Operator: Our next question comes from the line of Mike Leithead with Barclays.
Mike Leithead : Question on O&P EAI. Historically, if I look back, this business did about $1 billion or more of annual EBITDA. And now it seems like profitability is likely going to be a bit below that for some time, just given energy dynamics and some of the new supply that’s coming on in Asia. So just if we take a step back, how are you thinking long term about the competitiveness and profitability of your assets there?
Peter Vanacker: Yes, Ken, I mean, if you can take that question?
Ken Lane: Yes. So listen, of course, the headwinds in the European business with energy like everybody else has. And we’re focused on generating the highest value from those assets because there are things that we can do through our VEP program that still does generate good value from a margin standpoint. We’ve seen probably the biggest headwind in Europe around demand. So volume is down pretty significantly year-over-year. As you can imagine, the whole inflation equation has hit the consumer very hard in Europe. So we believe we’ve got good competitive assets there. But of course, we’re operating at a very difficult market. We’re going to look for ways to continue to improve the value that we can get from those assets. In the longer term, we’re always looking at our portfolio, and we’ll continue to do so and make sure that we have the most competitive position that we can with reasonable amounts of capital that we would have to deploy there.
Operator: Our next question comes from the line of Matthew Blair with TPH.
Matthew Blair : I had a question on just the longer-term PE outlook. Some of the consultants are showing global capacity growth in about the 2.5% range for 2024 through 2026, which, as you know, is about half of what we’ve seen recently. And so my question is, do you — what are your expectations? Do you believe this forecast? Do you think this number will creep up? Or is it too late to really see any meaningful increase in like the 2024 and 2025 numbers, specifically.
Peter Vanacker: Well, Matthew, I mean, normally, you have quite a good visibility. I mean, with the announcements of capacity increases. So — and that visibility in our industry is normally around what, 4, 5 years, I mean, down the road. I would be very surprised, I mean, if there would certainly be additional capacities that come on stream. I mean, within that period that have not been announced because that’s not how the industry is working. I mean, Ken, with regards, I mean, to the announcements now as the supply and demand.
Ken Lane: I — the only thing I would add to that, Peter, is we have seen some projects starting to slow down, right? So we are hearing about that in the market. And look, I’ll remind you, too, we always get into these down cycles, and it happens every time. And it feels like you’re going to be here forever but there will be capacity that also comes out of the market. So yes, there are some additions that are going to come. And some of those are going to make sense depending on their feedstock position and the region that they’re in, but there are going to be some capacities that come out. It takes a couple of years for that to happen, but that’s how the cycle works. So in the short term, I don’t expect there to be any significant change in capacity coming on. But in the midterm, I do think you’re going to see some projects start to be slowed down.
Peter Vanacker: And then if you look at it, I mean, from the demand side, if you look into the history, than with the financial crisis 2008 and 2009, then certainly in 2009 and 2010, you had a big recovery. So growth was higher than it normally is, let’s say, over the cycle, let’s say, around, I mean, 4% per year. And the same we’ve seen, I mean also with the pandemic, I mean, pandemic in 2021. During the second year, you saw a recovery with — when you compare that to 2020. So I mean, we continue to be just looking, I mean, from a historic point of view. We have a consumer behavior. It could very well be that also then we see in the future that there’s going to be higher demand compared to, I mean, to the average over the cycle demand growth of about 4% per year on polyethylene.
Operator: Our next question comes from the line of John Roberts with Credit Suisse.
John Roberts : Will the delay in closing the refinery pushback the time frame to achieve the $1 billion EBITDA from circular plastics? I assume you’re going to be later in converting some of the gasifiers and so forth at the location.
Peter Vanacker: The clear answer on that is, John, no. It’s not. I mean, our target remains, I mean unchanged in the circular and low-carbon solutions business as we have communicated on the Capital Markets Day and we have been evaluating that option, obviously, exactly if you did our Capital Markets Day, so it was on the radar screen.
Operator: Our next question comes from the line of Jeff Zekauskas with JPMorgan.
