Huntsman Corporation ($HUN)

Greetings. Welcome to Huntsman's First Quarter 2026 Earnings Call [Operator Instructions] Please note, this conference is being recorded. At this time, I'll turn the conference over to Ivan Marcuse, Vice President of Investor Relations and Corporate Development. Thank you. You may now begin.

Thanks, Rob, and good morning, everyone. Welcome to Huntsman's First Quarter 2026 Earnings Call. Joining us on the call today are Peter Huntsman, Chairman, CEO and President; and Phil Lister, Executive Vice President and CFO. Yesterday, April 30, 2026, we released our earnings for the First Quarter of 2026 via press release and posted to our website, huntsman.com. We also posted a set of slides and detailed commentary discussed in the first quarter 2026 on our website. Peter Huntsman will provide some opening comments shortly, and we will then move to the question-and-answer session for the remainder of the call. During this 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. 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 will also refer 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 measure in our earnings release, which has been posted to our website at huntsman.com. I'll now turn the call over to Peter Huntsman, our Chairman and President.

Ivan, thank you very much. Thank you all for taking the time to join us this morning. Before I begin my remarks about our company and recent events. I want to simply say that I hope there is a quick and peaceful resolution to the ongoing conflict in the Middle East. Over the past 40 years, I've had the opportunity to visit every country bordering the Persian Gulf with the exception of [ Iraq ]. I have always been treated warmly and fairly by the people I've encountered. I hope that my comments to come across [indiscernible] any way to the suffering and fear emanating from this region as I address the economic impact of these events to our bottom line and industry. From the first hours of this conflict, our #1 commercial priority has been to increase [indiscernible] enough to offset rising costs. I believe we've been successful in doing this. This will require continued communications with our customers and suppliers, and also the discipline to make sure that we are not a shock absorber between raw material costs and finished product pricing. Our next priority is operating our plants in a reliable manner to make sure that we have the product to meet our demand. Our operations during the first quarter and going into the second quarter have been excellent. From a sales perspective, we are seeing stronger-than-expected demand going well into the second quarter. I would say that this is being brought about by 3 factors. Number one, seasonality as we move into the second quarter and the building season resumes across North America, Europe and Asia. Number two, customers who are buying ahead of the expected price increases that are being announced. And number three, disruptions that have been seen in certain trade flows that have impacted supply. An example of this would be some of our maleic customers in Europe, who will become overly dependent on Chinese supply maleic, have seen a disruption in supply as raw materials and shipping costs have increased from that region. These 3 factors are also happening at a time when most inventory levels are very low across many supply chains. These improved order patterns are being seen as we enter into the second quarter, in most of our regions and across many of our products. The obvious countervailing point to all of this is how long does it continue? I can't see order patterns that go through the month of June. But the guidance that we have shared from each division in Q2 reflect what we've seen to date. Today, that visibility is less clear as we look further into the quarter. I struggle to see how inflationary pressures, particularly in areas reliant on imported energy, like much of Asia and Europe, will not see an inevitable downward pressure later in the year as consumer spending gradually shift towards higher prices. To what degree this occurs is yet to be [ seen ]. I am heartened to see the housing starts and durable goods orders in the United States better than expected for the month of March. But I'm also keeping an eye on residential permits. A step that precedes construction starts down 11% for the month of March. There will also be some longer-term dislocation of traditional economics. If you are a producer that enjoyed discounted raw materials coming out of Venezuela, Iran and Russia a few months ago. It is likely that you're not seeing such discounts today, and I highly doubt you'll see them in the foreseeable future. Many customers are looking for closer and more secure sources of supply. Supply chains are sifting and being reassessed. I believe that there will be some lasting impact for certain regions and products that may not seem too apparent today. It is simply too early to know how lasting some of these will be. In short, we are aggressively raising our prices to both cover our cost of our raw materials while also expanding margins from the trough economics that we've been experiencing for the past 3 years. We will continue to manage our costs and deliver these objectives on budget. We will be focused on volumes and make sure that spot buying also comes with longer-term volumes and obligations. I'm glad to see the trends that we're seeing in the second quarter, but we still have a ways to go to get to our normalized margin levels. This will require stable and longer-term demand trends to continue. I feel that we are in a strong position today to capitalize on such changes going forward. Thank you. And operator, with that, we'll turn -- open the time up for Q&A.

