Cabot Corporation (NYSE:CBT) Q2 2024 Earnings Call Transcript

Sean Keohane: Jeff, I think, a couple of things here. If you look back over a long period of time here, probably, from 2015-ish time period up through this year, what you have seen in the U.S. is two factors. One, an increasingly tightening supply-demand balance and that structural change remains in place, as well as a significant requirement for environmental investments into the plants, which require pricing and returns on capital in order to get an appropriate return on that and to supply our customers. And of course, the tightening balance over that long period of time has been because there have been tire plant expansions in the U.S., as well as competitor closures over that period of time that have brought the supply-demand balance into a tight position.

So that structural dynamic has played out over many years. In the current near-term here, there’s a certain, I would call it, sort of dynamic nature in the demand, as Erica pointed out, because you saw 2022 was very, very strong, 2021 and 2022. And then in 2023, I think people realized that there was a bit of overbill of inventory in 2022 that got trimmed off in 2023. So you really have to look through those two years and kind of average those out, and when you do that, you see that, the dynamic is actually quite snug from a supply-demand standpoint. So that’s the long-term picture that we’ve been sharing for quite some time now, and I would say there’s no change in that, but you’ve got to, certainly, look through the inventory build and then the destock across 2022 and 2023 to see the real supply-demand balance.

Jeff Zekauskas: Great. Thank you so much.

Operator: Thank you. And as I see no further questions in the queue, I will conclude the Q&A session and hand it back to Sean Keohane for final remarks.

Sean Keohane: Great. Thank you very much for joining us today on the call and for your continued support of Cabot and we look forward to speaking again next quarter. Have a great day.

Operator: And thank you all for participating and you may now disconnect.