Westlake (WLK) 5 May 202020 Q1 Earnings call transcript

Good morning, ladies and gentlemen. Thank you for standing by. Welcome to the Westlake Chemical Corporation First Quarter 2020 Earnings Conference Call. [Operator Instructions].

As a reminder, ladies and gentlemen, this conference is being recorded today, May 4, 2020.

to Westlake's call Vice like host, to now Holy, Jeff President would turn over the today's I and Treasurer. begin. may you Sir,

Thank will Vice Conference of Westlake's and Corporation management everyone, President other a and by begin you. followed conference team. members the agenda with with Bender, perspective our regarding call will Chief Good a more Chemical our Financial Steve current Westlake Steve and Executive Albert few who welcome Chao, First and I'm our call. to a XXXX our CEO; joined detailed comments industry. look results. will performance, President operating provide today Quarter Albert, by open morning, the at The on and financial then Officer;

add and Finally, up a the call comments, questions. few open concluding to we'll Albert will

During Any Chemical. which our master LP, olefins as refer to this reference to owns facilities. to partnership, OpCo to and Westlake we call, the ourselves Opco LP, is Partners Westlake Chemical Chemical references limited Partners Westlake certain refer similar subsidiary, Westlake to

products, SEC technological impact access and in industry products and pressures; other of global policy certain These is predictions expectations to rates; unrest; well that in upon of by or risks management and could governmental factors materially information factors made which results and are we as discussed differ discuss and to compete; beliefs that topics changes on based suggest the risk for pricing capital supply-demand industries volatility many to filings. going our balance operating information conditions, assumptions will contain the as materials, cost available currently subject to and in forward-looking availability, trade the is based COVID-XX; including markets, nature statements Westlake's Today, the management. economic utilities; forward-looking management's raw developments thus cyclical competitive or and regulatory uncertainties. actions, Actual of including energy political

web details with results. of available release press document press is the a issued at Westlake in This our quarter our morning, This page of westlake.com. first section release

on in to assist also have discussion posted our a presentation We of our results. website the

call of be hours following of Domestic following XXX-XXX-XXXX, replay accessed two A may by the callers Please any available code access therefore, will beginning note the longer dialing and international as time-sensitive no on be of This XXXXXXX. replay. call. that of call reported that should as may the advised numbers: access for replay you this numbers both time speaks today, information is The today's may this callers information May the X, at are replay of only dial conclusion XXX-XXX-XXXX. accurate be today, XXXX,

conference that that system finally would this can web an live page through our call at advise I westlake.com. Internet be being broadcast you on accessed webcast is

call the to would turn Chao. Albert I like Albert? Now to over

morning, and our quarter you Good Jeff. results. thank XXXX us ladies gentlemen, and first you, for joining Thank to discuss

we talk I would those to COVID-XX. with Before and very thoughts a by affected are is time, like challenging recognize, this about our quarter, the

situation. ways of thoughts current I we will COVID-XX are to on some and the responding the highlight

of permitted and increased can all by orders. noncritical employees having and which do including response been our work each we activities to providing and protective by managing to operate always priority variety have spacing of have the of threat essential facilities, instructions COVID-XX, Security equipment, those In our local authorities. conducting in state state disinfecting and followed business the postponing deemed initiatives our personal and of have cleaning Safety Department employees travel, recommendations national, health to positioning were entrances our Homeland so. who various remotely governmental as -- our all stay-at-home plants, authorities, employees, personal #X a ensuring local operations temperature and screenings protect we us Our of and have the posed or of facilities, and implemented national canceling the during to and and at actions many

In of Fund. the have connection made with Wei protective the Foundation, product $X facilities, Ting addition Chao and local where Fong numerous We've other to including Houston equipment communities to protecting Greater the our in combined Westlake operate, and businesses donations local we shields. Recovery where Chemical, also supporting face plastic made contributed a in Tsung we personal medical and the hospitals employees, million vinyl we're several communities to COVID-XX operate. our

team manufacturing. society's our As variety Westlake thank half as fresh goals, particularly these caustic and that's such and are governments, Once producing Nations' today's are disinfectants, want makes I over and chlorine a for today's well to in of and packaging, everyday used products of equipment development used environment, production products needs and soda including treatment, a medical Many applications wastewater benefit supporting of piping infrastructure as the the are packaging United PVC and of are in safety medical state essential employees and in and supplies in that in business products sustainable polyethylene supporting paper tissues users, to construction again, lives. food important as and water critical the who federal cardboard that's that by our used these environment. but

our focus as see food and food applications, generally to some good more specialty business, the expect the from perspectives packaged COVID-XX. more impacts seeing environment packaging, results through such the remain let items our in are what from current me in grocery by we first resilient. for in stores, the and we particularly and everyday driven we continuing are Before goes demand provide consume demand In individuals to Steve detail, quarter polyethylene

costs this ethane decline has the feedstock in seen competitive eroded our price However, so versus our been oil-based decreased, by XX% have feedstock year. have advantage while we oil far

