PE Pricing Outlook
Q: What's the outlook for PE pricing and demand?
A: Peter stated that domestic demand in the U.S. improved by 5% versus Q4 last year, marking the strongest quarter since Q3 2022. Export sales continue to grow, breaking records for the fourth consecutive quarter due to the cost advantage from the oil and gas differential. Capacity utilization moved up to around 90% in PE in the United States. Price increases are out in the market for April and May, with a strong case for them to stick.

China Overcapacity Impact
Q: Is China's overcapacity suppressing PE prices globally?
A: Peter acknowledged that margins in China are not where they need to be due to overcapacity, and "everyone is bleeding". Despite this, U.S. exports are breaking records as material finds their way into other markets where older, less flexible facilities struggle to compete. There is a strong case for U.S. price increases to stick despite China's situation.

CLCS EBITDA Goals
Q: Are you confident in achieving CLCS EBITDA targets?
A: Peter expressed confidence in achieving the $0.5 billion EBITDA target by 2027 and the overall goals set a year ago. The Circulen family volumes have doubled, and margins are strong. The first MoReTec investment in Cologne is on track, with work underway and a positive timeline to start up by the end of 2025. The final investment decision on MoReTec in Houston is expected next year.

Cost Control and SG&A
Q: How are investments affecting SG&A and cost savings?
A: Peter mentioned that while making good progress on the Value Enhancement Plan (VEP), a substantial part of the $300 million bottom-line value created last year has been reinvested in building up the Circular and Low-Carbon Solutions business, leading to higher SG&A. Michael added that they continue to manage costs well, with SG&A as a percent of sales at 3.8% despite headwinds, and are making targeted investments while being disciplined.

Sasol JV Consolidation
Q: Any updates on consolidating the Sasol JV?
A: Peter stated they are pleased with the joint venture with Sasol and continue to look at opportunities to grow and upgrade the core but will be extremely disciplined in M&A activities. Michael added it is not appropriate to comment on specific transactions.

Europe Rationalization
Q: Any further rationalization actions in Europe?
A: Peter noted they are continuously evaluating their positions in Europe. They previously rationalized their polypropylene facility in Brindisi, Italy, and are considering strategic evaluations of their assets. Positive dynamics around regulation support demand for recycled products, and their Cologne assets are strategic in this regard.

Downstream Renewable Demand
Q: How is demand from PE customers for renewables?
A: Peter mentioned they continue to see very good traction in the market for renewable polyethylene. They doubled the volumes of the Circulen family last year. They are not contracting on a cost-plus basis; the market is setting its own price points, which align with or exceed their expectations.

Cash Flow and Working Capital
Q: Is the working capital build complete?
A: Michael indicated that working capital should be relatively stable in the second quarter, and any consumption in the second half is not expected to be material.

O&P EAI Price Trends
Q: How do you expect O&P EAI prices to trend?
A: Peter stated that the situation in Europe is changing, with customers buying more locally due to supply chain threats. They expect further advancement in profitability in the region in the second quarter. Consolidation announcements in Europe could remove approximately 1.5 million tons of ethylene capacity.