visibility that we have … how many units of automobiles will Ford or GM or BMW will be running at the end of May, that hasn't been told to us," he said.
What happens "at dealers and consumer sentiment and a number of other issues" will drive the recovery, he added.
Huntsman, whose company is based in The Woodlands, Texas, noted the impact of the coronavirus pandemic on its polyurethanes division.
There was a 60 percent drop in orders for polyurethane across the board in April. The Americas were down 90 percent and Asia "around 20 percent," he said. Orders for May are down around 50 percent and the outlook for June is at 35 percent down.
In the composite wood and other construction sectors, demand for Huntsman's products in April was down 35 percent and could be down by 20 percent in June. Elastomers were down from 60 percent in April to 45 percent by June.
Huntsman said the company does not plan to idle any MDI manufacturing sites but will reduce production to meet demand. That is expected to mean a 70 percent decrease in production in Asia, 50 percent in the Americas and about 60 percent in Europe.
"With a visibility before us of a matter of weeks of orders and so forth, I would use some caution," he said.
Signs from China and elsewhere in Asia are showing improvements, however.
"As we look to China, we are quite bullish about what we see. Europe … we are definitely coming from the bottom of this particular cycle and we see gradual rebuilding," Huntsman said. "The Americas, are at that trough, and I think that in the coming weeks, you'll start to see that pickup of automotive, aerospace and so forth."