these in Our decline prices. due costs oil reduced NAKAN-based international from the to competitors benefiting global are significant

remains at these polyethylene these oil of while result prices depressed industry costs, consultants and to prices. margins a production producers' expect polyethylene global decline, As gas-based lower see

the manufacturing of global people XXXX COVID-XX. producers businesses, the decline start help starts, we onset reduce quarter, governments in from broad reduction In and to very a oil construction PVC reducing by of also in first many the competitors activity, since use advantage prices, resulting gas oil and the general shale restrictions our revolution. input enjoyed late cost infected business, lower Vinyl our North with products and industrial led was to ethylene world decline PVC demand. the naphtha-based have of that that after around place This decline the in number Olefins Similar our have many their American cost activity, seen to global the in put saw good a the housing by

these which Chinese nonintegrated the not in or be and production that benefit PVC American-based consultants PVC at potentially term. are shut lower down, industry economical and acetylene-based However, the levels, long being North will risk demand believe at coal may production

has COVID-XX the has in caused demand related chlorine demand This for reduced construction production. feedstock. slowing activities in and chlorine demand chlor-alkali overall production for globally, caustic supply cutting associated PVC chlorine the chlor-alkali co-products reduced weakening soda, for balances

and pandemic, of various the a improved impact prices stay-at-home caustic the we soda the restrictions result, are rate duration economic on on of the remained will As as in depend seeing U.S. has abroad. business the of its firm. our in COVID-XX duration the and recovery demand Overall,

to to first now for the over turn quarter. would go to over and results our call our like I Steve operating financial

will detailed financial followed good with Thank start segment discussing our a Olefins by and of and our morning, I consolidated results, results. you, everyone. review Albert, Vinyls

Let consolidated me results. our begin with

was net for $XX to we fallout benefit first million to million affecting from the the income reported prior United address the $XXX net the For in of $XX economic due of of of in compared XXXX, of period COVID-XX year the income pandemic diluted XXXX share or to income of of income partially The quarter in million tax the quarter provisions resulting March enacted Act net XXXX. $X.XX businesses increase CARES the $XX the States. per from million first

to Vinyls both the first strong of saw Olefins Compared especially we our and PVC of and a segments, to XXXX, in start, XXXX got off sales quarter increased volumes polyethylene. and

by and resin products. we contraction Vinyls resulting were in in our to strong in polyethylene, vinyl these see February, and impacts our in The from for offset COVID-XX Although international export the European that for XXXX lower led business in in to and persisted and XXXX especially January began late driven PVC demand a downstream the uncertainties Asia major margins product by impacts global in international products, trade demand markets. -- prices throughout industrial major for

the both of we the through prices. first price beginning prior first of progress decline same to segments we pandemic a we the at COVID-XX our As oil quarter, in global to in -- saw in becoming which we significant momentum begun occurred time see were the late increases global quarter for XXXX,

approximately is of an utilization unfavorable of if the accounting would Our $X.XX reported what to the $XX share or audited. been an only and impact method compared per been resulted earnings method. LIFO pretax million in not This calculation has have on FIFO estimate of

Now saw as business cost thereby our we prices Europe. COVID-XX of reducing well ethylene fuel Asia sluggish for as cost. in first driven Vinyls higher industrial first to primarily reduced Vinyls caustic of on products, of and lower the market Also, X our partially caustic by the the prices. operating with offset sales sales of first total our with at from for at XXXX by quarter initial in feedstock XXXX ethylene by the the Vinyls In the lower review as let's impact sales prior ethylene and compared contribution million move of our in our a LACC the income additional along segment. joint volumes soda, and $XX to providing million starting PVC quarter the lower of amount cost, interest purchased segments, quarter performance in XXXX, prices period higher $XX for result as of soda from our decreased downstream global venture resin the year of the activity manufacturing

PVC $XX for by XXXX from million cost. soda. prices These volumes First million operating and lower and by feedstock $X the of quarter global fuel sales increases and as quarter income for saw increased Vinyls caustic were lower we sales prices higher offset fourth resin partially of

segment. to turning our Now Olefins

first XXXX, lower from and of the sales feedstock operating increased sales polyethylene income For by volumes Olefins and lower $XX XXXX cost, million million $XX quarter were higher polyethylene which quarter by fuel a prices. offset as of partially result first

the and income to operating to million of compared million prior fuel for Olefins polyethylene due XXXX quarter. and XXXX lower quarter cost higher sales from increased quarter volumes $XX the $XX immediate fourth First when primarily feedstock

the debt and operating quarter from million Now activities of sheet of of $X.X XXXX, billion balance $X.X equivalents of first let's XXXX. flows. $XX cash turn we cash to the end quarter and first flow total have Cash our cash the was attention At the billion. and in of statement

with discuss put the to respect our typically place. Before and forward-looking the actions we have from I'd with we to moving impact forward about resulting in talk to economic restrictions the corresponding of guidance, some the items like COVID-XX taken manage

sheet life us liquidity We strong average approximately at the resulting is have cash revolving uncertain million the end holding in an liquidity allows XXXX. in an position, This in July we maturity have debt out $XXX credit balance maturity quarter. balance we nearest $X the a years. a position, long-dated schedule, strategically environment. liquidity billion caution sheet operate of due position confidently end Alongside our of staggered solid drew $X.X facility, coupled on XX and The today's with of the first more at strong debt of abundance with maturities billion the to on of debt of March of

reduce We our demand. manage action are operating our expenses current to operations to manage and taking

