Participants

Ivan Marcuse; Vice President, Investor Relations and Corporate Development; Huntsman Corp

Peter Huntsman; Chairman of the Board, President and Chief Executive Officer; Huntsman Corp

Philip Lister; Executive Vice President and Chief Financial Officer; Huntsman Corp

David Begleiter; Analyst; Deutsche Bank AG

Jeff Zekauskas; Analyst; JPMorgan

Patrick Cunningham; Analyst; $Citigroup Inc(C-N)$

Michael Sison; Analyst; Wells Fargo Securities

Vincent Andrews; Analyst; Morgan Stanley

Frank Mitsch; President and Senior Analyst; Fermium Research

Josh Spector; Analyst; UBS

Aleksey Yefremov; Analyst; KeyBanc Capital Markets Inc

Salvator Tiano; Analyst; Bank Of America

John Roberts; Analyst; Mizuho Securities

Hassan Ahmed; Analyst; Alembic Global Advisors

Kevin McCarthy; Analyst; Vertical Research Partners

Mike Harrison; Analyst; Seaport Research Partners

Arun Viswanathan; Analyst; RBC Capital Markets

Laurence Alexander; Analyst; Jefferies

Presentation

Operator

Good evening and welcome to Huntsman Corporation Third Quarter 2024 earnings conference call.
(Operator Instructions)
I would now like to turn the conference over to your host, Ivan Marcuse.
Thank you. You may begin.

Ivan Marcuse

Thank you, Rob, and good morning, everyone.
Welcome to Huntsman's Third Quarter 2024 earnings call.
For joining us on the call today are Peter Huntsman, Chairman and CEO and President, Philip Lister, Executive Vice President, CFO.
Yesterday last night, November 4, 2024. After the US equity markets closed, we released our earnings for third quarter 2024 via press release and posted to our website, huntsman.com. We also posted a set of slides in detail and commentary discussing the third quarter on our website.
Peter Huntsman will provide some opening comments shortly, and we will then move to question-and-answer session for the remainder of the call serving the call, let me remind you that we may make statements about our projections or expectations for the future.
All such statements are forward looking statements and while they reflect our current expectations, they involve risks and uncertainties and are not guarantees of future performance once you should review our filings with the SEC for more information regarding the factors that could cause actual results to differ materially from these projections or expectations, we do not plan on publicly updating or revising any forward-looking statements during the quarter. We have also referred to Non-GAAP Financial Measures such as adjusted EBITDA, adjusted net income or loss, and free cash flow.
You can find reconciliations to the most directly comparable GAAP financial measures in our earnings release has been posted to our website, huntsman.com. I'll now turn the call over to Peter Huntsman, Chairman and CEO.

Peter Huntsman

Ivan, thank you very much, and thank you all for taking the time to join us why we've got quite a few people line for questions.
So I'm just going to be very brief.
The third quarter ended about where we expected it to finish, and we're now focused on the fourth quarter and year end, but we expected there to be better than it's shaping up to be there still a number of positives as we move from quarter three quarter four and year end.
So we said to many of you during our investor conferences and improvement in North American housing and construction will be the single most impactful change on our earnings.
I'm heartened to see that interest rates are [troughing] in both the US presidential candidates commissioned new housing and the partner program to the economic platform further improvement.
We are hopeful that another [recount] between now and the end of the year will continue to improve EBIT growth. we're still seeing today.
In addition to falling interest rates over the past few quarters, we've said on the top of the more traditional MDI growth that exceeds the rate of GDP growth.
As we've said in past quarters, we need to see demand growth, improving capacity utilization rates increase before we see meaningful margin expansion.
Demand growth is moving in the right direction, but I was disappointed to see our recent Q4 MDI price increases getting traction with customers.
We continue to see very low inventories across-the-board and rising demand will eventually support price increases and margin expansion.
Additionally, we see a number we see a record amount of global chemical assets, especially in Europe that are on the market.
I would personally be surprised if all of these assets are sold.
So I imagine that very few of these are actually making money given your desire to rid yourself of manufacturing, which I see reflected in its adherence to anti-growth energy and regulatory policies.
I doubt the prospects for change anytime soon.
We may well see a number of facilities closed due to a combination of regulatory and high cost structures.
Longer term, I think there will be a much-needed consolidation and a number of chemical products in Europe having returned resulting from visiting government leaders, customers and partners in Malaysia, China, Saudi Arabia and Korea.
I believe that these markets are seeing relatively low growth as you continue to sort out their conflicts and housing bubbles will continue to see our people continue to see opportunities grow. 2025 should be a gradual improvement across Asia and the Middle East.
We continue to look at all of our production sites and examine our cost structure, supply agreements and operating rates.
For the end of the year, we will be initiating a further $50 million cost reduction program and our global polyurethanes business.
This is an additional $280 million in costs we've taken out of the entire company over the past few years.
We will continue to manage our way through challenges such as the recently settled Boeing strike, which will cost an estimated few millions of dollars in the fourth quarter will also capitalize on growing EV battery opportunities, tightening insulation standards and the energy efficiency in Home and Building Materials.
While too early to say much about 2025, I believe lower interest rates, pent-up housing demand, Asian stimulus announcements, lower inventories and greater political certainty in Europe and the to us all worked towards an improving market conditions.
With that, operator, why don't we open the line up for any questions?