[Operator Instructions] And our first question is from the line of Patrick Cunningham with Citi.

In the release, you talked about the potential for a more durable return to mid-cycle profitability. This likely depends on both supply and demand side at this point. But can you give us the latest view on what this crisis may do in terms of supply-side rationalization for MDI and polyurethanes? How do you see this playing out in terms of structural energy cost pressure, feedstock availability or potential closures at this point?

I don't see a great deal of structural change as we look at MDI. I do see pressures continuing in Europe. If you're a European producer now having to put up with natural gas, that's probably somewhere in the mid-teens versus where we are today. I noticed in the Houston ship channel price this morning was under $2 per MMBtu. These are real material gaps in shift. I can't help but think that there's going to be continued pressure on petrochemical producers across the board and in MDI across Europe. But having said that, I also think that there are probably some structural issues that may make Chinese exports in certain products. I won't get into exactly [indiscernible] products [indiscernible], but I think that they're varied across the board. If you're relying on coal as a raw material in China, you're probably doing quite well. If you're integrated into a world-scale refinery and integrated system in China, you're probably doing [indiscernible] well. If you're a part of what they call the [ teapot ] collection of refineries integrated into export bound chemical facilities, you may be under some cost pressures as you see some of the discounted crude product. So it's not just what we see from a competitive point of view. It's also what we see from the raw material that many of our customers, and many of our competitors and the industry in general will be facing. And I think those are some of the longer-term issues that we'll be dealing with even after the Strait of Hormuz hopefully open soon here.

Very helpful. And could you talk about some of the sustainability of the positive trends you're seeing in Advanced Materials, particularly interested in line of sight into aerospace and power order books and what that potentially means for segment profitability in 2026?

I think that I don't want to get too much into our numbers is the worry [indiscernible] and where we saw a lot of upside since the beginning of the war. But my CFO will start kicking in the side here. But what we -- the performance we're seeing in Advanced Materials is largely what we expected a quarter ago. We may have seen a little bit of [indiscernible] in pricing. But remember, that business is not reliant on any one major raw material. As you would see, for instance, in benzene going into MDI or some of the raw materials, caustic and chlorine prices and so forth into some of our Performance Products materials. And so as you look at our Advanced Materials section, that continues as we see -- as we've said now the last couple of quarters. We see the recovery continue with aerospace power, these better than GDP growth businesses. That business is just going to continue to get traction. And I'm not sure the results this quarter and the second quarter where we finished the first quarter. I'm not sure that would be materially different from where we'd be without the Gulf conflict.

Our next question is from the line of Kevin McCarthy with Vertical Research Partners.

Peter, can you speak to operating rates in MDI, both for Huntsman and also what you're observing at the industry level? And related to that, how are things changing post war versus pre-war?

Yes. I think that as we look at the industry in general, you're probably looking at the low-to-mid 80s. I think now, from where we are, we would be in the high 80s, we're sold out completely in our Chinese operation. Our U.S. operation for the most part is sold out. Europe. So as we said, when we announced our first quarter earnings before the Middle East conflict, we're starting to see some green shoots there. We continue to see some opportunities in Europe. And I would say that we're operating at pretty good levels across the board. There have been a number of outages and I would say, short term and also planned disruptions in the industry, not to be too unexpected. When you go -- have an industry that's been operating kind of at a low probably [ 70, 80 ] [indiscernible] for the last couple of years. And now all of a sudden, you see an increase in demand and pull-through, you typically have operating issues. So I can't speak about the competition, but I can just say in our facilities, all 3 of our MDI facilities, our associates there have done a fantastic job in their operations.

And then secondly, I imagine your PO/MTBE joint venture in China has become more profitable. Maybe you can talk about what you might expect for equity earnings trajectory moving forward?