We and some have facilities. reduced idled small facilities operating rates at our unintegrated

expenditures of level employees. and decreased our of capital the operations have safety while ensure continuing the We to

outlook, current million. of anticipate discussed expenditures $XXX our from our million $XXX to million XXXX we to Given reducing previously to $XXX million capital guidance $XXX

II for We ethylene half to of the second XXXX of planned of to defer the half expect Petro XXXX. our the originally first turnaround unit,

closely market Given changes environment, the needs. are accordingly operations, meet our the business adjust in we to current monitoring we'll and

CARES Act, be we expect effective the to the tax XXXX previously rate approximately benefit XX%. discussed our of now With

back call some the to With closing comments. to Albert? make that, turn Albert over I'll

in of quarter first Thank We results solid you, the produced Steve. XXXX.

quarter, began we However, from the this resulting we as managing feel focused COVID-XX challenging the the outbreak in on the the magnitude pandemic business to time. impact have of of late through

safety the employees ensure the and world. is our to of Foremost around health

and equipment, lives, Next food produce compounds in PVC disinfection, construction our packaging, products and resins for essential from to that packaging. are used water paper polyethylene applications packaging, is treatment, tissues and chlor-alkali to and and for medical cardboard products food infrastructure

products our to virtually continue challenging produce exceptionally teams needed in continuing Our the perform to close to in today's these customers times, well and staying society.

environment on We versus continue business usage to polyethylene costs, focused ethane will in we this taking cost the and production position value reduce expect be advantage actions ourselves remain to economic create will and from over the cash naphtha reestablished, limited to cycle.

sheet, competitive will to current position position Our weather balance us the actions environment. and

Thank listening to earnings you this very much our for call morning.

Now Jeff. I to back call over turn the will

Albert. You,

Before call remind replay to we has begin you taking the I that like available teleconference questions, will of would this after X hours be ended. a

at call. We we will of again the now number take end the that provide will questions. Twanda,

[Operator Instructions].

Our first question Juvekar from PJ the of Citigroup. comes with line

question remains I A could in and there on -- chlorine higher sustained warrant know is demand but paper do anything due markets think are demand higher decline alumina that you in going prices caustic if caustic weak? or volumes? fundamentals. prices caustic be volumes, to up pulp And

there's the lower still pretty for of for water production the caustic. of most treatment especially strong segments, chlorine derivatives, And in a and Because caustic said, chlorine of demand That's question. and demand you as is disinfectant. less the, packaging, good

So the stay-at-home we as resumes will still good economic activity the orders, forward. believe caustic from going be reasonably that demand

And advantage flexible? any an the some -- make you on do be as further second at will Do on that comments that think question road, you is happen? when you spend that comments will my then you to would more mentioned, CapEx down think point just And your crackers you, Albert, have reestablished.

the that the production part, of production. early answer ethylene end the be believe next that of and will move From -- prices Steve ethane-based oil I'll consultants industry the second year, competitive ethylene price ask the part. year, that first more towards we cost U.S. up such answer to ethane-based I'll oil, and future than naphtha-based will

as And has looking as our have it capital heavier moving and we you slate have at seeing cracker, that we we're recall, with demand as propane economics. with make as you to a naphthic substantial Petro long do will to reasonable the at II to reduces looking in ethylene. derivatives, our sure flexibility flexibility PJ, feed need we're And certainly, as more flexibility. may downstream And to relates flexibility, recall, integrated

of flexibility. that. we'll potential reestablishing assess the with advantage, return But Albert's putting about we'll more capital, that So study more comments giving

we But investments. And are our And a that PJ, improve we are operating makes can watching we'll our certainly, bioethylene. debottleneck like know, as you sense. to still net and we anywhere capital rates

investments is we'll way. well that sure make So major way or know its we that not has recovery the make on economic on any until been its

Sachs. Our next question comes from the line of Bob Koort from Goldman

This kind some of same is same competitors -- of for Bob. of flagged Campbell switching some production on that week home co-products. Dylan that to for to that naphtha-based find limitations physical on to point, point limits kind some of your On the last a

cracking terms also practicality what economics put ethane terms do of where then on spreadsheet or So on see you relative naphtha propane? in both the current pricing you and to in can of

quite a of due prices a issues demand butadiene Yes. the fluctuating as -- sharply automotive a has are is of as Right come lot. well lack to of co-product the major driving. lot And lack reduced down right, of you're construction now, one

more naphtha a So produce -- crackers. the and than butadiene crackers ethane lot

which crack advantage, So ethane you back to even you the home you naphtha, Steve butadiene cost on have comes as cracker, if you're lot, also. then volume if no And will back, as issue if a your mentioned, already go but have go it's down as for well. an cost your impact

helpful. That's

or prices where see type In some once to of ethane head, cuts of actually at spike that potential down what for well point terms at -- do again? ethane a kind you point the of production and creates