Question and Answer Session

Operator

Thank you.
Time will be conducting a question-and-answer session. (Operator Instructions)
David Begleiter, Deutsche Bank.
Please proceed with your question.

David Begleiter

Thanks.
Good morning.
Peter, do you expect MDI assets in Europe to close in this iteration of restructurings?

Peter Huntsman

I'm sorry, David, I didn't get the entire question, do I expect.

David Begleiter

Do you expect MDI assets to be closed in Europe in this iteration of restructurings and reviews?

Peter Huntsman

Huntsman's restructuring?

David Begleiter

No of competitors, MDI. assets fall.

Peter Huntsman

I look, I simply have no idea what our competition is doing.
As I look around the world, you look at the cost curve in Asia.
I think given the size and the relative We initiated construction of the capacities of MDI in Asia, this is relatively flat cost curve in Asia.
I think one has an advantage just simply because the scale and integration that they enjoyed, but they took pretty flat cost curve.
I think it's pretty similar in the US where you have full players that all have about the same size facilities, single site locations.
And so for Europe continues to operate multiple smaller facilities and multiple across multiple countries.
And as I look at that, we look at the raw material costs, energy costs, transportation costs, regulatory costs, everything else across Europe.
I'd be very surprised if we're sitting here a year or two from now.
And all of those, particularly the smaller non-integrated facilities are still operating.
But again, I just look at that on a cost curve, US versus Asia versus Europe and certainly Europe and the outlier.
But who knows if that again, I haven't had any idea what goes on.
And now in the competition.

David Begleiter

Very good.
And just on your new restructuring program, polyurethanes, $50 million, you detailed the functions and regions where that cost is being removed from you.

Peter Huntsman

Most of that is going to be in Europe be centred around our automotive and construction will be giving some more detail about this during our fourth quarter call in a couple of months.
But safe to say this is this will be about a $50 million cost savings over the years, the majority of this database and by the on a run-rate basis by the end of next year.
And the costs, typically when you're looking at these sort of a of programs as much cost to the same with the savings.
So there's about a one year.
Yes, give or take a quarter to a one-year payback on this.

David Begleiter

Thank you.

Operator

Our next question comes from Jeff Zekauskas, JPMorgan.
Please proceed with your question.

Jeff Zekauskas

Thanks, Frank.
In the quarter, you received a dividend of $35 million SLIC China JV acquisition.
I taken that went through cash flow from operations.
And are there any more dividends to come from that source?

Philip Lister

Yes, thanks.
Thanks for the question.
Jeff?
Correct.
That's $35 million from the liquidation of the Chinese joint venture.
You'll recall we did the restructuring in the first quarter of this year.
We're now moving through the liquidation process.
And during the course of liquidation, about [$65 million] of that can be recorded as a dividend, which impacts free cash flow.
That's something which is over and above or below the amount of net income that we've received over the lifetime of the of the JV, $30 million was simply a capital separately injection.
There's about RMB300 million left to liquidate out of that JV.
You expect that to occur during 2025.
None of that will be recorded the dividend policy for accounting purposes and therefore it wouldn't impact free cash flow.

Jeff Zekauskas

And in terms of your update, can you describe your volume expectations and (inaudible) for the fourth quarter in general and by region?

Peter Huntsman

I think that as we look at this year, we'll see a seasonal decline.
That's usually the about 15% to 20%, depending on at year end, inventory stock and so forth.
Jeff, I'm not trying to evade a direct downturns, but typically in the middle of November and the next week or two, we'll start to see just how much people are trying to cut inventories and trying to preserve working capital and so forth.
And literally, as you start to see this in the last four to six weeks of the year of people who are in some cases, we'll just stop ordering and and though they'll take their inventories down.
Now, I believe that inventories are at just anecdotally, as you look across MDI. inventories are very low, but we have some regions of the world where a growth demand is pretty [mean its low]
So I think that we'll see what we typically see during of seasonality, which is on a global basis, anywhere from 10% to 15%.

Operator

Our next question comes from Patrick Cunningham, Citi.
Please proceed with your question.

Patrick Cunningham

Hi, good morning.
So you mentioned in MDI price increases were Reebok's into 4Q 24.
What are your expectations for prices by region in 4Q?
And what are you reflecting in terms of raw material declines?

Peter Huntsman

Well, I think that as we look at pricing for MDI. in Q4, it's looking pretty flat. (inaudible) [stock] market, a little bit of upward pressure in China, but it's on the spot prices in Europe in the US is flat to down a little bit in tracking the cost of benzene.
So I will pick up a little bit of benefit from benzene, but that will not wholly, but partial only be offset by flat pricing and probably higher natural gas prices.

Patrick Cunningham

Very helpful.
And then in Performance Products, you cited sales volume increases in construction and coatings and adhesives was just in line with your expectations are or are you outperforming the market here?
Or is this mostly the absence of destocking?