Yes, I -- it's -- certainly in the past, it's been a little bit of a drag on us. I think today, we're probably in the low to mid-single-digit, millions of dollars of impact on that business. So certainly doing better than it has been in the past. And I would hope that MTBE, that [ C factors ] should improve as you get more into the driving season, but that's -- there's just so much volatility right now in the whole refining chain and what's going on with [ PO ] economics, [ that'd ] probably be one of the murkier businesses that we have as far as looking into the future.

Remember, Kevin, the price of gasoline is managed differently in China than elsewhere in the world. So MTBE margins aren't what you would expect in China, where the Chinese joint venture is making money today is on propylene oxide and the margins that we're seeing there over and above propylene.

The next questions come from the line of Frank Mitsch with Fermium Research.

That's interesting. So PO is doing better than TBA, MTBE and in China. Thanks for the enlightenment. Peter, I was wondering if you could speak to the polyurethane and MDI pricing initiatives that are underway. How that relates to underlying benzene costs? And what sort of successes are you seeing, or not on that front?

Well, I'd say that we're seeing a -- we're certainly staying ahead of the benzene curve, never as far ahead as I would like to see it. I'd like to see it multiple times better than what we're seeing, but I highly complement our sales and marketing groups on their aggressiveness and making sure that we're covering our raw material costs and staying ahead of that. So yes, both from a volumetric basis, we'll see a positive influence on it and also margin expansion above and beyond raw materials, we should see the expansion on that.

All right. Terrific. Great. So margin expansion. So if I think about the price mix for Huntsman overall, it's been negative for several quarters here, given these initiatives that you have underway, is the expectation for the full company to show positive price mix here in 2Q and hopefully [ beyond ]?

Certainly, in Q2, hopefully, beyond, I would reinforce that as well. I mean as I get at some of the pricing trends that we're seeing going into the second quarter. Just to give you an idea, in North America, I'm talking about all products, all prices. So I'm not [indiscernible] one division, but we have not seen a quarter-on-quarter growth in pricing trends. [indiscernible] you're unfortunately, you're right in what you said earlier, we haven't seen that since 2022. So the trends that we're seeing right now and the jump that we're seeing on a quarterly basis right now in North America, we haven't seen that in years now. Europe isn't too dissimilar. We've seen a few quarters here and there where we've seen some pricing. But that's more to do because of the strength of our Advanced Materials business in Europe, not because of the macro trends there. So yes, I like where we're going into the second quarter. And [indiscernible] question is how sustainable is it. But it's -- look, it's a lot better than where we were a quarter ago.

Our next questions come from the line of Hassan Ahmed with Alembic Global.

Peter, I just wanted to revisit some of the earlier commentary around MDI supply, both as it pertains to the product, as well as the feedstock. I mean, there's at least one facility in Saudi Arabia that seems to be off-line. And then obviously, I would imagine there would be sort of broader issues in terms of the availability and pricing of benzene as well as methanol. So could you comment a bit about sort of operating rates for MDI, keeping in mind some of these outages, as well as some of the feedstock availability issues the world may be encountering. And how long it may take for some of these bottlenecks if peace was declared tomorrow, to sort of be ironed out to the system?

Yes. I think that as we look -- you made reference to -- you made reference to a Middle East producer. That's roughly about 4% of global capacity. So if you if you kind of think that the industry is operating in the low to mid-80s, I would say that we're kind of pushing the mid- to upper 80s, at 90% capacity utilization globally. Now again, that's not across the board. There will be parts that are better than that, parts that are worse than that. But just globally across the board, when you reach 90% in the MDI industry, given what people have a stated capacity, and the outages that they place on a yearly basis for maintenance and so forth. You're really in an industry that starts to strain at 90-plus percent capacity. So, I mean statistically on paper, you can see where the industry is now moving into the upper 80s. In some regions of the world, it's going to be, again, better and worse. I've not seen or heard of any problems with the procurement of raw materials in MDI around the world. And the pricing of that raw material so far has been pretty much in line with oil. So that would tell me that there's a pretty decent supply of it that's available. Longer term, my biggest question on MDI is going to be the sustainability of the demand because, again, previous February 28, I would say that I don't want to say that we were going [indiscernible]. So we're starting to see some green shoots in Europe as we reported earlier. We were moving into the North American housing season. And China was stable and in pretty decent shape. So my whole question is really around sustainability of demand as you looking out in the third and fourth quarter. And [indiscernible] it's just too early to start looking at those order trends.

