Kevin Estok

Kevin Estok asked about the potential demand tailwind from U.S. coal production and its growing share for LSB Industries. He also sought details on the expected evolution of fertilizer demand in 2027 and whether elevated pricing is currently crimping demand.

Answer

Mark Behrman, Chairman and CEO, indicated that U.S. coal production is holding steady, providing a solid demand backdrop for AN rather than a significant increase. Regarding fertilizers, he noted the market is tight for ammonia and UAN, with pricing reflecting this. While some demand destruction might occur 'around the edges' due to high urea prices, strong corn acreage forecasts and global supply constraints suggest solid demand and a constructive nitrogen market through the fertilizer season.

Kevin Estok, on behalf of Laurence Alexander, inquired about the evolving demand dynamics in the fertilizer market for 2027, particularly whether elevated pricing is beginning to constrain demand.

Answer

Chairman and CEO Mark Behrman acknowledged the tight market for ammonia and UAN, with pricing reflecting this, and expects it to continue through the season. He suggested potential demand destruction 'around the edges' but anticipated solid demand due to corn acreage forecasts and global market tightness in ammonia and urea.

Kevin Estok of Jefferies LLC, on behalf of Laurence Alexander, questioned if lower corn prices were causing fertilizer demand destruction and asked for an update on the potential tailwinds from the administration's deregulation push.

Answer

CCO Damian Renwick stated that while there is some retailer hesitancy, they did not see significant demand destruction during the spring and view the current buying pattern as the 'new normal'. CEO Mark Behrman added that potential ethanol export growth could support corn demand. Regarding deregulation, Behrman noted that federal and state agencies have become more 'user friendly,' which has been helpful for project discussions.

Kevin Estok from Jefferies LLC questioned if LSB Industries was observing any fertilizer demand destruction from farmers due to lower corn prices. He also asked for an update on any tangible impacts from the administration's deregulation push over the last three months.

Answer

EVP and CCO Damien Renwick responded that there was little demand destruction in the spring but noted some retailer hesitancy for the fill season, calling it the "new normal." Chairman and CEO Mark Behrman added that potential EU ethanol demand could support corn prices. Regarding deregulation, Behrman said dialogue with federal and state agencies has become more "user friendly," aiding environmental conversations and project planning.

Kevin Estok from Jefferies inquired about the potential impact of administrative deregulation on the company's operations, particularly regarding permitting. He also asked for more details on the drivers behind the potential pent-up demand for UAN at the retail and producer levels.

Answer

Chairman and CEO Mark Behrman responded that the impact of deregulation is expected to be minimal, with the notable exception of the EPA. He highlighted that since new leadership took over the agency, there has been more activity and encouraging conversation regarding the El Dorado low-carbon ammonia project. Behrman also confirmed that strong UAN demand is driven by a significant increase in forecasted corn acres and insufficient import volumes, which is straining logistics and driving prices higher.

Kevin Estok, representing Jefferies, asked about Celanese's inventory reduction strategy, specifically the guardrails in place to prevent service issues, any elevated product families, and the timeline to achieve a steady-state inventory model. He also inquired about specific levers Celanese is employing to stabilize the acetate tow business, including regional mix shifts, capacity actions, and contract resets, and when measurable improvement is expected.

Answer

Chuck Kyrish, CFO of Celanese, explained that inventory reduction is a coordinated, multi-year effort focused on raw materials, offtake agreements, and finished goods, without compromising service levels, with Engineered Materials driving efficiency. Scott Richardson, President and CEO, stated that for acetate tow, Celanese is aggressively addressing cost structure, go-to-market strategy, and future contracts, anticipating destocking to normalize by mid-year, leading to a more stable market.

Kevin Estok asked for a quantification of the expected earnings contribution from the multiyear supply agreement with PowerCo and the magnitude of Cabot's cross-border specialty product sales exposed to tariffs, including any pricing recovery mechanisms.

Answer

CEO Sean Keohane stated that the earnings contribution from the PowerCo agreement is not quantified due to confidentiality but emphasized its strategic importance for establishing incumbency outside China. Regarding cross-border sales, Mr. Keohane clarified that Cabot is largely a make-in-region, sell-in-region company, with only small, non-material volumes of specialty Performance Chemicals products moving across regions, thus experiencing no significant tariff impacts.

