WLK - Earnings call transcript Q3 2019

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Operator

Good morning, ladies and gentlemen. Thank you for standing by. Welcome to the Westlake Chemical Corporation's Third Quarter 2019 Earnings Conference Call.

During the presentation, all participants will be in a listen-only mode. After the speakers’ remarks, you will be invited to participate in the question-and-answer session.

and XXXX. conference ladies today, being reminder, X, November a gentlemen, is this recorded As

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

Jeff Holy

management Chief you. members Steve Westlake Corporation the Vice Bender team. I'm today our Third welcome our of Chao and Call. Chemical by Conference Executive Good Albert morning Financial XXXX President Thank other and joined to our Officer; everyone and Quarter and President CEO;

agenda by call Albert industry. will perspective conference and a with The will on results. financial who our provide the operating open begin comments more few Westlake's on at detailed Steve then with a a will performance look followed current

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

refer going reference to who During Master These our or are that to information forward-looking management available and Westlake based Today OpCo risks to Partnership Westlake management. ourselves to Partners uncertainties. Chemical Westlake this is similar as call that refer LP to facilities. is Partners by suggest to statements certain as will management's Chemical. Olefins thus we subsidiary assumptions currently topics to beliefs discuss information on and well to contain expectations as references is Westlake Chemical and Limited predictions our OpCo owns forward-looking certain Any LP made or subject

competitive capital and balance industry discussed developments operating other markets trade the factors governmental pricing compete; our risk could utilities; raw for global pressures; nature results economic changes Westlake's energy the rates; availability of and to Actual volatility filings. including conditions; supply the SEC actions political cyclical and in and materials industries regulatory factors materially many technological access upon which in cost based of in demand we differ products policy products; and unrest;

section of a quarter is westlake.com. in our third release issued results. with webpage details morning available This the press document This press at Westlake release of our

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

available the call two dialing today's dial be access XXX-XXX-XXXX. the XXXXXXX. this of Domestic following accessed today may beginning call. will code hours numbers. callers for replay at International following access of should A callers the be The both numbers replay XXX-XXX-XXXX. The replay by may conclusion is

that note as you speaks on therefore X, today are and information reported Please advised may the time-sensitive that inflation be this longer only call XXXX no as of of accurate November, westlake.com. accessed webcast advise broadcast that of may that any is be would finally system call conference time replay. on this an through web you our page I Internet being live at

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

Albert Chao

for Jeff. of million and thank you Good third morning $XXX U.S. third reported you to results. net In per we share. XXXX for income discuss and of this gentlemen $X.XX or morning's Thank our release press ladies joining quarter diluted quarter the

inventories In from fuel have resulting the operational the went remain third costs and cautious above which average the lower fee stock the and caused performance market of quarter, to tightly. we plans benefited from in customers uncertainty industry manage our tensions strong and

downstream continue the in sales wet recovered half we and segments solid was the Yet first by in see of due and weather the our vinyl to year. our cold both to volumes lost businesses

remained capital expenditures. have Over the costs our past and our year, closely being with we disciplined focused on managing

and ownership ethylene extending increased year a with costs. lowering market binary remain the up and in chemical Germany, balance improve and our in joint constructed the with will the logic Despite outlook demand expansions in our venture prices by etc. our competitive and believe weakness in products which supply, our along start global the position recent for U.S. presence will operating previous for major

on detail turn now I Steve operating to to our the to more over results. provide like financial call would and

Steve Bender

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

me with results. our consolidated begin Let

We income and third our XX $X markets. XXXX. our the XXXX. export third to reported million and were the net for or lower results compared XXX products, our international quarter of net quarter impacted $XXX,XXX major to of especially $X share, of of For by prices the and prior margins Compared for income per results, primarily cents in

all the as gas as U.S. Asian Producers North reducing European So use classes ratio feedstock most have of Napa throughout and the obeys gas XXXX experienced our feedstocks, advantage. have American for the producers prices based we and lower fX cost

trade to the lower international and tension past from uncertainties, both margins year So XXXX. quarter gas resulting lower over ratio compared slowing to violence with and was our the in segment economic coupled the oil third global growth led have olefins

the our quarter Vinyls of lower to XXXX Compared higher we turnarounds. feedstock following our spring completion and of normal from cost as in the operating fuel second benefited segment rates maintenance