Understood. And as a follow-up, you mentioned the polythene market in Europe, obviously, was volumes-wise up 4%, which obviously is decent. But in your prepared remarks, you obviously talked about easier compares as well, because last year you obviously had the, sort of, Rotterdam, sort of turnaround. What green shoots are you guys seeing volume-wise in Europe? And -- and over the last couple of quarters, obviously, long EBITDA lines, it seems for the PU business, EBITDA was negative. Have you guys currently sort of turned that around? Is it actually generating positive EBITDA now?

Yes. To look at your first area, I would think that [ CWP ] composite wood products in Europe is looking pretty good. Technical insulation is -- and that would be your sandwich boards and so forth that are going into data centers, warehouses, prefabricated buildings and so forth. Your [ ACE ] business, adhesions coatings, elastomers business is doing -- again, I don't want to paint [indiscernible] through the roof in Europe, but we're seeing some green shoots in these areas, badly needed by the way. And so yes, I think that certainly is moving towards an area where we don't just want to see a positive EBITDA coming from Europe. We want to see positive [ cash ] coming out of Europe. And so, yes, we're at that precipice and seeing things improve.

And Hassan, as we sit here today, we would expect Europe to be positive from an EBITDA perspective.

Next questions are from the line of Michael Sison with Wells Fargo.

When I take a look at your outlook for polyurethanes for 2Q, margins look like they're going to improve a little bit, but not a lot. So what do you think needs to happen to get the EBITDA margins for polyurethanes at better levels going forward? And just curious what the pricing for the segment should imply for 2Q year-over-year?

I think the two things that we need more than anything else are demand and raw material stability. We're projecting in the second quarter that we'll take in well in excess of around $100 million of raw material costs. We expect to offset that and get prices higher than that. But that's a tremendous amount of raw material costs that we're absorbing in 1 quarter. Of course, in order to have any sustainability in pricing and pull-through in pricing, we've got to see the demand. So I did note in my prepared remarks, a cautionary note on inflation and what inflation factors may play in Europe. But there's also -- I'd say on one hand, there's those inflation factors that give me concern. On the other hand, Europe has been so lethargic for so long. I can't help but think that there is pent-up demand, whether it be in housing, or remodeling and industrial demand [indiscernible] rebuild and so forth across the board. So that's going to be for the second half of the year, the single biggest variable in my opinion, is going to be demand.

The next question is from the line of David Begleiter with Deutsche Bank.

Peter, just on Performance Products. Why is that business a little bit stronger in Q2 given some of the [ strength ] in maleic?

David, that's an excellent question. And I think as we see the strength in maleic, that certainly is going to be manifest through Q2, going into Q3. A lot of our European customers on maleic are actually buying that and negotiating purchases of that FOB Florida. So -- of our plant in Pensacola, Florida. So picking it up in the U.S. rather than us shipping it over to Europe. And taking the time and tying up working capital and so forth. So we'll see the impact of that going forward. But I'd also remind you that we also have one of our facilities in Q1, and also presumably could see some impact in Q2, where we have an [ ethylene amines ] facility, joint venture facility, which we believe is one of the lowest cost facilities in [indiscernible] on the wrong side of the Strait of Hormuz. And so that's going to also be a little bit of a headwind in that business.

Very good. And do you have an update on your U.K. [indiscernible] plants given some prior comments?

Yes. Again, that facility when those comments were made, we were seeing $20, $22 gas in Europe and a government that was lethargic at best in concerns with it. And we are seeing import pressures that we're countering that. I think since that time, imports have lessened a bit. We've seen gas plummet from $20 to $15. I still say that's an aesthetically high number for an energy less policy-driven government. And so I wouldn't say that, that facility is -- when I look at the economics of it, I continue to be concerned. The people that work there, the reliability of that facility, the ongoing maintenance and operations and so forth, that facility are absolutely a plus. But they're having to battle some really poor energy policies.