Peter Huntsman

I think in Performance Products, we're right now the good side about that business is its margins on a compound basis.
The main one being fairly strong and our biggest issue there is around demand.
And you typically see, again, seasonality in that business like you do other businesses I've been.
So I'm hopeful that we'll start to see the demand start coming back after the Chinese New Year.
In particular, I believe it will be in line with the typical seasonality that we see.

Operator

Our next question comes from Mike Sison, Wells Fargo.
Please proceed with your question.

Michael Sison

Hey, guys.
Morning, Peter.
For polyurethane, you are getting volume growth, the earnings leverage to EBITDA leverage just doesn't seem to be taking any at what level of volume or sales you're saying you need to see to start seeing the appropriate leverage for that business going forward.

Peter Huntsman

It's an excellent question, one that we ask ourselves quite often as well as we really see this in this market.
We started getting leverage when capacity utilization in the high 80s.
Now exactly what segment of the market does that have to hit them for us.
That's all you have to be determined.
But as we look around the world, I believe that the global operating rates are probably in the mid 85, 87, 88.
You know that that we might be of, if we continue to see the sort of growth in demand and recovery in MDI that we've seen this past year.
I believe that we ought to be seeing some expansion in pricing and margins early in 2025.
Again, that's predicated upon demand continuing to improve, particularly in North America, around housing, but it's a local coming out of the very low base of where we were last year.
So when we look at the demand and I'm happy to have seen in 2020 for an MDI, but we need to see that continuing to get out of the hole that we got into the 2022 and in 2023.
And of course, during that time period, we've also seen capacity additions and something to the market.
So I think all of that offset each other.
As we look into 2025, I'm hopeful that as we kick off 2025 post Chinese New Year's start getting into the construction season, hopefully, we'll start to see orders in the February March timeframe.
Start picking up materially.

Michael Sison

Great.
And then a quick follow up on 2025.
I know it's little too early to give specific out like a lot of the consultants still see margin expanding quite a bit potentially disorder agree with that cadence and and the what type of EBITDA potential or power or do you think you should see in polyurethanes if things pick up next year?

Peter Huntsman

I think again, I would agree with that.
I mean, if we talk about margin expansion, 2025, a lot of that's going to be predicated again about what sort of demand we see in North America housing, of China we've got to see consumer confidence return and Europe, Cisco, I see some sort of return to some element of sanity when it comes to manufacturing of policy around energy and so forth. We may well see an improvement in North America because of housing and Asia because of consumer demand and Europe continues to lag behind.
I do believe fundamentally that we're seeing a lot of capacity utilization that traditionally has been European-based and particularly in auto automotive and probably a couple of other materials that are moving to the U.S. to move into the Middle East are moving to Asia.
So I think that you are seeing a global dislocation from Europe to other regions.
And so you might actually see an improvement take place in North America and Asia before you do Europe.
So I'm not sure that it's necessarily going to be at an even tied in all regions simultaneously as we've seen in the past.

Operator

Our next question comes from Vincent Andrews, Morgan Stanley.
Please proceed with your question.

Vincent Andrews

Hi, thank you.
Good morning, everyone.
Prepared comments on autos?
Well, certainly it wasn't what you expected.
You didn't seem to grow in the third quarter and you had stable EU volumes and it also looks like autos were better few in polyurethanes versus advanced materials.
So I wonder I wonder if you could just comment on on all that, particularly the EUPs, just given how weak that market seem to be and what the sort of sequential outlook is into the fourth quarter, maybe the 25 to extending over the year.

Philip Lister

Thanks for the question.
Also was 3% up year on year.
As you indicate, it was down 6% sequentially.
So we did see it a little bit of a slowing during the call.
So I think you break down our exposure around the world for also, which is about 15% of our portfolio, about 40% is into Asia, and that's being relatively strong and well (inaudible) Polyurethanes division for us at about [30%] into Europe, slowed a little under 20% into North America, 10% rest of the World in North America definitely did come off as we went through the third quarter.
And as we headed into the into the fourth quarter here, I mean, look, we look at the numbers we have 90 million production builds last year and 23.
I think most of the forecast for about 88 million for this year.
So a little bit down overall in general, where we're agnostic to, whether it's ice, whether it be via, whether it's hybrid and are able to pick up, pick up for pickup sales in across the IgA, either platform.
But in general, a little bit of a slower.
But in general, also a pretty good for us in Asia.

Vincent Andrews

And Peter, if I could just follow-up, I'd be curious to get your view on interest rates.
I think we all want to come down, but so far, we haven't seen as much help on the back end of the curve, I think as people had hoped for.
So you're saying is you're looking to 25.
If we get to a situation where maybe the front end come down a lot more than the back end of the curve, where do think that helps you?
And where do you think that maybe slows down the pace of recovery?