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

prices economic industrial ongoing our Now past export our lower business segment. with slower to sales in lower our global review the Vinyls segments let's on uncertainty pressured especially soda be move the as in In caustic to third continued the quarter international XXXX prices Vinyls activity the trade X performance resulting market of growth of year. over the and for from declining starting

of a million quarter as third decreased income million lower operating for $XX Vinyls the sales of primarily XXXX soda. of $XXX the prices caustic result to Compared

as turnaround. second fuel $XX ran at ethane and feedstock we Vinyls completion of million and our quarter the quarter $XXX following higher lower the operating rates million Third spring prices operating income from increased XXXX we benefited of from

and balance prices margins the sales to our lower ongoing and prices the balance capacity with seen turning which supply Now coupled industry the segment. lower. Since the trade polyethylene Olefins uncertainty new oil significant production ethylene enter XXXX market supply has global and pushed demand

from as a income XXXX the million $XX of result For quarter Olefins million margins lower quarter prices. of sales XXXX lower polyethylene operating third decreased from third of $XX

lower quarter from prior as we Third XXXX $XX benefited million Olefins fuel quarter. XXXX the second $XX quarter when income from feedstock to operating costs increased and compared of the million

turn let's we sheet the statement had and At attention Next end of the debt $X.X and flows. our cash of billion. cash and equivalents cash third of of the quarter $X.X balance to billion total

Third cash XXXX $XXX quarter while expenditures were million $XXX operating million. flows from activities were capital

our world. around in capture strategic existing of within leverage investments were and United our cost businesses further These integrate the vinyls product to capital footprint our debottlenecking the expenditures further focused reduce and the States Germany our chain in to the vinyls operations margin

our production and which expansions of PVC and will Louisiana VCM year. Germany start million to than by the up previously more in pounds expect end PVC per bring announced XXX of We the year

As exercised option which our will acquire lower further and announced our chain Chemical our integrate interest have we last additional our in to Lotte with an vinyls ethylene cost. venture week joint

and enhance We position. invest advantage integration position. the to seek improves our which and technologies our chain to leading capitalize acquire that of prudently cost stock will the on global business, opportunities further and projects our

nation and the As starting we the new quarter. up fourth capacity accompanying be will look India in practice forward, pipelines

highlights the beneficial These North industry, definitely of our supply infrastructure will feedstock American by increase and enjoyed advantage long producers. position investments term cost into

and the and rate year for and to capital planning respectively XX% the approximately your we cash we be tax expenditures end to full approach effective as of tax approximately be XX% XXXX to $XXX purposes our rate For million. our continue expect

I over will turn back make that to now call closing With the some Albert to comments. Albert.

Albert Chao

gas-based Thanks economic delivered third for cost result sheet discipline shareholders. strong environment. We The to our environment and business challenging feedstock combined in this balance quarter Steve. by create scale our positioned current you, on to to our capital the with we demands global allocation. driven cost and are our solid a prudent continue advantage position Thank a value curve

a interest of The start-up vinyls are examples with along this in you have morning. Chemical costs and lower expanded Germany listening with shareholders. and organic return our in our for a to much joint business Lotte Louisiana our to production we opportunities just integration of facilities further compelling venture call of earnings the increased ethylene to provide of our many couple the very Thank

back over Now turn to Jeff. the I call will

Jeff Holy

Thank you, Albert.

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

of that provide at call. again will We end the the number

will we now Jimmy take questions.