The next question is from the line of Vincent Andrews with Morgan Stanley.

I just want to try to piece together a couple of the comments you made, Peter, as it relates to polyurethanes [indiscernible] completing things, please, obviously, correct me. But you're talking about how you've been able to get pricing ahead of vending, and we traditionally think of you having about a 2-month lag of benzene flowing through. And then maybe later in the year, we may see some negative demand elasticity from the consumer at the end market, working its way back up the supply chain. So do we think about 2Q, your spreads being strong because you're ahead of that benzene, and then maybe benzene catches up with you in 3Q, and then we have to see how much pricing you can get and that, I guess, would be a function of demand. So thinking 2Q and 3Q may be flattish in terms of profitability in polyurethanes? Or [indiscernible] actually be up a little bit or maybe it would be down a little bit. What's your latest thinking on that?

Well, far too early to comment on Q3. Again, I believe Q3 is going to be more demand driven than anything else. I do -- the trends that I'm seeing today we are staying ahead of the price on benzene. We also are picking up some volume that we see on a year-to-year sort of growth basis. And we're going to continue to be pushing prices through. Now again, the ability to push those prices through will be predicated on macro demand and so forth. And as I get into the third quarter and again, I don't want to be overly pessimistic about that, I may say that is right now, there's -- I feel there's a bit of euphoria in the industry, and I love to [indiscernible]. I think what's long overdue. I hope it continues into the third and fourth quarter. But a lot of that is just too early to tell on demand.

The next question is from the line of Matthew Blair with Tudor, Pickering, Holt.

I was hoping you could talk a little bit more about just underlying construction activity. One of your peers mentioned that has been weakening. You talked about the diversion in March data between starts and permits. Are there any trends in Q2 on construction activity that you can share so far?

I would say that we're not seeing a drop off, but we're also not seeing a lot of improvement. And I think that -- I would say right now, it certainly isn't shaping to be a bad season for us. It's just not a lot of growth in that. So I'd say there's some stability. But I'm sorry, I probably should be saying [indiscernible] going up or its going down, but it seems to be quite stable at the present time. That's why I say there's some decent trends on housing starts that feel pretty good. And we're -- I think in the second quarter going into the third quarter, we'll probably see 2%, 3% low single-digit growth in construction this year. But I'm also concerned when you see a 10% drop in 1 month in housing residential permits. Again, that's the step before the housing starts. So again, I don't want to get -- I don't want to read too much into a single quarter of data because February, both of those numbers were the complete opposite. Permits were up and starts were down. So I think we'll probably see some very gradual growth there.

Sounds good. And then I was also intrigued by your comment that you're seeing some customers that are buying ahead of expected price increases. Is this occurring in some products more than others? And if so, which products? And then also on a regional basis, would this be something that's more prevalent in Europe relative to the Americas?

Yes. I would say that as we look at it, you're probably talking about 2, 3 days of -- on MDI, that would be the area where we probably see the most pre-buying. So I'm going to just say that there's -- I wouldn't say that there's a big wave of capacity that is being pulled through. I think that we're managing that very carefully as well. So customers coming in and increasing their orders from where they were just a few weeks ago. We're discouraging that and making sure that we kind of keep an equilibrium on orders and so forth. And in other areas where people are coming in that haven't bought from us for some time on a spot basis, we're seeing if we can't extend contracts from what you need over the next month or 2 to what you need over the next year or so, some of our Performance Products customers and so forth that may have shifted supplies to China out from Europe and the U.S., for example. So yes, I think on both of these demand trends, we need to make sure on those that are -- there's a difference between those that are spot buying, [indiscernible] buying. And those are just trying to buy ahead of a price increase, they all need to be managed a little bit different. Sorry, there's not one size that fits all. But right now, if there is prebuying that's taking place, I would be very worried if we were seeing what would be the equivalent of a week or 2 or 3 of prebuying taking place. I would say right now, we're seeing low number of days of inventory that is prebuying at this point.

Our next questions are from the line of Jeff Zekauskas with JPMorgan.