-- prices associated from reduced ethane reduced production, with lot increase a expected being or But moved ethane in the Well, There's has price gas gas is that natural of prices. natural rejected. projection tracking up. the ethane will be gas still Certainly. still

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

what budget. you Can would ask I postponed, been to which to have projects, million reductions have complete? but the to may any, intend about capital been still if canceled discuss you wanted the and $XXX

PVC year. we you in last So expansion if for Kevin, an Louisiana late completed recall,

of those we and are at Coast-based So predominance savings-related smaller Gulf discussed. the reductions the opportunities some energy projects of some of the looking

to we at level. So level I markets largely forward. the consider what major But no last of we're certainly, the this normalized maintenance And pulling go back, we'll were of pullbacks assess operating would kind really, Those rate as all completed major projects. year.

a to then in moving through in little seen bit what are you've with demand? And Okay. far the possible you your so talk regard resin, to PVC And can market and construction other quarter April expectations with regard applications? end-use what about

Certainly.

due as consultants, averaging placed not orders, industry pretty of that U.S. construction second from such production XX% mentioned the only are restrictions That of or government's to stay-at-home projecting range. has PVC has the lot rates market stopped. we impacted much CDI, And globally XX% has to PVC and production. to As the but IHS U.S. a the slowed and global XX% down first to on in quarter XX%, to quarter impacted drop,

expect we demand -- drop significantly pretty the second to and quarter. in the So production PVC first

Our next of the KeyBanc. Yefremov question comes from from Alex line

lower soda at second look as you outlook, margin in weaker a likely you there just is higher and PVC volumes, mentioned. caustic the As quarter, price

your do of Vinyls So out factors those sequential EBITDA three playing in you side? see outlook how terms for

point at PVC Well, they'll the certainly, depending And price who view, from an a is impact. have you projecting down. consulting of look coming

and then ton a a ton -- increase. $XX -- caustic March, has the PVC May. $X.XX announced we've improved bottom more -- people at seen. a price February, from April, has price caustic industry in $XX The between in Caustic somewhat looking to sorry, low on certainly March additional I pound very overseas decline think $X.XX $XX And spot price. there's about price in in to price

And so these and a tell impact second chlor-alkali of business. volume negative will on financial will And quarter. but impact, expect we how Vinyls our results the results will all quite time much in financial of impact reduction the

Understood. higher, quarter? net lower or these And your a is it all about same to basis, too given in say on be EBITDA whether factors, will second the early the

Well, from volume that mentioned as drop expect to rates. earlier operating we the

reduction negative quarter lower the PVC, but a have in you even if in and has though with all combine improved, volume second caustic the will combination, on it So impact prices earnings.

talked reducing What have your system? your about quarter first some or for the the to polyethylene, need polyethylene second then see are versus so And players either Do in volumes do capacity idling you Understood. expectations quarter? utilization. in

Again, if industry consultants, XX% of for CDI, the operating you look and at XX%, some the rate. IHS first quarter LDPE, was

XX% XX% Second quarter, at operating to they're looking rate.

low, operating XX% to rate. and XX% is quarter linear was For operating XX% rate, to first XX% quarter second

competitive So again, come are And that due is with to rates second nature lack the quarter partially or sharply to globally are low. quite down reduced of as costs well, expected naphtha-based of demand. the operating demand overseas production ethylene two

So -- in a of as negative also a have volume combination impact declines financial will well on price as results. polyethylene expected the reduced price

Our Mitsch Frank of with Fermium line Research. next from question the comes

chlor-alkali for be percent et you reduced rates facilities. for size providing some rates the operating way you Any of of operating that the Where running some seeing give Vinyls are polyethylene Thank to magnitude low. you're idled and cetera? side? you that On us? order try on of mentioned Can side, what you've off-line, would on side? industry of And linear you and the Albert, at operating capacity had up low some rates us and the industry

quarter, rate, the first operating looking dropped the dropped at, and earlier, to operating first IHS in And quarter. consultants that I XX% in caustic, PVC to XX% as for Well, operating quarter. between XX%, looking and XX% rates second from at quarter mentioned XX% rates second for industry XX%

know, production. the you So they PVC reflecting -- are chlor-alkali drop demand that -- chlorine looking PVC in or that, drives as the demand

for we volume chlorine production, as about And So with for prices result. caustic a mentioned lower a caustic the has the come production seeing and reduced chlorine demand, we're hence, higher as down well.