Operator

Instructions] line your [Operator Markets. Our open. is Capital first BMO question John from McNulty with comes

Bhavesh Lodaya

This is Bhavesh for John. Lodaya

you of lower First could indication just versus adding you where just came product And you and of take returns your product prior Have JV. also a versus estimates? go take on maybe the if Lotte the on option? see to a later? Like entire on cost the into the account could the comment your today? decision you comment perhaps do your ahead cost add then And bit the how a on and now

Steve Bender

and the X.X that on mean came for budget. schedule what billion of ethylene. is project the Well pounds I And in billion about on $X by

So decision invest to return provides investment. believe was because it a we this good on our

really ownership. So our and the decision is to this driving behind stage increase invest reason at that the

Bhavesh Lodaya

up deep very particular you resiliency can sequentially on the on the And what was could as prices your in it. the the a you then growth If pieces even discuss the moving which with segment drives Got regarding on sequentially? volumes quarter there. solid comment sequential fell and EBITDA of Vinyls - just this

Steve Bender

by feedstock. about running also It the in rates completed from was because of and plant XX% turnaround fuel as course also we quarter-over-quarter about quarters. costs so benefited and operating Well quarter completed spring we lower we lower over lower sequentially Sure. our better XX%. benefited second earlier noted we we And those at activity turnarounds were the with ethane were

So results. were drivers the behind the big sequentially those quarter-over-quarter

Operator

Thank you.

Neel Stanley. Our next comes Morgan from with Kumar question

Your now line open. is

Neel Kumar

demand and growth look where lagged like key expectations? was and would Illumina you and the year-to-date paper has for the at inorganic most caustic when growth say the you. curious versus Thank pulp underlying I for end organic markets you chemicals

Albert Chao

area because growth world the it manufacturing. side - think I on and and the paper around impacted of manufacturing general pulp especially the the in the has on the economic all in slowdown alumina Well

Neel Kumar

control examples Can focused comments have challenging this? of then in specific And in any some environment. And you in mentioned Okay. whether initiatives give your on us you going you this you forward? that are place cost

Steve Bender

externally see just in that the Well set not you period-over-period. initiatives can think lower was recent public most while G&A our even Neel I have period we

investments as our to going to and on point continue is I to to much very managing we a of managing that. focus. cost say as of eye that continue area are we keep just in example G&A focus our a clear So And

Neel Kumar

that - And been kind just on of the what going? the the of how And during just you Can contribution integration us maybe also quarter? last update had NAKAN question. has

Steve Bender

Well we gone would our very integration acquisitions. But earnings contributions of have not any has from individual the broken out well. I the say

it focused know compounds be or you are American the which pleased as geographical positioning We it both or much offerings medical very with our us is wide range a into in position position. product it was our Asia a largely And our for applications Americas expands of strengthens now the this takes into and And acquisition. in larger North auto Europe others.

very transaction. are pleased we the So with

Operator

Thank you.

Our next Stephen Byrne of America. question Bank comes with from

now line Your open. is

Stephen Byrne

I EBITDA. the you wanted that ask for about provided guidance you to midyear

are toward a upper headed are where beyond at we quarter Here that would that or the you see end this range point? of lower you

Albert Chao

and indicated said going-forward going as unusual guidance the summer and a provide basis. to we we event an weren't in we it and the was that provided first this Steve was on guidance time we

of kind is where that stand. So we

Stephen Byrne

do your the or you share capital another not to Okay. wanted are Lotte you I to drop whether the down MLP cracker? planning raise of - into also for ask the to

Albert Chao

think inventory significant Well of the partnership amount a have you about as left. we

contribute. excess OpCo This of XX% this valuation appropriate in an ownership Westlake which well still option be at exercise of Chemical to in the down operating to have could time. adds We or contributed ethylene at companies

still partnership. we left. company necessarily it capacity we Lotte that transaction still we'd of And I that needn't expect significant cracker the in the plenty operating would inventory So related 'XX have because but be have undertake into a of the contributed to

Stephen Byrne

Okay, thank you.