Peter Huntsman

Well, it's got to be able to hit in both areas.
one, it's got to be able to hit on consumer confidence and consumer spending in that singularly has been the engine of growth for the US economy.
Yes, there are a lot of levers of the U.S. economy, but I believe that the consumer confidence has been probably the biggest differential between Europe, US and Asia has been the US consumer.
They continue to spend money on a smaller scale around consumer confidence, items, shopping and so forth versus larger scale, which I would consider that to be a home buying.
And as we start to, as Phil mentioned, in automotive in the U.S., particularly in the third quarter.
So again, when you talk about that interest rates coming down and that potential bifurcation between interest rates, mortgage rates, we need one to continue to keep the US consumer stimulated and spending we need the other one or more importantly, I believe for our company, mortgage rates need to come down to stimulate housing demand.

Operator

Our next question comes from Frank Mitsch, Fermium Research.
Please proceed with your question.

Frank Mitsch

Thank you and good morning.
Peter, I saw a news item recently about a chemical company doing a capacity expansion of non-PU based insulation materials and are targeting the European market and the release read positively about future demand for insulating materials in Europe.
Now obviously, as I read the prepared remarks and listen to you so far, things seem like there was it was much you can get excited about insulating materials in Europe, which obviously be very helpful for you.
What's your take on that market and when might we see a recovery?

Peter Huntsman

There would be absolutely on another frustrated with Europe, as you can probably tell Frank, and one of the areas where you would think with higher energy prices, Europe would be one of the most proactive areas on legislating construction materials and insulation standards.
Reality virtually every state in the United States has a higher and tougher energy conservation standard than most European countries still.
So Europe, when they get their act together and they really want to start looking at how they have you can serve is much is yes, it put that into an active energy policy.
I believe that there's some real upside there.
I think that we're sitting in the position.
We have blending facilities in Europe.
We can make a polyurethane spray foam materials.
We don't exported from the U.S.
We can make it there.
We can utilize, you know, our own technologies in our own polyols and so forth.
And we've got a real opportunity in Europe with that without the correct incentives, inducements and assets that have regulatory environment, I don't think that will obviously have the support of growth in Europe that we've been able to see in the US.

Frank Mitsch

Okay.
Thank you.
Very helpful.
And then any in the prepared remarks, there was also comments about, you know, looking at possible M&A in Advanced Materials and given obviously your leverage is kind of elevated, but that's really more so about the new kind of the trough or bottoming levels of EBITDA.
But given your stock is close to yielding 5% of what are your thoughts on what are your thoughts on buybacks?

Peter Huntsman

I'd have to fill.
Well, look, first of all, it's a decision that the Board would be making, but my recommendation of the Board, as I'd have to feel a little bit more confident about free cash flow coming in and preserving that free cash flow.
And right now, I want to make sure that we preserve the dividend and I speak on behalf of the Board and say this on to it because we have preserved the dividend.
We keep a strong balance sheet.
We stay focused on our investment grade ratings.
And then when we see an improvement in free cash flow will divide that up between and the potential of share buybacks or M&A.

Operator

Our next question comes from Josh Spector, UBS.
Please proceed with your question.

Josh Spector

Yes, hi, good morning.
Just curious on Europe, the deal that's kind of [Aperam between cholesterol and adnoc] kind of has been keeping capacity intact in Europe.
Is that an impediment to Europe improving for the MDI market for Huntsman?

Peter Huntsman

I'm not trying to evade And as I've just got no idea what [adnoc and cholesterol] would be planning.
I assume that between signing and closing, you're not going to want to do no matter what your plans are.
You not going to want to do a whole lot that wouldn't agonized regulators and your labour unions and so forth.
So you let's keep everything kind of as is.
And but I'm just speculating at that.
So I look, I'd love to see less capacity than capacity.
All things equal, but have no idea what they're planning to do.

Josh Spector

Yes, no problem.
I think I just thought that there is something where a few years after that, we'll close something had to stay in place, but I'll move on.
I guess maybe sticking with Europe and a different name is just when you talked about polyurethanes in your earnings power in the past, I think you said low utilization rates are higher.
You think maybe a mid-teens margin is what you can achieve.
I guess with your commentary around demand and the U.S. and China versus Europe, it seems like Europe will probably lag and also costs are higher than I guess the question is, can you achieve that framework, Europe costs stay higher or maybe there isn't any industrial change?
Would you have a different answer around Huntsman's earnings power?

Peter Huntsman

I'd like to think that whatever is lost in Europe can be made up in Asia and North America.
I think if you have continues on the path that is now, it's going to have a higher cost structure and then the Americas and Asia.
And if we see demand, if we see particularly downstream demand or we have excess splitting capacity in North America and China in both of those locations, this may well, it gives us greater opportunity to move more production downstream, particularly in China and earn more per pound in those regions to offset any uncompetitive structure that might exist in Europe.
But I think until the reality of the market had some pricing hits in global trade is it's probably, I'm just speculating at this point, but I don't believe that fundamentally, you said that there's been any sort of major shift in those dynamics.

Operator

Our next question comes from Aleksey Yefremov, KeyBanc Capital Markets.
Please proceed with your question.