Can you comment on how much Chinese MDI is coming into Europe?

Hasn't been all that much. I wouldn't say that it's anything out of the ordinary. It's been pretty stable with what it's been the last couple of quarters. And -- so it's -- I would say, if anything, maybe it's even a little bit slightly lower than what it's averaged over the last year or so. So nothing that would be nothing that would have a material impact on the industry or pricing there.

Okay. Good. And then in Performance Products, can you frame the penalty from the ethylene amines joint venture being behind the [ Strait ] either in the first quarter or the second quarter, or for the year? And in your guide, you're going from $26 million in EBITDA to an estimate of $30 million to $40 million in the second quarter. Why so big a jump? And why is the range so wide for the second quarter?

As we look at the [ ethyleneamine ] facility, again, that facility, it was down for a couple of weeks. It's operating today. I don't want to get too specific. It's operating, let's say, at around 50%, and material is being trucked out to the Red Sea and also South. So, I mean, we're finding some means of getting product out of there. What the impact of that is going to be and how much that we can offset through operations from our [ Freeport ] facilities, I would say that impact could be as high as $4 million, $5 million for the quarter. So as we look at that spread of $30 million, $40 million, a lot of that is going to be based on how successful we are in getting product economically. I mean, because you're moving it out by truck. So you can well imagine, that's going to be quite a bit more expensive than moving out by ship. So there's some variability there. I would also say that there's quite a bit of spot material that seemingly is coming -- opportunities coming in [indiscernible]. How much that materializes, what we're able to get pricing, people inquiring people talking about volumes and prices versus actual orders and so forth. We'll know a lot more about that in the coming weeks.

And Jeff, in terms of step-up from Q1 to Q2, just as in polyurethanes, we are seeing pricing exceed the raw material increases.

Our next question is from the line of Mike Harrison with Seaport Research Partners.

You mentioned in the prepared remarks there that were still meaningfully below mid-cycle margins in the polyurethane business. And I was wondering if you can provide any kind of an updated view on where you think mid-cycle margins could be I'll hold off on asking you when you think you can get there. But what is the appropriate mid-cycle margin level for polyurethanes?

Well, I think that we're probably -- I've always thought of it more on what it is on an EBITDA on average basis. And I think that business on average ought to be a mid-teen sort of a business? And how soon do I expect that to happen? As soon as possible. Sorry. Yes, it's long overdue.

And then the second question I had is just curious, I didn't see any comments about the specialty amines capacity that you've added to serve the semiconductor industry. And I'm just curious how that's contributing relative to expectations, and whether you expect to see some growth there given the strength in semiconductor?

Yes. We continue to see that coming online. It's going through qualifications as we've stated before that is going to go through a qualification of usually around 9 to 12 months. Sometimes when there's supply disruptions and so forth on chemical products as there is right now. Sometimes that can be accelerated. Sometimes it slows down actually. So I think as we look in 2026 is we're building up to a normalized run rate, hopefully, by the end of the year, we'll probably see $5-plus million coming from that this year.

Our next question is from the line of Josh Spector with UBS.

I wanted to see if I could just follow up on kind of the benzene MDI math in 2Q here. Just trying to think about, if we say volumes are stable into 3Q, you're pricing ahead of [ raws ] in 2Q, is that a headwind in that your raws are going to catch up a bit more from inventory in 3Q? Or are you exiting with enough price where you'd say that earnings in polyurethanes would be stable sequentially in that scenario?

Yes. So I would say that we are exiting Q2 able to stay ahead of the raw materials that we see going into Q3. And we're also working towards more price increases to come in that area. So -- I mean, as I sit here today looking at unless there's a cataclysmic change economically, we will stay ahead of our raw material costs going into Q3.

And Josh, benzene just settled at [ $471 ]. The point is we're ahead of that. And we'll stay ahead of it.

Our next questions are from the line of Laurence Alexander with Jefferies.

Peter, do you see any end markets where your customers are indicating already that they're in pre-buy mode?