Operator

Thank you.

with comes question next Partners. from Kevin Research McCarthy Our Vertical

now is line open. Your

Kevin McCarthy

than long look PVC well that ethylene pounds through your X as as Yes, If X.X you billion the position. Question Lotte be still the good morning. though will X.X as to perhaps billion. referenced it option billion exercise I more short relates short to seems you expansions

that do with of exercise Or is appealing options that to rebalance for And bridge the foreseeable beyond gap content ethylene remain position? are any the future? question so my the amount you and see Lotte to you ethylene

Steve Bender

because is right about as we the pounds today short both billion that think we mentioned look number pounds both X.X been will but we billion new Well we that with this short are here to have. sides time is the balanced have to perfectly wouldn't road opportunity about at you the X.X we we necessarily look it have do addition. Certainly to will the Kevin down we'd that new more one balanced. cracker of want over the on we'd we new ability - But capacity set that you immediately. debottlenecking has that long a that we and needn't be be And have And though it like approximate and debottleneck. time will position unit we about over have an - being

Kevin McCarthy

talk about And start-ups three your I density other and magnitude of low demand premium may six expectations if In could garners relative then question how like talked historical that fluctuate? over have relates second through next you that to polyethylene. a as premium the the past the few beyond your to to it Okay. we Can grades looks relates months. supply of XXXX polyethylene. for you've and It the among low-density competitors to

Steve Bender

in Yes. new you've us meaningful Certainly time. technology. period additions the are there premium no with coming talk has as at autoclave additions garner time that all autoclaves for the really over of certainly a a to meaningful continued heard And long the

The polyethylene lower density it linear be Commodity-based in all in manner additions tubular even coming all or high than low technology. applications. tubular the are the

benefits continue the a end we in LDPE the of more position of specialty So to having see space.

margins the some we total as well. to certainly under think customers to be important that expect we market pressure new that into as certainly recognize come continues those pounds our and premium that And of as be

Kevin McCarthy

you. Thank helpful. Very

Operator

Thank you.

Our next Goldman question Sachs. with comes from Bob Koort

Your open. line is now

Bob Koort

calling that start-ups investors the Asian I some I do of at seems opine seems has guess path in maybe composed the world. a ramps very the Thank like think look U.S. a in How there. forward are you pound the sort those it and affecting integrated the bit know your polyethylene trough see the that But seems anxiety a for you pretty capacity how there still forward? on you could maybe on you about it shifted U.S. been do which outside are when good. reports consultants' of the about U.S. the $X.XX you business? And polyethylene thought much. to the Albert some angst of quite I maybe had now path in like I for capacity

Albert Chao

Yes.

of impacted As gas Steve supply by growth capacity as for mentioned and demand as producers. earlier economic the well polyethylene oil globally really the the impacting American and ratio have probability North

IHS the assuming think pretty somewhat. going between growing a recession global slower as is by at next a end is I be looking And across the So the GDP I improve much not will to people flat PE that in XXXX. year U.S. hopefully prices we and looking the are rate. think are will trade year at albeit tensions of to forward and China And And the GDP U.S.

looking to are commodities what more general. in follow-on environment And want polyethylene and said. I people think for at stable just I So Steve of a

I think the expansion the U.S. all in

LDPE. Tubular Our

grades. are we of focused XX% more They on And on focused our And are LDPE specialty the more commodity is side. - autoclave.

spread So Algeria and between tubular autoclave will I also think will and the continue. between continue

Bob Koort

And on could that investment? return figured guys the were capital what a on Lotte I on the cracker you basis for ask economics

Steve Bender

pounds if X a entire between ownership saw contribution had two. we year. EBITDA delta about market for therefore we about quarter would unit bring third million billion and roughly the quarter potential So when of those And you about between think $X.XX Bob a the owned owning ethylene $XXX the probably

about we in that experienced quarter. third of kind contribution the a is that think as you kind at the margin that So could of

Albert Chao

also I there as mentioned are is And ethylene budget. ton on per I new one just it oil ton the add U.S. cracker to you basis claims Lotte ethane grassroots arena newbuild per international on came investment the building in know the lowest a as plants. is on And our at basis cracking. time want cost more on companies based Steve the our major of Steve And in this plants think biggest though even

we vantage if us. have that position start-up cost So point should from a start-up view position for of investment a a - early advantage have and be

Steve Bender

nice guess transaction say I a in summary So accretive I the would Bob. what

Operator

you. Thank

with Mike question next Barclays. Our comes from Leithead

Your is line now open.