Aleksey Yefremov

Hi, good morning, everyone.
Peter, I wanted to ask you about pricing in MDI. in prepared remarks, you say you don't have much exposure to spot, but I also recall traditionally don't have much exposure to contract as well as on a big chunk of your business tied to just raw materials path for us.
Can you just explain what's the current state of your sort of leverage to contract benchmark contract pricing for MDI that we can observe in North America?

Peter Huntsman

Yes.
Well of I'll just touch on all three regions.
So I consider it.
I don't want to oversimplify this, but so forgive me, but let's just put it in kind of three buckets.
one is how much is just spot.
And that's what you oftentimes we'll read and (inaudibale) are these sort of publications.
The other one is going to be around formula pricing.
And the other one around, I would say, variable pricing, which is going to be MDI is more than just three buckets of pricing that variable pricing, depending on it, pure MDI or if it's formulated products or whatever it's going to, it's going to be all over the place.
So we look at spot materials is typically around 10%, Europe, 10% Europe and about 40% in China.
As you look at formula pricing, it's around for a 20% of our total volume, even globally.
That's going to be preponderantly in North America going to be around 40%.
And in Europe, it will be lesser than that.
In China.
It will be lesser than that.
And then that third bucket on the variable side, that's what you have the splitter for the most part or the formulations will hand it to the (inaudible)
The pricing is going to be on a contract is going to be on a customer by customer.
Very little of that is going to be throughput pricing.
And that's just that's going to be on a negotiated basis customer to customer.
So that's kind of the three buckets.
I do think people have a tendency probably to read too much into published pricing.
I think it is probably a good macro indicator.
But you just got to remember that MDI, unlike ethylene and benzene or some of the other chemicals that are that are traded, the pricing of which is regional.
And it is all over the place.

Aleksey Yefremov

Thanks very helpful, Peter.
In your automotive polyurethanes business.
I mean, it appears that European Allianz are or losing share and these are some traditionally some of your best customers, right, biggest customers in PU.
How are you addressing this or a sea change in the auto world?
How are you changing your strategy in terms of going after sort of the emerging (inaudible) in China and elsewhere?

Peter Huntsman

Well, I think that is fortunately have we have very strong regional platforms in the U.S., Europe and Asia.
I think each region platforms are probably getting stronger and stronger with Asia used to be just probably four years ago, five years ago, we made more money in European auto that we did in our than we did the other two regions combined today that can be said about Asia, kind of the relationships that we have with Asia.
I see it, you know, anything from [Hyundai] in Korea to a BYD in China and so forth.
The relationship, the applications, not just in traditional applications like seeding, but also now with more EVs in the sound insulation materials into the battery and so forth.
As we look at Asia, we make more money, even though that's only 40% of our global automotive businesses in Asia, we make more money in Asia than we do the rest of the world, the other regions combined.
So I think that we're as we look at our automotive business, it continues to be very stable for us.
But again, I think under the water, there's a lot of very fast-moving currency between us and easy to in Europe, in Asia, U.S. and the rest of the world.
And the global trades are going to continue to move very rapidly those there.
As we look at Chinese EV markets are doing in Latin America and so forth.
But rest assured, I think we have very good platforms to address these nice and to address the regional formations.
And that's how we've been organized.
It will continue to be organized.

Operator

Our next question comes from Salvator Tiano, Bank of America.
Please proceed with your question.

Salvator Tiano

Yes.
Thank you much.
So firstly, you mentioned your split or before the contract by contract banks.
I believe earlier in the year you said that the new guy (inaudible) really adding any EBITDA so far.
So what do we stand right now has started contributing?
And if not, why is up and what should we for 2025 on this spitter?

Philip Lister

Yes.
So mostly for the splitter investments, outputs and smart, what really needs to happen to get the full benefits of that split is a which then from a consumer perspective, on areas such as furniture, auto needs to be quite a bit stronger in North America as well.
And so as a decent coating, so which ends up from the consumer side, a lot of really nice to be a lot stronger in order to benefit substantially from that split for investment.
We still expect that to happen over time.
That's not the issue.
It's still around timing or on the consumer confidence that Peter spoke about.
If you think about next year, maybe $10 million to $15 million higher year-on-year benefit.
But that's really dependent upon how our furniture market develops.
Our automotive develops as well as solid interest in coatings develop.

Salvator Tiano

Okay, perfect.
And I also wanted to check a little bit on the Chinese market, especially because I guess there.
So we have the stock and these new stimulus measures, but they don't certainly seem to probe the new housing market.
If anything, there seem to be disincentivize new construction to boost, I guess, existing home stock prices.
So when we think about your MDI and polyurethanes business there and you talk a little bit about your end markets and how they differ versus your US and European business?

