Lockdowns, Uncertainty Weigh on Recovery, Says CEO Huntsman
2020-06-18    [Source:Chemical week]

PUdaily, Shanghai —— Peter Huntsman, CEO of Huntsman, is more bearish on the global economy than at the outset of the COVID-19 pandemic. Resurgent growth in China shows light at the end of the tunnel, but lockdowns and uncertainty continue to hinder recovery in the US and Europe.

    "Demand probably has come back a bit slower than I had anticipated," he says. "Frankly, I've been rather disappointed with the prolonged nature of these lockdowns. This is just my personal opinion. I think that this entire lockdown situation has become politicized in many parts of the world, particularly in the United States." 

    Huntsman shared his views this morning with Lyn Tattum, publisher of Chemical Week, during a webcast of IHS Markit's
Chemical Executive Conversations

    "When we look at the overall supply chain, and … the number of retail outlets that are still closed globally, I think that rather than a V- or a U-shaped recovery, we're probably going to see a W-shaped recovery," he says. "So I think you're going to see a W. You're going to see some good news and some positive results, and then you're probably going to see the continuation of some bad news."

    Demand has been fairly resilient in the DIY and home construction segments, but there has been very little improvement in the aerospace and textiles segments, he says. 

    "Areas that we thought wouldn't have been that badly affected like textiles and clothing and so forth actually have been absolutely devastated," Huntsman notes. "And the entire United States and Western European economy—for the first time in industrial history, in the month of March and going to April, for a prolonged period of time, the United States [and] Europe did not assemble a single car, did not build a single airplane."

    Export-oriented demand in China also remains severely depressed. "If you're doing business in China dependent on export, which is about 15–20% of our business in China, you're going to see about a 60–70% drop in business," says Huntsman. 

    However, demand driven by China's domestic market is snapping back. "We're seeing that business tracking about 95 to 100, 101% of where it was a year ago," Huntsman reports. "In total, our business in China is probably down 5–10% from a year ago. That's mostly because of the … export-oriented piece, but the Chinese-oriented business, where you're investing in domestic automobiles, construction, infrastructure projects, and so forth, those are going to remain. China is going to continue to be a very strong market for us." 

    The economic chaos surrounding the COVID-19 pandemic has not only depressed demand, it has also thrown up hurdles to recovery. Although Huntsman entered the crisis with its strongest balance sheet ever, many of its customers were not so fortunate, the CEO points out. "A lot of them are going to start looking to us to be their bank, [will] want us to start financing their receivables," he says. "But we're not a bank, so we're going to have to work through those. We have to make sure that credit and sales are working hand in glove better than they ever have, perhaps."

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