Mike Leithead

down can was morning, just flat weak. prices guys. with Olefins polyethylene earnings falling and call to first IHS ethane Thanks. my your kind styrene that I the benefit margins understanding in should talk of guess were you Good what through it drove of improvement lower offset the segment? sequentially Because was integrated

there additional provide I would helpful. just could So guess be you any color

Steve Bender

year-over-year about think year-over-year you you quarter? or when were Mike So speaking

Mike Leithead

Sorry. to XQ. I'm talking XQ

Steve Bender

Okay.

think in and so say X you while fuel did the So feedstock or costs. lower costs you neighborhood percent had quarter-over-quarter prices you polyethylene meaningfully about have when lower also of

feedstock lower about XX% fuel were So by costs by costs was lower and natural gas XX%.

offset up had significant And significant that prices a helping so benefit a of the polyethylene - period-over-period. lower lot to

Mike Leithead

it. Got

release slower the Okay. in macroeconomic the the of And pointed environment. to you impact then

was I downstream products So portfolio a you your it to areas building that is in PVC bit the give hoping because maybe on and from one outside? of could is color the track your compounding businesses more hard few

Steve Bender

into applications. compounding materials as goes our more be businesses stable. the go of course auto construction into nature building into But a to products The lots medical and tends is in because more go wire business earlier and cable. materials than goes NAKAN It just stable. but materials lot The I mentioned seasonal of to construction-related into of it be tends more also

less we But go. broader lost of a construction weather. that So and over of construction where and are it be up the than to due siding markets deeply markets has businesses. it of pipes than but noted cold tends the do the some the volumes just cyclical the footprint did to we applications we pick year And chemicals-related some as recovery wet our

Operator

Thank you.

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

open. is line Your

Arun Viswanathan

Thanks, guys. Good morning,

caustic. had I on was question First

We And down another what are of is the would given production guess is have you'd main $XX then out Or point low think downtick you perspective? how it - seen your else there descriptions? in to? business the characterize after anything the industrial $XX that driver improve October you what September. in here I inventories Supply environment? caustic quite help the are that demand? would from And

Albert Chao

industrial But the the and of some demand quite the said weakening. producers bottoming is prices we of I probably as a Asian below Asia think earlier globally are and think in been has seeing I Chinese cash we cost. it

So if demand should next think some help improving globally industrial improves we that year caustic the Asia in prices. of that

Arun Viswanathan

a what question. could And on you think is lower markets your the in can there PC in similar ask you feedstock and maybe if With ethylene buy give us I just outlook going would in you in make in supply lower - outlook it Or result difficult about margin for from PVC to PVC? and pricing would the ethylene how here? get and result are thinking

Albert Chao

think I globally stable. for like is also in prices looking U.S. capacity and doesn't domestic Physically new polyethylene pretty next increase this additions PVC export IHS capacity the year price Yes. PVC. our price in

So tighten pricing. that as the the the globally to market help and demand up still growing is will help

at in up I prices IHS the think next year So domestically looking going U.S.

housing of also of X.X know XX average construction units around you those - were even the residential year a million rate construction. units is below it million the still that is X.X still As

conversion U.S. domestic it'll residential for demand also returns market So as PVC. the help

Arun Viswanathan

may. I if lastly then And

if is in thoughts most There yours and is - capacity chlor-alkali. get a competitor been of about reaction. adding to wanted any Just thinking your for

is probably investment. years some Geismar added that the ago guys You margin several recent most at

understand as potentially just look help possible? heads all a what their at returning new what through if would far can as facility for in you is So me you going

Albert Chao

year at we looking plant think Sure. capacity read looking out VC chlor-alkali And global spending X billion they additions. five approximately from demand And USD exceed I a at PVC and will far building plant. what for in are

at globally thesis improve the replaced further economics the will support cost So U.S. this. vinyl which supports best place business if you is investment that looking and and in chlor-alkali are

Arun Viswanathan

perfect. Okay,

Operator

from Jim And Thank our Sheehan next comes SunTrust. question with you.

line open. now Your is

Jim Sheehan

any thank earnings? might turnarounds planned And Marty, the you to expect what in have fourth the you you. about that Could talk on quarter? be impact

Steve Bender

be we do fourth Jim obviously we facilities quarter. with a worldwide we going meaningfully But that on basis. of turnarounds do a regular to are none there number are the impactful have in large

an have was but look ethylene out as turnaround. that ethylene we guidance that we be the in have would to our would call And more fourth As the a into give planning I'll we quarter. XXXX that nothing will finish turnaround meaningful we other have units I

Jim Sheehan

for prices forward? And your going what outlook is ethane

Albert Chao

in $X.XX a think think gallon is the range. support much prices ethane that. And I I future the pretty prices

Jim Sheehan

you. Thank

Steve Bender

are You welcome.