How et expenses costs, Got should is expenses you Got Steve, I for the managing think Westlake beyond? its and the And second corporate for mentioned noticed company cetera. about you. corporate you. we quarter came had down.

the we'll So and on I capital guidance to the gave focused continue Frank, corporate be numbers. expenses, you lower very in

year. costs And but so low throughout into be that continue to keeping you'll not quarter very on our focused expect going the only we'll forward the

Stanley. from Morgan of question next Our with the line Kumar Neel comes

Given in I versus production, making caustic term, considering the in near the of XX% you the prices tighter you supply XX% market in the typically to higher market? any terms of to given allocation especially domestic significant export, relative your domestic believe, are changes the the

it some export export are certainly, PVC the with we by impacted demand caustic as Well, as export. And moved coming certainly see on domestic has been as domestically mentioned the the for coronavirus And places as up well earlier export And price, has supply demand globally. even that price down impact well. commeasurably actually as domestic will more.

So will volume it impact the well pricing demand between will allocation the sales. as that on depending domestic as export

Okay. That's cost corporate on then follow question. the just helpful. a up And

just segment other onetime the decent about quarter rest run versus, of forward? million $XX kind reductions? corporate coming XQ the $XX there quarters. a of level should like EBITDA $X in negative rate that to how think, million million I we was think Is Was anything for the recent levels in the for focus that? in on So around had And going the cost year? Or

so, lid expenses. keeping close Neel, operating be we And on a will

so And both segments we'll expect so, operating lid a item while well and I as close expenses, don't across se, X unique expect you'll any as there very per any corporately. wasn't keep -- on the

next David Deutsche line Begleiter from the Bank. of Our with question comes

calling about combined also decline in What's polyethylene, potential with on QX? the assessment? view QX. And your you for a consultancy, Just on decline the in April, of $X.XX $X.XX about agree do that in price overall they're

Yes.

second as is as is oil as the overseas quarter. in looking polyethylene the $X.XX a that ethylene lower the quarter, IHS demand $X.XX overseas and for We across are the across well at decline second for reason April. price, well lower as decline globally. due And looking mainly cost CDI And lower at only to seeing decline $X.XX

-- release for cash from is it. expect Got capital much capital year? the And us this working to Steve working see you the how would

David, you'll you'll spoke of Albert May. of see April and just that I given lower most I these of So all that to, in the kind think see, reset prices think release

working the the it'll release first it's release of should months capital and over capital the in guidance, most X of of haven't months specific a of while amount be first quarter, So the fairly -- I X second working that given measurable the quarter.

Our next question line Mike comes with -- from the Leithead next of Barclays.

I Steve, of guess housekeeping. first for kind question

cash statement, cash about there? other noting Or is flow just sheet $XXX primarily and items? use there you Is the the On anything working million can else capital? worth of talk balance that

mentioned, So in as tax position. I had our changes we

so NOL to going were carryback of big CARES of the to of benefit Act. are be from we as a piece that, a course, result that able And

So change. that's a big portion of that

this a of long-term focus the opportune know, cycle. market chlor-vinyl a Got of your on past maintaining the ethylene it. balance and priority successful guess question, at strength downturn. point? the internal assets Obviously, consider record right picture months. has the assets more been track But Westlake now? is is I in I the would That's first Or in looking bigger current always the reportedly then key. moments valuation there's But all helpful. And at assets number obviously, in had at few the is second, fairly you sheet buying

Yes.

we opportunities we think time, But liquidity there's want can sure We're is at well balance all very this it. look first and through with circumstance. be position, And if manage assess also well maintain you're we we position this But position and strong the dealing as all that right. we'll the a time, that value-added look opportunities and at to of make making and all us we'll imagine, sheet We'll a the that sure capable. both footed. making allows a come opportunity, Mike, to same is the order sure business sure So making there. that very business at the out we you

from Our next Sheehan Jim with question SunTrust. comes of the line

You about capacity mentioned idling your Vinyl? how Could And what integrated? talk that in are that is of you're integrated. some some portion not not -- is -- plants all you

it's assets, a Vinyl piece. were but small were very small facilities, Jim. These These

by And from on export attracted to prices you starting gone export especially market, lot. Asian the market a caustic the the these soda, increased competitors have higher prices? up Are that see America, competition in in in Latin are

again, to into also their Asian demand. look competitor chlorine have derivative Well, the

and And you a the are caustic U.S. the we allocation under may for that -- balancing as so it's know of producers know, some sales.