Peter Huntsman

Well, I think in China, we are again, we see a very much a very fast-growing automotive market, and that's an area of benefit for us.
We're pretty small there.
And residential housing, again, it's a growing market for us.
We look at the installation side of it in the building materials side of and so forth.
Consumer spending is been rather make in China.
We have spent or also sell quite a bit of a large infrastructure projects.
I think about central here in Central insulation, water, well, maintenance pipeline maintenance and so forth.
Electrical build out infrastructure.
That's obviously in some of the other areas outside of polyurethanes as well.
But as we look at those large projects that are going across China, we continue to see a lot of [demand]
So for us, infrastructure spending, automotive were both very good right now.
As we look and in Asia, you were seeing some good growth in the Asian markets and our adhesives, coatings and elastomers market.
But again, as we look into 2025, hope that we start to see some recovery in the housing market in China.
And that will obviously be the catalyst for furniture appliances, a lot of consumer spending and so forth.
And that's a kind of just how that knock on effect.
But it's going to be a, as I said in my earlier comments, is going to be a slow, gradual recovery in this area of China.

Operator

Our next question comes from John Roberts, Mizuho Securities.
Please proceed with your question.

John Roberts

Thanks, Peter.
Since it's election day, do you think a Trump versus Harris when we'll have any impact on Huntsman?

Peter Huntsman

No, not now rolling out as I looked at, it's definitely going to be Donald Trump versus Donald Trump.
I mean, I think 80% of the people voting, I probably either voting for or against Donald Trump.
So it will really be interesting to see which Donald Trump wins or loses is the election.
But as you you kind of come out, I think both candidates when you really look at it have pretty similar views that housing needs to be something that that is going to be a major catalyst to keep the US economy growing at 25 beyond tariffs and trade.
Surprisingly as much as the rhetoric that's been going along, both lines of Trump, put it in a number of Care Trust.
And I'm not sure that buying change any of those tariffs over the last four years.
And energy conservation is probably going to be very high on both the West.
So I think housing tariffs, energy conservation probably pretty common between the two.
I think there's a split on Groupon, obviosly of regulation and how of that [Chevron] ruling and so forth, how that actually impacts our industry corporate taxes from the IRA and carbon tax and so forth.
Yes, there's some real differences on that.
And unfortunately, I don't think either candidate is beginning to address the £900 gorilla in the room, which is our our national debt.
I was just for the first time exceeding our GDP., and that's in spite of a GDP growing as rapidly as it has last couple of years.
So I don't see any need to either one of a materially changing of the outcome of our business plan here over the course of next year so.

John Roberts

Okay.
And then maybe a little bit more lower level question, but have you set your turnaround plans yet for 2025?

Peter Huntsman

I believe that we have I'm not sure that I have that right in front of us.
We I think that the one that we do have on the docket is at the end of the first quarter.
I believe we've got what we call the cluster turnaround.
It's been called a whole variety of things evolving toward cluster.
But as you look at it, Rotterdam and our site there, there's four or five very large chemical plants.
It all come down at the same time, none of us can operate over the last one when the first one shuts down the last one starts up.
And so we maybe have a we may have a record a turnaround maintenance timing he set and ready to go when somebody's got a small leak and a pipeline somewhere and delays everything by a weaker deal.
But right now, that is one that we're planning for the end of the first quarter of next year.

Operator

Our next question comes from Hassan Ahmed, Alembic Global.
Please proceed with your question.

Hassan Ahmed

I'm wondering, Peter and Phil, I'm not to bore you guys, but just wanted to go back to a bunch of the questions that were asked about on the European restructuring is going on assets being put up for sale and the like, I mean, look, one of the Virtus, obviously of the polyurethane sort of story has been, you know, it's obviously an oligopoly rate.
And if I heard your comments correctly now it sounds as if you are leaning towards at least some of these assets being permanently shut down.
So my question I guess is that looking at the divesture deal and I obviously understand, you know, a different company and the like you have no idea what [Adnoc] is thinking, but I mean, how do you think about, you know, players like [Adnoc], other sort of, you know, state players or Asian players coming out, you know, buying up those assets and fragmenting and otherwise relatively consolidated industry?

Peter Huntsman

Well, yes, I'm not sure it's a very good question.
And a very it's a complicated one.
And how many cents I'm not sure that [Adnoc] really changes the dynamics.
I mean, you're just having the name of one company, Covestro being changed to another one [Adnoc] them.
If they decide to build in the Middle East, if they decide to build a new facility at major, possibly look looking at anywhere from six to eight years away between, in the time that it would take to build a facility somewhere even if it's in addition to an existing site from given the opposition that you see and large-scale chemical production and so forth.
So I'm really not sure that unless you saw a splintering that took place of the Company, I'm not sure that the whole [Adnoc] divest drove a deal really changes those dynamics any.

Hassan Ahmed

Fair enough.
Fair enough.
And you can have a question around inventories on obviously the last couple of years since COVID has been quite complex.
I'm just trying to sort of figure out how one should think about a potential inventory restocking.
I mean, going back to the COVID times, it seems demand tightens changed dramatically because of lockdowns and the like.
But it also seems now on corporate appetite for holding inventory has changed as well.
So how does one think about a restock, you know, in light of some of the demand sort of pulls in [dugs], [whereas we] may be potentially help companies sort of thought processes about sort of keeping inventories lean and maybe sort of moving in that direction.
I mean, how does one think about the potential restock with all the sort of moving parts?