Operator

Alembic question from Thank you. Global. Ahmed Hassan And comes with our next

Your line is open.

Hassan Ahmed

to the primarily the the pricing the fairly Steve. large incremental has go and we And just of been Obviously of come wanted Steve Albert timing obviously in last Morning, have ethylene back volatile couple U.S. seen online to supply option. exercising quarters. over

Now in the you quite economics you the obviously cracker as guys that deteriorate were the digested kind enough is would to break is owned had like always rapidly. economics fear out a looked those there capacity QX. have what But

my differently question a now and Or worst exercising that you we option us said ethylene QX later rather you the taken that behind incrementally move signal the are as as do beyond? think now market? you now should on is positive actually from So is than forward the be that guys

Steve Bender

that about have said compelling good Well for we made Hassan return you believe that pretty incremental accretive as we for this the I return a was investment you very think think pounds. the investment the when

business chain investment with vinyl even of so. more agree and you believe this I one prove segment volatile the that we be very a a in our for to over but short further margins be attractive the will over period that integrate us can the cycle time

of are to think And a is a nice going but degree period period right. we from can investment you to and there cycle margins. the prices so very be high it And over in volatility be ethylene

Hassan Ahmed

Understood.

hey in perception coming broadly polyethylene the back was of perception the year the for exact again was And And opposite ethylene of where online. half we any would the if price increases go to was the were think follow-up the was back side pretty a the it the the hardly a crack capacity online year. start pricing and capacity as I assumption of to of coming Now lot look things crack back hard. half chlor-alkali

to what views right? polyethylene it on simple than has Because quite the mean chlor-alkali - obviously as is is industrial much. your really hear consumer love primarily economy? the changed guess? has stronger been not it And resilient as as it would So being I demand related I

Steve Bender

The Well And generally industries I world very of bit a recession a think industries. is used a both. PMI you in it people know chemical for impacted slowing some in the impacted XX chlor-alkali of manufacturing supply manufacturing though supply and many is as term say for as limited even lighting other is commodity example. going the has just that metals wise demand short below it the And is has for it chlor-alkali. demand down

as use will long still inventory Economies demand global the cycle start and and will again. the over. and so go adjustments people grows But economy over things we inventory believe still producing people be

fluctuations. on on longer-term are chain So going core we said could basis as be a forward. short-term very Steve the vinyl optimistic But

Hassan Ahmed

Very helpful. Thanks.

Operator

Juvekar And comes question from Thank with Citi. next our Peter you.

line Your now open. is

Peter Juvekar

money money made Yes, very good with Today the in ECU chlorine. in morning. in of Hi, little most caustic is

opened have come have and still make just delta prices domestic But really and and you hard ramped caustic down export guess I really prices So importance having up. of fundamentals given then with between export the export it. up the Alunorte PVC

you So you there how risk think that And pricing? domestic to do is see resolving? that some do maybe situation

Steve Bender

but is demand globally slowing seasonality PVC in bleach the treatment Well water side still trailing chemical is pretty actually chlorine VCM the strong. side stable is EDC that pretty the and is Obviously down demand the and months pool the winter chlorine demand caustic strong stable.

products even chlorine they things think goes are So pretty still net-net But good. and though is - demand other I to impacted. - even euro and though chlorine

I of nature than it think commodity past. caustic in more because today is the the volatile much

the the is still they back over the I hopefully people pretty I come well improves. industrial doing and said need cycles with chain and inventory now. think as production products And But will chlorine

Peter Juvekar

what terms in there? then of as based activity construction of in industrial China secondly And sort Okay. in business on activity data you seeing points are well recent your as

Albert Chao

antidumping in see has PVC And well you the And U.S. that industrial been recovered know from will coming this the has we continue. that dropped manufacturing duty low first hopefully in China the may second What from China's quarter. or as the

be big So up in there globally. producers will think a for I boost China U.S. selling PVC and

Peter Juvekar

Thank you.