Hassan comes next the Ahmed Our question with Global. Alembic from line

Look, and the seeing activities the of a of on slightly question question some medium-term side sort are a near-term on we things. ethylene of

material One So of your you temporary, of the some of And raw it. if agree is stage the side and So you of peers, we're near product these capacity but permanent? just about the react near-term seeing view do million what idling, of with actually, notion? do, economically how cost pricing "vulnerable." they Obviously, tons in you seen movements, at some talked sort feel to industry become do during that sort that's of their with that XX pricing, temporary QX earnings we've your generally how call, movements ethylene in that curve that in think will term? around does

the side it, not material And raw guys to on marginal you happens second the medium-term adds? to of current used capacity wave if that obviously, naphtha are the pricing, be mark-to-market what mean, I to were of -- chemical sudden, marginal more quite a oil actually of that the of The may start the but attractive. guys looking MTO crude a right the little are looking marginal, side it all CTO, looking now. coal-based,

the and the medium-term curtailment I new near-term views your would side to hear project So on love side.

really important is dependent ethylene you is know, plants your feedstock the and pressure; two you cost, operating thirdly, and is rate a cost that cost and Certainly. is the equally as advantage; Well, demand. smaller you factors. ethylene older are X derivative if probably operating have One

costs you ethylene in a down. market, ethylene, your terminal previous mentioned with seller demand Even of potential export, that competitive, will very not ethylene cost are merchant the difficult. U.S. are come of U.S. the ethylene If export we today's in would be if

So that are a matters that X run. combination will all plants which enter buyer of we it's Luckily, and of ethylene. Westlake, net really a

ethylene on the would whole. lower the So benefit prices Westlake

forward, that going the end will back year position the to the we next price ethane-based where in go the the competitive of be year, U.S. of again. early industry ethylene crackers consultant earlier some mentioned oil But oil or future thinks will prices by

So that time the tell case will or will not. whether be

a PVC speaking, big are in the Understood. you your a as broadly side, of at follow-on, -- as the Understood. even sort look a or huge Very the delta seeing now of, perspective, caustics of, helpful. Could much sort bit And us portfolio, take divergence, to maybe right from is side, the versus side? polyethylene just the exposure right versus side durables give in is nondurables. how I end we nondurable portfolio the of your you sense you now have markets demand guess, for durable a

Certainly.

you and almost applications. produce some into that mostly garbage these food and know, all of polyethylene to that and packaging and kind packaging bags As density, are linear to low density we low goes applications,

the And continue but much expectation grow. So they the think I to in environment. demand durable will are needed not very today's is that

people can homes on there's may at already second governments we construction. that and restrictions are help. to that in homes. multifamily we go infrastructure economy, at recovers, of many many is that government economy one side, as are as construction is that believe stimulate investments looking And we the On staying stay-at-home rather constructions. the areas: the part area But know, the to PVC that the And majorities than heard that two put government single-family having

applications. many than homes and it's windows, the future multifamily -- PVC typically whether single-family demand as you piping, more sidings homes, So the other know, in use

expect, we in on tell will more those economic back, come But demand years. again, past and longer grow So than depending few PVC recoveries. in the time the when will demand will term, the

Our comes RBC Markets. from next Capital question of line with Arun the Viswanathan

Just the soda of on wanted back potential to pricing. get caustic trajectory

forecasted in demand has rates derivatives over caustic X a think term Shintech How announcements do caustic beyond do next operating as evolves preselling this think chlorine come Is How see for starts quarter persistence evolving? little momentum you So have plant the the of and related pretty the -- in second do you bit pricing that the the volumes we've the quarters? for mean IHS soda some recent come you price have your fall. a drop I seen quarter? up? really down. this as near actually of for to has second potential steep support down or

Yes. That's a good question.

case. think will hence, more the are after will price and return time come IHS be the caustic, that demand caustic is rescinded. I production tell And there's maybe down. will that orders whether PVC hence, Again, for projecting will stay-at-home

later supply And supply Do any the enter you year or demand? and next market, expect I this new thoughts guess, year? to on early

And market PVC I still demand the that waiting -- inherent But some stopped There's new coming today limited there's future. capacity. PVC as Shintech most growing, globally, at mentioned, to is people the of of for return. new capacity investment well as amount looking very think the stream new demand potentially in and polyethylene, the plant. investments have despite fact supplies, unlike the But you on as

So the -- supply compared with there's other less some products. other pressure of

the guys who of that presumably potentially and And in I maybe smaller I a would assets of point, those couple are had acquisitions facing of guess, demand lower available, become the year? is years side. of on PVC next And completed couple struggling the mean presumably in some last Okay. that right more side on now. that some you compounding competitors

activity expect, we guess, from heightened types should of So I pursuing Westlake assets? those some deal

attuned. of those in at to think further but I to but as we're be see XXXX We'll across continue in accomplished know there, how that the you they Arun, and the in expansion think there XXXX see, if return will example an or will going 'XX, look are in as opportunities that. marketplace into to and some present come business. we'll XXXX chain Well, And potential come, as materials additions hard the integrating roofing those of as we've certainly stay fit assess materials you in -- it's I and will mentioned to the I opportunities they what themselves into earlier, compounding look

production? different be given And as just Or again, mean lastly, much given you willing then integration around ethylene feedstock that for is just potentially would possible? just, still think to maintain level -- strategy do is cash your your as reduction cost the naphtha-based the there to somewhat I change environment, you in

we still Well, ethylene noted, significant Albert pretty in marketplace. a are of buyer as the

well. we ethylene as our so as adjust have moves, demand to purchase ability And an

