Albert Chao: Absolutely. I think as you mentioned, we’ve been seeing destocking pretty much through the whole year. And I think most companies mentioned earlier, the destocking activity is over. The question is what is the true demand? And people are really — because high interest rates — high inventory costs are expensive to carry, people are really ordering what they need. The issue is their need changes. And they don’t know — they’re very short-term oriented now. And so, as demand came down, we have more ability to serve. As you know, back in 2022, our HIP business, we have a backlog over a year of certain products, and that’s not good for our customers. So now, by and large, most of our businesses we are ready to serve our customers in a relatively short notice.
So, we — as a producer, we carry a bit more inventory to serve our customers which also benefits from any import competition and the businesses. But having said that, we don’t know and customers don’t know what is the true demand, and we are ordering — they’re ordering as only they need and we’re supplying them. And as you said, when the market turns and they want more of a reasonable higher level inventory, then will be a multiply effect, if that — you can say that to production in the future. But who knows when that market turn will be. On the housing side, generally speaking, springtime, which starts probably February, March is when people are seeing benefits of the weather and they start putting sticks in the ground and do that.
So, we should see some signs of improvement on housing in February, March related. But who knows? Time will tell.
Operator: [Operator Instructions] Our next question comes from the line of Michael Sison from Wells Fargo.
Michael Sison: Hey guys, can you hear me?
Steve Bender: Yes, we can, Mike.
Michael Sison: Albert, where do you think you’re going to run your chlor-alkali facilities in the fourth quarter in terms of the operating rate? And how do you think about that as you head into next year, if demand continues to be sort of challenged?
Albert Chao: Yes. Our operating rate pretty much follows the industry operating rates, and as mentioned earlier, generally, the demand goes down in the fourth quarter and the first quarter. So, our industry operating rate tends to go down and picks up again in the second and third quarter. And this is the general pattern. And of course, as Steve mentioned, we have not only seasonality, but also impact of high interest rate on the demand for construction activities. So, those are compounded effects.
Michael Sison: Got it. And then, if — when you think about PVC demand in 2024, if demand weakens, as you head into ‘24, how do you think you run your facilities to sort of compensate for that? Will you pull back some capacity or just sort of run it as is?
Albert Chao: Yes. The industry has pulled back — we have pulled back capacities when the demand is not there. But as I mentioned, that in the vinyl industry, we are one of the more fully integrated companies going for — all the way from making ethylene and chlorine down to making pipes, windows and sidings and compounds. And the further you go down, the more easy for you to reach out a broader customer base. And for PVC resin, we don’t export much HIP business, but PVC resins, mentioned the industry exports about 35% of production. And we are the lowest cost producer in the world for PVC, we being American vinyl producers. So now, the margin is good enough. Our industry will export PVC, and we’ll also benefit the upstream chlorine, ethylene side.
Operator: Our final question comes from the line of Arun Viswanathan from RBC Capital Markets.
Arun Viswanathan: So, I guess, my first question — I have two questions. So first question is on HIP. When you, I think, discussed this segment in the past, you’ve noted kind of a 15% to 20% EBITDA margin range. You’ve done very well in executing here. And do you think that’s still the appropriate range to consider? And could you potentially go well beyond that range in a higher volume environment? I’ll start with that.
