Sales growth slowed in the third quarter of 2018 in the Huntsman MDI business as prices began to fall.

Sales in the sector amounted to $1.36 billion in the third quarter of 2018. By contrast, sales for the same period in 2017 amounted to $1.2 billion, an increase of 13% over the same period last year.

The adjusted EBITDA increased by 1% from 2017 to 2018 and reached $247 million in the third quarter of 2018.

Chief Executive Peter Huntsman attended a conference call with U.S. financial analysts. "Earlier this year, we pointed out that our short-term profit margin soared by $40 million in the third quarter of last year," he said. We estimate that profits could soar by another $15 million in the third quarter of this year. We don't expect any surge in profit margins in the fourth quarter.

"We have absorbed the $50 million impact of the unexpected shutdown of the MDI plant in Rotterdam, the Netherlands," the CEO added. He said it was caused by suppliers. He added: "In the third quarter, we have absorbed about $50 million in raw material price increases and benefited about $20 million from our recent expansion in China."

Compared with the third quarter of 2017, the volume of transactions in the U.S. market increased by 17%, of which 6% came from the acquisition of Demilec.

He added that U.S. customers are benefiting from building factories in China, as raw materials produced by Huntsman in the United States can now stay in China and boost local business growth.

Peter Huntsman wants to remind investors that the company is turning to high-value-added downstream products. This is important, he said, because the future decline in MDI pricing will not have much impact on profitability.

Peter Huntsman also said that our global risk in parts pricing was under 30%. This is because the company is entering the downstream market.

"We will have more exposure to China's spare parts market, and over time we will make the transition as we have done in Europe and America," he said.

He explained that in downstream areas, quarterly profit margins remained unchanged. This is because the company has been able to offset the rise in raw material prices.

"Our downstream differentiated formula business continues to grow steadily. Our differentiated business sales grew by 6% year-on-year.

According to the company's estimates, MDI demand will grow at a rate of 6% or 400,000 tons per year, he said. Peter Huntsman added that if all expansion and new capacity were to proceed as planned in 2022, capacity would grow by about 5% a year.

Sean Douglass, Huntsman's chief financial officer, said the company planned to use all of its aggregated MDI produced in the United States in its downstream business.

"We need to make aggregated MDI," he said. Our plan is to acquire companies such as Demilec, enter the downstream market and convert parts and components into high-value goods.

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