So we within purchased component the profile. can adjust, is given levers, of and the variety our level of integration we have, a of levers one ethylene those

near to make be you guess something it like moves term? Or of that's possible? is I levels a really in that that more Or near-term you that is the willing So decision your wouldn't lower to longer-term for this? clarify, is integration just would

a of think the those. is what I we really answer on long-term have Well, of function benefit do kind

to adjusting those demand when think deal of near-term current certainly, short-term, with business So it's circumstances. opportunities, the we

more term, more of we question. more As look a it's broadly, longer strategic

comes Wells Our from Fargo. the next Mike question line Sison with of

that hope does range of gave to EBITDA -- with change to -- change take depressed I'm you About oil regain sort if that little guys American noted, range How $X.X these prices time. at it the gets back a to advantage? And year as for that over billion And billion. demand time of or you ago, that $X.X range just let's a might kind level bit a curious sort levels? of North or of

prices Well, be advantage prepared that you see our And depressed will believe it these itself. in heard advantage reestablish sustaining. oil ethane that Mike, Albert we as remarks, do -- that long-term from don't

going to our our there. So feedstock is today in businesses continue think opportunity the be to flexibility to We think ability, use we as do going flexibility-wise, benefit have within to crackers. from forward, we that the the

that the XXXX to guidance to we obviously, environment gave conditions we at for of And as time. But for certainly, continue so. so we grow, changed And reflective the that was lot. do the opportunities demand a look has

we advantages sustaining. think will continue aren't to to that oil the prices we'll these themselves we And think that going as because mindful for we we so take see. be we're ethane of reestablish look the advantages long-term forward, And going to be

then on And Olefins. it. Got XQ quick follow-up a for

the A little think have lower? plans your rates Will the running A do you you bit will You that higher? bit industry little operating gave how you you noted. consultants What do those at fare? be think -- us levels?

time, operating run Well, a we different rates, we a this will somewhat would generally, challenge little -- industry but in than higher time. is

will much down, run do But stay it's the -- better. best to is We going higher. difficult our it's when the -- tide whole to

of next JPMorgan. comes Our from with question the Jeff line Zekauskas

postponing that is your of the ethylene into 'XX? half turnaround cracker it first Why you're

also, site. has of that maintain our run is you of contractors and turnaround, large the And associated on costs number and a So expect we prudent own density Jeff, site. of with contractors not plant there safety bring felt the might on to of plant is well. well. And some running the course, during provide this. you it was third-party And employees, footprint to that The employees

combination And we so made about of of back half when think sense you that thought to move those the factors, first to it XXXX.

That's clear.

the is -- operating Or market because discussion an call, the less in unfavorable? moving depression much has that spreads depression? the down shift rates it of Is to demand? an the the really rates there are So is there in during is export because export quarter. it operating been export-driven polyethylene to a Is second

includes lower going still economic demand to you goes the consumer as applications. low as is coming of than guess packaging expect is and disposable the forward. the high the market. the that lower the know, I demand to well and total export polyethylene, food GDP, we down, the that other competitive lower density be density globally, overseas even that feedstock combination the global good, Two Because costs the of though are resilient it's albeit that impacted both. high also as But activities -- is

main would demand. economic the the think I -- lower that believe activities for be driver we So

the have that it become export is unfavorable? spreads more And to case

lower Well, dropped. for with the prices certainly, ethylene from feedstock cost lower prices overseas,

prices And they into still market. so But is producers, domestic impact there's coming selling think in why price the export I export that's also for prices down and still well. as are the margins

should when quarters, then think cadence do That there's have have third recovery like be quarter. And quarter, mystery? in the about the into activity a relative second second of the there less. so it's vision vision you the lastly, third PVC Do the to the quarantine quarter In much a domestic looks or you what of you any is in coming the the market?

XX% their and XX% quarter low based a pretty If the XX%. and operating quarter on at at CDI's third to rates XX%, IHS higher and forecast, Yes. still looking fourth are bit

improve PVC know, for but the over expecting is demand to quarter. fourth the quarter months they're may you typically As that due slow to third quarter fourth a weather,

operating third of the quarter and rate a lower second really, still XXXX. improvement, quarter below fourth some So and on fourth quarter quarters but