Good question. We're in a prebuy mode. None that are really that, I mean, typically, this time of year, you're going to get some prebuy in construction. Installation spray foam business feels like it's in there's pretty good demand and people are trying, maybe, to buy ahead of the curve in that business. So those would probably be the 2 areas. But no, again, I mentioned that earlier, it's something that we're working on very diligently. When I said that we're kind of like a day or 2 worth of inventory going in that. I think we're -- I'm not going to say that we're walking away from business. We just want to make sure we're managing that very carefully with our customers. We don't want to build up inventory, nor do we want to necessarily see it built up on the customer side.

But I guess -- I appreciate that no one wants the customers to build up inventory, but is it unusual for -- with this kind of spike where several companies are out publicly talking about imminent shortages and different molecules that people who may see higher prices in the future aren't trying to pull forward orders? Is that...

I think -- no, I don't think that's unusual at all. I don't think that we're at a point -- I mean, not [indiscernible] I don't wish we were, but I don't think [indiscernible] MDI at this time where we're seeing shortages and people saying, I can't get it. I think that there are people that are concerned as they look at their supplier with their suppliers with announced turnarounds that have been scheduled for multiple years that are taking place and so forth. Some of the disruptions that you're seeing in some of the energy flows and shipping flows. But I'm not seeing panic buying at this point, but I am seeing higher capacity utilization. So I think that there's an improvement in market conditions for the producers, but consumers can still get the product.

The next questions are from the line of Arun Viswanathan with RBC Capital Markets.

I guess we did hear about an outage with Wanhua a couple of days ago, and maybe I can just get your thoughts on that if you think that, that could tighten up markets. And then I guess maybe you were asked this question earlier, apologies if so. But what is kind of the potential for those utilization rates to remain consistently above 90%? Do you see any permanent kind of supply activities that could arise in the next few months? Obviously, it depends on duration but of the conflict. But what are your -- are your customers kind of migrating to you in the face of other supply shocks or disruptions? Is there a share gain opportunity as well?

Yes. Arun, good question. I'm not sure necessarily what's happened with the competitor facility. When they do have multi-year closures, when I say multiyear, I mean, oftentimes, when you do a large-scale closure on a vast petrochemical side, you're renting equipment, your planning equipment, you're planning on workforces, usually 18, 24 months in advance. I mean you know these things are coming and people are exchanging materials. I know that's happening. I've heard -- read that a splitter may have gone down or something. I've not read that a facility, there's been a large-scale cataclysmic outage, or anything like that. I think that we're probably as an industry operating in the high 80s right now depending on product flow in the Middle East. That's going to be a bit volatile right now with some of these large members. In China, you've got single site facilities of [ 1 million ] metric ton sites. [ Wells ] go down, aside that big, you will fill it globally. And if they're down for an extra couple of weeks because of a problem or whatever, you'll fill it acutely on a short-term basis. So we'll continue to take, I think, as we look right now, our facilities are operating well, and we're in a position where we can be a strong and reliable supplier.

Okay. And then the other question I had was just on the PO market. Obviously, there's some tightness there, but there was also a reduction of capacity by one of the suppliers recently, and I know one of the other plants are down. So are you guys feeling like your own kind of procurement for the polyurethanes business is intact? Or do you foresee any supply disruptions or rerouting of your supply chain that would be required next?

No, we don't see any disruption in our PO supply right now. We've got a good supplier [ that plants ] operating, and I feel that we're covered with that. And we've also got an excellent supply source in China as well. So I feel we're okay with that. Operator, why don't we take one more question, and we'll let people get on the way.

The next questions are from the line of John Roberts with Mizuho Securities.

Not that it's large, but maybe your Saudi [indiscernible] JV give some insights into the sustainability of the disruption. If we had an agreement imminent here on the Strait of Hormuz, what's the earliest do you think you might be able to resume full production in export by [ sea ]?

You're probably looking at 30 to 45 days would be my assumption on that. Again, there's going to be a bottleneck of [indiscernible] both to get there to pick product up, and also [indiscernible] a product to get out. And yes, so I would say about that time, 30 to 45 days.

At this time, this will conclude today's teleconference. We thank you for [indiscernible] You may now disconnect your lines at this time, and have a wonderful day.