Scott Richardson: Yes, Mike, I’d add one of the other benefits in the near term for us is that adds redundancy to our U.S. Gulf Coast network. And we called out in the prepared comments that we had some unexpected outages that would have more or less been offset had we had the new acetic acid unit up and operating. So it gives us that redundancy to ensure that some of the near-term blips that we’ve had in our U.S. Gulf Coast network in the past, we’re able to manage those better in the future.
Operator: Your next question is coming from John Roberts from Mizuho.
John Roberts : Back to Sal’s question, Red Sea and the Suez. Do you think the reduced Asia POM exports into Europe or coincident with the Red Sea incident here? It seems odd that China would be improving before Lunar New Year. And I think Japan just slipped back into recession. So we’re not hearing from other companies about demand picking up in Asia.
Lori Ryerkerk: In China, in Asia, which is reducing the amount of material that is having to move out of Asia. So I think subsequently, we may see that impact continue because of the Red Sea, but I really think it does demonstrate a strengthening of the market in Asia.
John Roberts : And then secondly, I’m not sure we heard earlier about the stocking cycle in Vamac rubber. Is it harder to track customer inventory in that product area?
Lori Ryerkerk: Look, Vamac is a little unique in that it is a highly differentiated, high-value product, primarily used in auto, it has some unique attributes, and we have some unique marketing positions. So it’s not provided by a lot of people. I would say when we — it was one of the reasons actually that we were so interested in the M&M equity that was one of the product lines that we thought would be highly complementary to Santoprene, and we back have found for future projects is highly complementary. But I would also say, due to reliability issues, it was very — in high demand, it was very constrained in ’21 and ’22. So one of the things that we focused on since the acquisition is resolving those reliability issues and increasing the production, which we were successful at doing.
I would say mid-’23 when we were able to get our volumes up, we saw customers buying up everything they could because they were used to have it go toward. And so as we move to the fourth quarter, they realized supply stability was better, and we went back to what I think will be — well, we had a low point in fourth quarter. And then I think this year, as we go forward, we’ll see more normal demand patterns versus kind of the high highs we saw a second third quarter and a low that we saw in the fourth quarter.
Operator: Our next question is coming from Jaideep Pandya from On Field Research.
Jaideep Pandya : The first question is on M&M. If I go back to the — did the acquisition, half of this business is sort of nylons and then half of this business is China and Asia. So when we look at the current level of earnings versus what you thought $900 million, where is the exact shortfall regionally and product-wise? Is this in Asia? Or is it actually Europe, U.S. country? Is this a nylons or is this outside nylon? That’s my first question. The question really is around the acetic value chain. This year, potentially, you will still have some pressure because of demand versus supply upstream in acetic acid. What is your strategy with regards to VAE and DPP in the middle stream or downstream? Are you going to push to gain more market share? Or are you happy to sort of have a more upstream position?
Lori Ryerkerk: Yes. So maybe talk about the M&M acquisition. I mean you’re right, a significant amount is nylon, but some of it is high temperature in nylon, more specialized nylons. I think where we have seen the challenges since the acquisition in nylon is really around more standard grade and volumes that were lost in 2022 due to pricing decisions that were made at that time. I think the teams have done a really good job starting to get some of that back, which is important, and that will continue to happen again and will continue to see improvement in variable margin as we flow through what now has been reduced with lower cost raws and lower fixed costs. So I don’t know that it was really — while it was around nylon, I wouldn’t say it was specific to any one region or not.
I mean DuPont was very strong in Asia, outside of China, which has actually been a pretty stable market this year. They were stronger in the U.S., which for auto has been stronger. They weren’t as strong in Europe. Celanese was stronger there. So I would say it’s not specific to any one region, but it’s been more of a challenge specific to the volume loss that happened in 2022 and the steps that we have taken to start recovering that volume in a fairly low demand environment. And your second question around acetic acid, maybe I’ll ask Scott take that.
Scott Richardson: Yes. Very similar to what we saw last year. The current dynamics that we’re seeing in the market globally, it makes a lot more sense for us to be pushing product downstream just given where some of the pricing and margin is on the upstream, and VAE has been a heavy lift for us from an earnings standpoint along with our redispersable powders as well as the acetate tow business as we talked about. And the current dynamics, it just makes a lot of sense for us to continue to maximize production as far downstream as we can. Kevin, we’ll make the next question.
Operator: Certainly, our final question today is coming from Patrick Cunningham from Citi.
Patrick Cunningham: Maybe just a clarification. On the $50 million turnaround impacts, are the large majority isolated in the first quarter? And do you have any other planned turnarounds to be up in 2024 or early 2025?
Lori Ryerkerk: Thanks, Patrick. So the $50 million is in the first quarter. There — we’re up about $50 million from last year. So through the remainder of the year, there’s probably another $50 million spread across the remainder of three quarters. But that’s consistent with last year. So incremental to ’23 it’s $50 million and I would think of it all occurring in the first quarter.
Operator: We have reached the end of our question-and-answer session. I’d like to turn the floor back over to management for any further or closing comments.
Brandon Ayache : Thanks, everyone. We’d like to thank everyone for joining. As always, we’re around after the call if you have any follow-up questions at all, Kevin, please go ahead and close out the call.
Operator: Thank you. That does conclude today’s teleconference and webcast. You may disconnect your line at this time, and have a wonderful day. We thank you for your participation today.
