Steve Bender: Frank, I want to add also that with high interest rates and uncertainty in the economy, our customers are very careful they only order when they need to.
Frank Mitsch: That’s very helpful. Thank you.
Steve Bender: You’re welcome.
Operator: Thank you. One moment please. Our next question comes from the line of John Roberts, Credit Suisse [ph]. You may proceed.
John Roberts: Right. Thank you. Back to Building Products, do you have a sense for the divergence between new construction and repair remodeling activity?
Albert Chao: So John, I would say that we did see continued strong demand in both sides of that HIP business. So strong demand really in repair and remodeling. And given the 1.4 million average start number, you can see, again, a resilient business being able to adjust to lower volumes year-over-year and still continue to perform. So I would say both the starts, the new construction activity in repair and remodeling continued to perform well in both sides of the HIP business.
John Roberts: And then you noted merchant chlorine volume was up sequentially Q-over-Q. Was that largely greater availability given the weakness in vinyls, or was demand actually strong in chlorine?
Albert Chao: You know, in the summertime, there is a pickup for water treatment activity in chlorine, and so that’s part of that story, John.
John Roberts: Okay. Thank you.
Albert Chao: You’re welcome.
Operator: Thank you. One moment. Our last question comes from the line — Hassan Ahmed at Alembic Global Advisors. Please proceed.
Hassan Ahmed: Good morning, Albert and Steve.
Albert Chao: Good morning
Hassan Ahmed: Question around ECU pricing. Operating rates globally seem to be quite depressed, yet, I know caustic soda pricing has come down recently, but on an ECU basis, pricing relative to history continues to be quite strong. So my question really is how sustainable are those pricing levels?
Albert Chao: Well, demand for chlorine derivatives are still strong. PVC, we mentioned globally, even though come – global prices has bottomed out. We believe, will improve. And housing demand, we think both new construction and repair and remodeling R&R is still pretty strong. And global demand in India is coming out of the monsoon, the demand coming back. So I think chlorine demands are very, very strong, but I will say that it’s really peaking, but it’s coming back on the bottom. I think caustic is really far of the general industrial activity. And in the US so far, we still have positive GDP. And I think most of the countries in the world are having possible GDP in Europe and Asia, but at a low level. So as they improve, I think the demand will be strong and more so, as I mentioned earlier, there’s very little new capacity added around the world as demand continues to grow, hence makes the supply-demand tighter going forward.
Hassan Ahmed: Understood. Very helpful. And just sort of following up where you left off on sort of chlorovinyl supply-demand dynamics. Look, one of the virtues, I guess, or positives of the chlorovinyl story was lack of investment under supply, I call it, right? And one of your large competitors recently has talked about considering sort of chlorovinyl investments in Texas, in particular. So how do you see the supply-demand story with that announcement out there now? Do you still feel that in the medium to longer term, that market will be sort of undersupplied and will continue to sort of tighten
A – Albert Chao: Well, as I said earlier, globally, there’s undersupply. So one plan would not make much difference that, as you know, this — the vinyl business, unlike the olefins business, other business, is very much integrated. You need a lot of investments, whether it’s chlorine, power plants or renewal power ethylene plants and VCM, EDC and PVC. It’s a very complete, very heavy investment and a very seasonal business. So we are looking purely on the return on investments. We certainly mentioned earlier, we’re looking at organic growth and find out which will give us adjusted return on a long-term basis but the cost capital. So we’re not looking at short-term returns on — really on a long-term basis. Long term basis, this business has been, as you know, challenging in the past.
And China is one of the major issues. And as a big — like anything in our industry, what China does have a huge impact and China going through its own review of double control energy, global warming, which area they want to allow for investments and phasing out of some high energy industries. So all of that is going on, and it’s all uncertainty going on, time will tell.
Hassan Ahmed: Very helpful, Albert. Thank you so much
A – Albert Chao: You’re welcome.
Operator: Thank you. At this time, I’m showing no further questions. And I would now like to turn the conference back to Jeff Holy for closing remarks.
Jeff Holy: Thank you. Thank you, everyone, for participating in today’s call. We hope you’ll join us again for our next conference call to discuss our third quarter 2023 results
Operator: Thank you. This concludes today’s conference call. Thank you for participating. You may now disconnect.