Kevin Estok from Jefferies asked about the quantified earnings contribution from the multiyear supply agreement with PowerCo and the magnitude of cross-border specialty product sales exposed to tariffs, including any pricing mechanisms to recover costs.

Answer

Sean Keohane, CEO and President, stated that the earnings contribution from the PowerCo agreement has not been quantified due to confidentiality, but emphasized its strategic importance for establishing incumbency outside China. Regarding cross-border sales, Keohane confirmed that Cabot operates largely on a make-in-region, sell-in-region model, with only small, non-material volumes of specialty Performance Chemicals products moving across regions, thus experiencing no significant impact from global trade tensions.

Kevin Estok asked for a breakdown of Cabot's regional utilization rates for the quarter, seeking specific data by geographic region.

Answer

CEO and President Sean Keohane detailed regional utilization rates, stating North America was between 75-80%, Europe around 85% due to local supply value and contract pickups, and South America in the 70s, though showing encouraging signs from trade policy impacting tire imports. He added that Asia-Pacific assets are operating at very high utilizations, focused on maximizing value and serving customers who prioritize product performance and reliability. Mr. Keohane noted these trends have been consistent throughout fiscal year 2025.

Kevin Estok asked for details on Cabot's regional utilization rates for the quarter, broken down by region.

Answer

Sean Keohane, CEO and President, provided regional utilization rates: North America at 75-80%, Europe at around 85% (due to being net short carbon black capacity and local supply value), South America in the 70s (impacted by tire imports, though trade policy is showing some positive signs), and Asia-Pacific running at high utilizations, carefully aligning with customers valuing product performance and supply reliability. He noted these rates were largely consistent throughout FY2025.

Kevin Estok from Jefferies inquired about the 2025 outlook for non-auto-related sales and whether management anticipates a gradual improvement or a more significant cyclical turn, particularly in relation to interest rates.

Answer

CEO Sean Keohane stated that within Performance Chemicals, infrastructure-related markets like alternative energy and grid renewal are strong, while consumer markets track GDP and construction remains muted. He confirmed the company expects a gradual improvement rather than a sharp turn, as tempered expectations for rate cuts will likely lead to a delayed recovery in rate-sensitive markets. Overall, he anticipates solid mid-single-digit volume growth for the segment.

Kevin Estok from Jefferies LLC began to ask about the impact of tariffs, specifically questioning if tire production was expected to return to Mexico before the U.S. and seeking to quantify the potential tailwind. His question was cut short due to poor audio quality.

Answer

CEO Corning Painter addressed the first part of the question, stating that Orion does not expect a preferential shift of production back to Mexico over the U.S. and anticipates the impact will be broadly felt across North America. The analyst was then asked to rejoin the queue to resolve the audio issues before he could complete his question.

Kevin Estok of Jefferies LLC asked about the impact of tariffs on production location, specifically questioning if manufacturing would shift to Mexico before the U.S., and whether the company had quantified the potential tailwind from these trade policies.

Answer

CEO Corning Painter, addressing the audible portion of the question, stated that Orion does not expect tire production to revert more to Mexico than the U.S. in response to tariffs. He clarified that the impact would be broadly felt across the region rather than concentrated in one country.

Kevin Estok, on behalf of Laurence Alexander at Jefferies, asked about the magnitude of interest rate cuts needed to stimulate a recovery in the construction and consumer durables end markets.

Answer

Chairman, President & CEO Peter Huntsman suggested that the direction and expectation of future cuts are as important as the initial amount. EVP & CFO Phil Lister added that they monitor the translation of Fed rates into longer-term yields and mortgage rates, all of which need to decline to spur demand.

Kevin Estok, on for Laurence Alexander, asked about the trend in global methanol operating rates during Q2 and into Q3, and the potential marine fuel demand by year-end.