Peter Huntsman

Well, we came out of the next question is how we came out of COVID, obviously, with the supply chain busted in many areas around the world.
And and I think that there was a capital was relatively cheap and companies had large amounts among towards we're very high and people thought it was a typical do proving difficult times, but these things are going to continue forever.
I think that when you look at the environment today is 180 degrees different capital now is king.
It's expensive people, not monetized cap inventory up.
Our capital up demand seems to be anemic and a lot of areas of the world.
So why keep a lot of inventory and done until I see demand and picking up, there's no point in restocking.
And on top of all that in spite of conflicts in the Middle East and so forth, energy prices have been relatively flat for the last, I shouldn't say flat.
They've been relatively stable over the course of last year or so.
And you haven't seen a terribly volatile market that way.
So until there's genuine demand in a particular region, I'm not sure that there's going to be widespread restocking.
I will predict, though, that if in one that does happen, the chemical industry usually needs a lot more time to build up our supply.
If you all the sudden you saw interest rates drop and also on housing takes off in North America, these are supply chains and typically take a quarter to get going.
And that's usually what causes prices which normally would gradually go up over four or five quarter time period.
All the sudden spikes up in one or two quarters.
So there's usually a mismatch between how quickly that restocking and panic buying takes place and the actual catalyst it causes that.

Operator

Our next question comes from Kevin McCarthy, Vertical Research Partners.
Please proceed with your question.

Kevin McCarthy

Thank you and good morning.
Peter, can you speak to how you see international trade flows today in MDI. and perhaps Maleic anhydride and how they might evolve if tariffs were to escalate scenario for laterally between?

Peter Huntsman

Yes, I think that will probably remain pretty much the way they are today.
The US has about a 30% tariff, give or take a few points on MDI. and on maleic and a number of other products.
And and so your salespeople that are importing and today, I don't see tariffs going up to the growth.
I don't see them disappearing or necessarily coming off, depending on some some recently filed cases and certain products and so forth, you might even go up a bit, but largely with the exception of one was in China that have all the production in China with the exception of a single European side, there are obviously moving product around the world they have for years, and they'll continue to do so.
But the trade flows from most of the producers of MDI that have regional production.
I see that as continuing and not a great deal of trade flow in MDI for more one region to the next, I would say the same is probably true with Maleic with most of the other products we produce.
I would say the exception of that with Maleic, it could be what you see in China.
There is a quite a lot of overcapacity in China for Maleic.
There was supposed to be the raw material for a biodegradable plastic that's coming on stream a little bit slower than I think most people anticipated, but nonetheless, had some of that in the Maleic is spilling over in Europe.
But other than that, I think most of most products are staying within region.

Operator

Our next question comes from Mike Harrison, Seaport Research Partners.
Please proceed with your question.

Mike Harrison

Hi, good morning.
You mentioned some new business wins in North America polyurethanes on.
I was wondering, I guess if you can speak to, you know, specifically what markets those are occurring in an engineering and construction.
Can you maybe just talk about your competitive position within construction and installation market?
Has that improved compared to a few years ago?
Maybe also wrapping on update on spray foam insulation adoption today versus a few years ago.
Thank you.

Peter Huntsman

Yes, in construction mostly.
And I would say in that kind of three buckets, if you will, one is going to be what we see and and that our OSB into the wood market that goes into construction, what we see in insulation going into construction.
I think in both of those positions, we have very stable physicians and physicians who were not just selling molecules, but we're also selling solutions to the customers.
The third area, I would say, would also be in furniture and appliances and so forth.
While we don't supply a lot of material that goes into appliances and some of the local and furniture, our applications others do, and it sets a lot of MDI after the market that goes into that kind of the third bucket of construction.
Oftentimes when we focus on construction, we're talking about OSB., but you have to construction.
Housing also takes up a lot of MDI. in other areas that aren't necessarily big markets for Huntsman.
But our for others, and it's a good driver for that for the product generally.

Mike Harrison

Right.
And then within Performance Products, can you talk a little bit or give us an update on the performance and means our capacity expansion?
I believe there are two projects going on, one for semiconductor applications and the other one in polyurethane catalysts are those in qualification right now and you guys are working to get some uptick in place.
Just wondering when we can expect to see some commercial contribution from those two projects?

Peter Huntsman

We're hoping to have the peak of polyurethane catalyst business and the amines expansion in pet Trudeau hungry.
We believe that that project should be done around year end.
You're looking for a couple of months for qualifying those materials to be going into various applications and so forth.
And we are completed with our Performance Products expansion that's going to ultra pure with solvency.
And the main products will be going into the cleaning and the treatment of chip production.
And we're in qualifying phases right now with those materials that project is done is operating.
And as we get those products qualified of night, there's not a given time on that, but it usually is anywhere from three to nine months on those.
And we started that process this past summer.
So I'd say early next year that we have to start saying some some revenues coming in from the ultrapure amines production.

Operator

Our next question comes from Arun Viswanathan, RBC Capital Markets.
Please proceed with your question.