Steve Bender

are welcome. You

Operator

you. question comes from our And Thank with Fermium Mitsch Research. next Frank

is line Your open.

Frank Mitsch

b because inventories morning, I side. operating average. industry actually to ticked down. sounded And is Good was the better that side that interesting commentary was than the were the than where your by that on rates operations? assertion listening on the your gentlemen. vinyl more struck it Olefin true? much And like how was better A the the And it

much that think pretty Is you it? are how sold we everything you should like looks about producing. it that So

Steve Bender

our our relative it So chain us rates elevated operating vinyls Frank does those of about to allow run the to as chain. being when at in peers think integrated are integrated you we many

took during place the quarters. mentioned as that turnarounds some so I course prior of had And spring we earlier

that plants obviously their normal built we inventory the maintenance activities. then so And sold while and undertaking were

And are the Olefins almost in in certainly highly all space. chain producers the integrated that

So cost I production. degree kind cost we of our where peer strength low. this is would are of the say and that our of spreading beneficial to well integrated pounds cycle chain that plays that set integration our Keeps of of fixed very the in in relative high

Frank Mitsch

you of I I probably anything quarter should JV? guess this believe dollars? Why a And very you are issue making think more that? issued euros Steve million pay or is That Lotte the else. a guess quarter of curiosity and euros But the for than and helpful. so about XXX payment in I How during million we in $XXX

Steve Bender

an was And finance that our X.XX% coupon it European attractive approach a for we against was in it XX-year market period. rate-wise to Frank So investments. an designated a hedge

flows those to use So growth no can opportunities here mark-to-market fund through the is P&L. then either proceeds elsewhere. there I that or

go a return. base really conditions saw of attractively make and we deploy to a good be on that priced us those base it into So markets wherever the have allowed good borrowing terms mark-to-market to euro able not opportunity an dollars to with

Frank Mitsch

that those Interesting dollars deploy euros. deploy said you and those not

Thank you, Steve.

Steve Bender

You are welcome.

Operator

Thank you.

comes next David question with Deutsche Begleiter Our from Bank.

is Your open. line

David Begleiter

what Good was some quarter? outlook year? online starting Thank you. how your your the for coming given is capacity in Albert China And new business XXXX in next in styrene morning,

Albert Chao

think I operations are Steve doing well. well. Venturing our said as very

of next volatility spread that’s there price a capacity up comes, right dynamic starting benzene are and lot that will and price, You coming year. depending the And the right be price more price now. styrene of

see things settle and we will don't also like they how as whether you not. are So other running those know styrene know plans we or technology so for we keep will [indiscernible] will how run

So things future a business. of could global impact operability the lot are styrene the - of these

David Begleiter

the drove what Steve on income the increase? We in that And sequentially just comment up sequential quarter. were

Steve Bender

David higher primary small were have. that some income interest So joint and components the and some income we insurance recoveries some some ventures

Operator

comes Roberts UBS. And Thank question our you. from John next with

is now open. Your line

John Roberts

in contribution cracker any Or the of Does a earnings from come come income? as in the all of goods. it does cost Lotte you, equity reduction Thank as in

Steve Bender

reduction cost a to It will of come sales. of

John Roberts

growth was out overall. grew segments Vinyl us kind come assume either Do building or to what can for to sales Okay. the And than faster products? then the have building business give rate for of Or XX-Q I products wait we the the the later? you

Steve Bender

Q We filed will tomorrow. have that

Operator

question from next Jonas comes you. And with Oxgaard our Thank Bernstein.

now is open. line Your

Jonas Oxgaard

Good morning.

the capex it billions some year billions are change a you of oil about chlor-alkali does billions in that after us petrochemicals. but have your is of give polyethylene. majors the how worried And announced thoughts versus are seems after oil None to last you seeing how on seen chlor-alkali the to in capex? strategic lot going outlook be Over Can polyethylene. you we on