Our Oxgaard Bernstein. the from next line comes of question with Jonas

for like plastics. So about low-density you you the talked a after the bit a done? here demand what plastics? you've looks -- you use genuinely do this little are increased seeing of changes future low-density we in seen And lockdowns are sense have Can a the

then consumption back demand packaged people or therapeutic that there'll still past. question. I vaccine less good do groceries a think to But go than demand as the don't and in out at eat But That's level to people presume more will be home a restaurants, we we will pre-COVID-XX to less -- developed. more higher in and eating, of been go be If various shopping still for that's home until return and drugs food. packaged forms

of have And impact the that what U.S. on market? kind does overall

a rates question. and That's drop supply are export. domestically both consultants at of Well, a meet mentioned good that expected I the to and demand, operating steep production demand in looking pretty --

last the polyethylene exporting due build up production of U.S. capacities As for XX% few years. as to its whole the industry XX% you between know, U.S. to a in the increased the

getting those in applications. and was is of it seems the Yes. demand plastics, harder particularly of a What the automotive lot -- is I a for to lot the from shortfall

dynamics out versus So past high-density seen at and rates of in I'm that where the there's trying we've different to have there's understand the low-density if grown trend. figure an to just trying acceleration they that

good a question. that's Well,

I think the rate lower in have related operating U.S. is the capacities the increased to also seen polyethylene partially we industry.

capacity increased lot production, less increase in and for chlor-alkali it's a there's earlier, of for new of polyethylene the but still quite capacity U.S. overseas investments. PVC mentioned I or globally As

Okay.

interested times into thinking mind, Westlake? this Chao take at where something the to Is something the options don't minority you point or raise and in that the in a a would altogether. about call We've bigger, different have step we about talked strategic would larger looking be Westlake But the new If in on if table? be owners family I question an like a of -- back RMT opportunities. also even that couple equity

transactions. to I hypothetical talk try add we get structuring not it any a of think about of a into hypothetical. value structuring doesn't And Jonas, real to just

a in makes instead, economically. we'd really structuring at the what kinds those think sense And look are of of ways business we think, about I which a rather And the hypothetical. take so a than

Tudor, Our Holt. next of question comes Pickering, with from Blair the Matthew line

frac some have the Do side? why sort view natural it's gas. just past here? moving constraint I couple a you a been of to of over now up on imply premium think Does weeks that $X.XX on has ethane the about

associated to lower it's affecting a demand higher will whether industrial reduced Yes. more or from exports production, and LNG for of -- We activities believe of recently. offset all the that by it's that. gas, prices less also And production that time And the ethane. oil the the gas seen tell whether reaction we've

As lot of we understand, rejected. there's still a ethane being

the as to to with an market sharp price, have by well. overseas ship impact ethane jump ethane on exports also gas a it's Also, reaction high the it'll in prices. maybe So

impact have you and between quarter? impact, split Indeed. even Indeed. And do Olefins the you sit QX, FIFO Steve, second for that as an do million guess And then, expect a Vinyls? larger on the I in $XX we

next number second end million an of Matthew, it's the gauge the endpoint, first quarter. $XX because the be in it's That very might And the Vinyls the largely quarter segment. FIFO to in is the much for what Vinyls segment. the hard it's number to the of quarter largely end pretax

where gauge to will hard in here early May be. it's XX So really numbers June

really guide quarter months largely -- that much the But endpoint-to-endpoint, first but two terms of more full were So be, because front I've in likely to numbers of much got segment. in so it's can't I me you I've where got Vinyls quarter-over-quarter. largely

comes from Byrne of the question Steve next with of line Bank Our America.

some of there's product mentioning, durable, end or were to new like vinyl goods. opportunity construction grow are any share to do meaningful develop And some consumer lower where sell maybe price into products, You end some these where you see that the markets, oil just variety products further any a applications you but of quite of lower potential expanding a of on for you in now environment? of would downstream? And be the these potentially substitution see polymer to that, converse interested you is do markets under a price

Yes.

business Home and remodeling. have Depot quite products probably they People second repair building quarter, own repair especially and and their staying and And been our remodeling. of Some are the doing well. home into actually, decent and go to even places do

as stay-at-home And -- are volume restrictions. many a we -- but is lifting construction out. governments also some governments of that put have local know whole, orders but -- local that the by the governments impacted the starting as So May,

new So new in see we've repair seen income and construction evidenced return on because reduction down home lower whole, But spendings as building coming on permits April. or in we as levels, the home activities. be will March a we some by homes of will expect

more other to but building products? move are do flat, markets year And inventory able versus of your anything sheet chlorine than end you inventories Within building building that And products other products? business, that have seemed you're ago levels? your increased into balance you seeing in into

when see our the managing on we inventories early impact. COVID-XX been We've

I demand going So forward. are for inventories our think reasonable the

John next UBS. line Roberts Our with comes of the from question

of coal-based seen production PVC integrated capacity that you And those producers? the Albert, yet percent of not to by any have curtailment is mine? know what global you is do signs

I can recoveries are the in that PVC And think production XX% the certainly, pretty they coal-based in or a won't activity lower sure whether at that operating I'm on depending down. And Well, And of all of operating XX% the I coal-based. that integrated. rates, and China, production -- not fluctuate but won't China, rates up majority, today. are economic rates part large Chinese pretty say operating XX%, is

remarks? has this At session Q&A the ended. closing any now there Are time,

again our next our again call. quarter you'll results. call hope for to you for today's join us We conference Thank discuss participating second in

in Quarter you Westlake First XXXX Conference for Thank Earnings today's Chemical participating Corporation Call.

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