Answer

President, CEO & Director Rich Sumner noted that industry operating rates recovered in Q2 from a Q1 low point, but cautioned that headline rates are misleading due to structurally constrained capacity. He estimated potential marine fuel demand at 2 million tonnes by year-end but highlighted that current economics and shipper focus favor low-carbon methanol over conventional.

Kevin Estok asked for an update on current MTO (methanol-to-olefins) operating rates as of early January and inquired about expectations for discount rates for the first quarter and the full year.

Answer

President and CEO Rich Sumner estimated current MTO operating rates are in the low 70% range, with downward pressure likely due to tight supply from Iran. Regarding discounts, he explained that while the average discount rate may increase due to a higher proportion of Atlantic-based sales, this is not due to deteriorating terms but rather reflects a higher overall average realized price in those premium markets.

Kevin Estok, on for Laurence Alexander, asked about the recent increase in order volatility, questioning its magnitude, regional concentration, and what customers need to see for a return to stable ordering patterns. He also inquired about the potential impact of deregulation on the business.

Answer

President and CEO Joseph Berquist responded that order volatility accelerated in the first quarter, primarily in Europe and the Americas, driven by tariff uncertainty and customers managing down inventories. He noted that the market in Asia was tepid but showed growth due to share gains. Regarding deregulation, Berquist stated that the company does not expect a material impact, as it is positioned to adapt to any regulatory environment, which can sometimes create opportunities for new, innovative solutions.

Kevin Estok of Jefferies asked about the level of order volatility in recent quarters and inquired about the company's ability to mitigate risks associated with its $70 million in U.S.-produced sales to China.

Answer

CEO Guillermo Novo explained that market volatility has stabilized since late last year, with current softness stemming from market sentiment rather than erratic ordering. Regarding China tariffs, Novo stated that while some unique products like Klucel can be managed via customer partnerships, the VP&D business is more exposed. He estimated that over half of the at-risk business has mitigation options through network optimization and potential share gains from market dislocations.

Kevin Estok, on for Laurence Alexander, asked about demand trends in China following the Lunar New Year and separately inquired about conditions in the automotive end market.

Answer

President and CEO Dr. Ashish Khandpur reported strong 7% growth in Greater China in Q4 and expects continued strength, highlighting new business in the digital economy related to AI servers. For automotive, he noted nearly 20% year-over-year growth in China's transportation sector in Q4, driven by EVs, and anticipates continued, though slower, growth in that market.

Kevin Estok asked about the demand outlook for robotics applications, the level of interest from downstream customers for magnetic offtake agreements, and the company's perspective on the post-election political landscape for critical materials.

Answer

CEO James Litinsky explained that while mass production for robotics is still a few years away, development is accelerating, and the magnetic content per robot could be 2-5x that of an EV. CFO Ryan Corbett added that DFARS compliance positions MP well for defense and robotics applications. Regarding politics, Litinsky stated that the election results provide a strong mandate for onshoring critical supply chains and that he expects continued strong support for companies like MP, potentially through tariffs or tax policy to create a level playing field.

Kevin Estok, on behalf of Laurence Alexander at Jefferies, asked about demand sensitivity to potential interest rate cuts, any signs of emerging 'green shoots' in demand, and the potential revenue opportunity for Sustainable Aviation Fuel (SAF) over the next five years.

Answer

CFO Michael Feehan noted that advantaged energy costs are more impactful for customers than interest rates and pointed to year-over-year growth in virgin sulfuric acid and nylon as positive signs. CEO Kurt Bitting described SAF as a highly attractive market, projecting pilot-scale sales in late 2025 with a ramp-up in 2026 driven by mandates, positioning Ecovyst's technologies as key enablers.

Kevin Estok inquired about the ethanol margin outlook, the potential for industry production cuts, and whether the Q3 corn basis met expectations. He also asked for customer feedback on the initial Clean Sugar Technology (CST) samples.

Answer

CEO Todd Becker explained that while margins compressed late in Q3, recent inventory draws suggest a potential for recovery. He noted the corn basis was significantly better year-over-year, though firmer than expected post-harvest. Regarding CST, he stated that while it's early, feedback on similar pilot products has been good, and the initial focus is on North American industrial markets.