Steve Bender

the when of the Jonas vinyls So think - about you it capital very capital-intensive. chain is intensity the

And get to of both power build has to PVC. VCM chlor-alkali intermediates to so the one EDC

is so capital-intensive. And it very

the business into olefins that they when their have more upstream ration build what And think side in the some is have given is intensity and capital sense. said it so that polyolefins much And have they about of make less you cost-intensive to - investments. is back to the chosen much the it

they certainly been this as investing for think many in approach this business years. taken have of business about have they we in the so And terms in

of ago business it the half requires chlorine and these majors all specifically. since handling half of is real about generation the this the side focus a vinyl exited On a your chain and a that space materials

value to time demand heard long-term So good say we remain believe we you the value balance made constructive benefit investments think that in very remains that supply that with comfortable the provide balance that continue the supply that us Albert the we investments And have over we and will made. demand the earlier we think as have we

Albert Chao

Jonathan if below was chlor-alkali of vinyl that through I and may made side costs. acquisition the much the add in investments also replacement

below on which confidence So when our building economics for good are acquisition vinyl most But acquisitions not a that the you return. based cost. grassroots are hear all plants of at is be that are major a vote competitors cost of place replacement there even if will our

Jonas Oxgaard

Okay.

- polyethylene you that against believe you buying but the of you that find the looks telling to much? the lot the don't answer how square a Lotte immediately chlor-alkali in do in share them out seemingly better a side part be to that the I if go cracker So

Steve Bender

where that chlor-alkali think vinyls the that sits recently - ethylene. you within have in very about also made that look margin but in we chain the that a sits margin the very you significant the When of a large of the investment ethylene if portion sits at in component recognized

time value be even in caustic the the ethylene. five either it So upstream over majority in years longer has or or of or XX great been years

chain of chlorine And out ethylene investment that that in and so allows ethylene. business make to to PVC integrate further ultimately us this our

that So the be is sides chain. allows investment side not capture vinyl able and vinyls the ethylene but margin further us what well chain have integrate would that this do one others. To the as just in been to ethylene chlor-alkali left as both that capture to margin

Operator

Blair Matthew Pickering Thank with And from you. Holt. question next Tudor our comes

now line is Your open.

Matthew Blair

propane to around QX. morning provide cracking? results able strong switch in much good you Hey, QX to cracked olefins Steve, can to you sort so albertan And were any of if back propane how circling the you versus numbers

Steve Bender

to plants go of to that ethane to feedstocks feedstock the still Because switch ethylene. a believe production So Matthew we ability but when feedstock the most have such we our the advantaged. you is de-rate propane have certainly heavier as

about derivatives or running we think you when down is have those as operate and we the really in facility in have interest the Kentucky can we as we And our facilities Louisiana can. as high well as and

at are across looks while looking times one the ethylene at chain. so integrated margin the at only the margin we And

downstream. a - amount would de-rate we ethylene offset benefits use receive to and not the produce that therefore so feedstock heavier of offset the we would And

to So units operating to the to rates. get really feedstock to the the better ethane ethylene be with had that able it higher ethylene is run run downstream

Matthew Blair

been debt Steve little And then the net sense. comfortable you year? your a has with some levels? Are should reduction Or leverage we current coming here. up expect bit creeping Makes in

Steve Bender

very notes balance on will sheet. keep have And be need so to to to focus a focus. is that years area that. our And of of We do Matthew certainly And very optionality year some we we what strong always able we following an next do to a keeping strong always manage in and do in balance sheet.

Operator

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

Jeff Holy

in conference quarter fourth participating will We Thank you again our next today's call. join again to us year hope full call you and for results. for discuss

Operator

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

is hours Eastern can has may The at after p.m. XXXX. both access you replay for be be As call numbers be XXX-XXX-XXXX. The on should calling callers until a accessed for XXX-XXX-XXXX. accessed code XX:XX the access XX November replay by available may reminder beginning X Time will the this and replay ended for call Domestic dial XXXXXXX. Tuesday numbers. following participating. call International Thank

now may You disconnect.

Westlake (WLK) 5 Nov 192019 Q3 Earnings call transcript