Huntsman Earnings Call: Pricing Power Meets Uncertainty

Huntsman ((HUN)) has held its Q1 earnings call. Read on for the main highlights of the call.

Huntsman’s latest earnings call struck a cautiously upbeat note, as management highlighted strong pricing power, sold‑out MDI capacity, and a recovering Advanced Materials business. Executives tempered the optimism with repeated warnings about limited visibility beyond the second quarter, volatile feedstock costs, and geopolitical risks that could challenge the durability of current momentum.

Pricing Power Drives Margin Expansion

Huntsman is pushing through aggressive price increases to stay ahead of rising raw materials, particularly benzene, which settled at $4.71. Management expects price and mix to turn positive in the second quarter after several quarters of negative trends, signaling that margin expansion is beginning to take hold.

Operations Running Hot and Plants Largely Sold Out

The company characterized operational performance in the first quarter and into the second as “excellent,” with plants running at high utilization. U.S. and China MDI operations are largely sold out, underscoring strong demand and giving Huntsman better leverage to sustain recent pricing actions.

MDI Market Tightens as Utilization Climbs

Industry MDI utilization has moved from the low‑ to mid‑80% range to the high‑80s, and management believes some regions are nearing 90%. With Huntsman’s Chinese and much of its U.S. MDI capacity sold out, the company sees the global market edging toward levels where supply strain and pricing volatility can intensify.

Advanced Materials Benefits from Aerospace and Power

The Advanced Materials segment is showing a clear recovery, fueled by aerospace and power markets that are growing faster than overall GDP. Management said these trends are continuing quarter over quarter, helping lift segment performance and diversifying earnings away from more cyclical polyurethanes.

European Polyurethanes Show Early Signs of Recovery

In Europe, polyurethanes volumes were up roughly 4% year over year, with “green shoots” in composite wood, technical insulation, and ACE applications. While the region remains challenged, the improvement suggests that European demand may be stabilizing and starting to recover from a low base.

Performance Products EBITDA Set to Improve

Performance Products is expected to step up from around $26 million of EBITDA in the first quarter to a guided $30 million to $40 million in the second. The improvement is driven by strengthening maleic fundamentals and pricing that is running ahead of raw material cost increases, though logistical issues could sway results within the range.

PO/MTBE JV in China Turns into a Contributor

Huntsman reported that its PO/MTBE joint venture in China has swung to profitability, contributing low‑ to mid‑single‑digit millions of dollars. Current earnings are supported by strong propylene oxide margins over propylene, but management cautioned that this business remains one of the more volatile in the portfolio.

Semiconductor Specialty Amines Offer Future Upside

New specialty amines capacity aimed at the semiconductor market is progressing through customer qualification. Huntsman expects this niche business to contribute more than $5 million in 2026 as volumes ramp toward a normalized run‑rate, adding a higher‑value, technology‑driven growth leg.

Demand Outlook Clouded by Limited Visibility

Despite the near‑term strength, management stressed that visibility beyond the second quarter is limited and the sustainability of current demand is unclear. They warned that persistent inflation and higher end‑product prices could eventually weigh on consumer activity and industrial consumption later in the year.

Feedstock and Energy Volatility Pressure Margins

Huntsman expects to absorb well over $100 million of raw‑material costs in the second quarter, leaving margins highly sensitive to successful price pass‑through. While U.S. natural gas around the Houston Ship Channel is below $2 per MMBtu, the company continues to grapple with more expensive European gas and broader feedstock swings.

Regional Disruptions and JV Outage Add Headwinds

An outage at an ethylenamine joint venture facility near the Strait of Hormuz is expected to be a $4.5 million to $5 million headwind this quarter. Logistical constraints, including reliance on trucking rather than sea shipments, are increasing both cost and variability, adding another operational complication to navigate.

Tight Supply Raises Risk of Industry Strain

Several outages and short‑term disruptions, including at least one Middle East producer representing about 4% of global MDI capacity, are tightening supply. Management noted that as industry utilization approaches or exceeds 90%, the risk of meaningful supply strain and short‑term shortages rises, which could further amplify price swings.

Shifting Trade Flows and Chinese Competition

Disruptions in trade routes and evolving Chinese export economics are reshaping competitive dynamics across several products. Some European customers have shifted maleic purchases to FOB U.S. supply, highlighting how volatility in freight and feedstock costs is reshuffling global sourcing patterns.

UK Aniline Plant Still Under Economic Pressure

The U.K. aniline facility remains challenged due to high European gas prices and import pressure, despite a drop in gas from roughly $20–$22 to about $15 per MMBtu. Management voiced ongoing concern about the long‑term competitiveness of the site, suggesting that strategic decisions may eventually be required.

Pre‑Buying Remains Modest but a Watchpoint

Huntsman has seen some customers pre‑buying ahead of expected price hikes, particularly in MDI where activity equates to roughly two to three days of demand. While management does not see broad‑based panic buying today, they cautioned that an acceleration in pre‑buying could distort volumes and create future inventory overhangs.

PO/MTBE Outlook Remains Uncertain

Although the PO/MTBE joint venture is currently profitable, management described the outlook as murky due to divergent gasoline pricing and refining economics by region. These factors make earnings from the business highly variable, reinforcing its status as a volatile but potentially attractive contributor.

Guidance Highlights Strong Q2 but Cautious Beyond

For the second quarter, Huntsman expects stronger demand, higher prices, and the ability to offset more than $100 million of raw‑material cost inflation, including the first quarter‑over‑quarter price growth in North America since 2022. They reaffirmed a mid‑teens mid‑cycle EBITDA margin target for Polyurethanes, guided Performance Products EBITDA to $30 million–$40 million, and signaled modest construction growth, while emphasizing that visibility into the third quarter remains demand‑dependent.

Huntsman’s earnings call painted a picture of a company capitalizing on tight markets, robust pricing, and recovering specialty segments while managing through energy and geopolitical volatility. Investors are likely to welcome the near‑term earnings momentum, but the story now hinges on whether demand and pricing strength can endure once the immediate supply tightness and pre‑buy tailwinds fade.