Arun Viswanathan

Great.
I just wanted to ask a little bit more about what you see in 25.
So in our both first half and second half of 24, you're around that [$300 million] or so of EBITDA.
I mean, in that range, maybe a little bit higher.
But as you look into 25, I mean, would you say that you took extra inventory out in Q4 or parts of 24 sets front, you're kind of lean and ready to really grow substantially in a recovery our scenario?
Or do you see 25 kind of evolving and similar to what you saw in 24?
We have seen some emerging weakness in auto, industrial and Arrow.
And so I'm just wondering if you if you would require more destocking in certain of those areas.
Are your customers what if you're in a more more points for to really leverage the recovery?
Thanks.

Peter Huntsman

Yes, I think that is we can look at the overall business today, our inventories and although they're going to be low in late going into 2025, and I just don't think it's our responsibility to be building up inventories, a cushion for our customers will have sufficient product to supply them.
But at the same time, I'm a kind of tie up our capital and hoping that they eventually come about to buy the materials.
As we look at automotive, again, I think we'll probably see it pretty flat U.S. Europe sort of environment.
And I think that we're going to continue to see strong demand coming out of Asia and China, in particular, the rest of the world.
So much of this is again predicated upon what I see is a major drivers.
North America is going to be around housing.
China (inaudible) we're you can see material growth is going to affect our bottom line, and that's going to be around housing in North America is going to be around consumer confidence in China and eventually is going to see a resurgence of European GDP and of European spending just across the board.
And again, I see more often opportunities for that.
That happened.
There seems to be a pent-up demand right now, particularly in housing in North America as many people been speculating about this now for the last couple of years.
And I would say the same also with China with since the COVID lockdowns have ended in China, and we really haven't see consumer confidence and consumer spending a return to China.
And I think there's quite a bit of of catalysts and opportunity for growth on that, but not as weak as we go into 2025 room, we're going to be we're going to be taking costs out of our business.
We're going to have low inventories and we're going to be running very lean.

Arun Viswanathan

And if I could just clarify it.
Thanks for that.
If I could just clarify some of the move maybe from Q3. $130 million of EBITDA down to $75 million at the midpoint for Q4, how much of that would you characterize that?
Is that mostly seasonality or has there been some income?
I imagine there could be some incremental demand weakness in there as well or would you sense that some of the seasonality?
And is there any like related inventory clearing out charges that are kind of embedded in there as well?

Peter Huntsman

Yes, there'll be some some inventory charges in that number that will be of Calvert reversals.
There's a benefit that we saw in Q3, but most of this is going to be it's going to be seasonal and as just seasonal softness now, again, if we don't see that seasonal softness, there might be some upside here.
I would first of all, you know, we typically always see seasonal slowness in the fourth quarter.
There's been one or fourth quarters in the last 15 years.
We haven't seen that.
But I think given where we are today, I think we feel we feel pretty confident about our Q4 numbers as we as we kind of get in here to the end of the year, we look at the stimulus is taking place in China.
We look at the rate cuts around housing and that housing stocks I mentioned earlier.
And I think as we also look at the of the MDI capacity utilization continuing to improve going into 2025, personally have a lot more optimism than I do pessimism that cost actions that we've taken in the past year on year, our SG&A is flat in spite of over the last 12 to 18 months, multi, a decade-long inflationary highs.
And we continue to have a very strong balance sheet and sell-side facilities positives for 2025 rooms of I have a lot more optimism that do pessimism.
And Operator, why don't we take one more question if I think we're coming to talk to the our yes,

Operator

Absolutely.
And that question comes from Laurence Alexander, Jefferies.
Please proceed with your question.

Laurence Alexander

This is Dan Rizzo on for Laurence.
Thank you for fitting me in its 2nd year of.
So I was saying that the Boeing strike just ended, and I think you mentioned that the strike was a $3 million to $4 million EBITDA headwind in the quarter.
I saw evidence today or ends with the next couple of days.
Does that mean provide upside or how does that kind of flow through to you guys for Q4 and beyond?

Peter Huntsman

I'd love to see it effects that quickly.
But you can you can only make a plane having had the opportunity to toward Airbus and Boeing and Chinese manufacturers.
We only make a play in as fast as the slowest component, the slowest part arrives.
And so you might go to the some of these manufacturing site.
You'll see a lot of our inventory is sitting and wings that are waiting to go on planes.
The planes are being delayed because of waiting for a $50 fasteners to arrive to be able to put seats and so forth.
So I would assume, given the problems that we've seen in the aerospace supply chain were more and more of the construction of an airplane is now being subbed out to third parties.
This is the strike will not necessarily be back to normal and that we could tell, I think will be lucky to get back things back up in line and going by the end of the year.
Again, that's up say that I'm not saying anything about what Boeing's production is going to be.
I am saying that by the time Boeing get things up and moving our demand starts picking up, the customers that we supply the customers to then subsequently supply Boeing by time, that (inaudible) is probably going to be close to the year at than it is today.

Laurence Alexander

Thank you very much.

Peter Huntsman

Thank you.

Operator

This concludes today's conference.
You may disconnect your lines at this time, and we thank you for your participation.