A cyclical rebound takes hold alongside merger risk
- Polyurethanes is the core business, driving the bulk of revenue and setting the pace for earnings.
- The Q2 2026 results confirmed a cyclical turn, with MDI pricing improving across the Americas, Europe, and Asia.
- Polyurethanes segment adjusted EBITDA more than doubled year-over-year to $66 million in Q2.
- Advanced Materials continues to be a bright spot, helped by aerospace, power, and automotive demand.
- The planned Olin merger adds scale but brings approval, leverage, and integration risk to shareholders.
A trough passed, if pricing holds
Huntsman is a cyclical chemical company climbing out of a hard downcycle. The key change is in Polyurethanes, its largest segment. The second quarter of 2026 showed a material inflection, with MDI pricing rising across all three major global regions and volumes growing in the Americas and Europe.
The bull case is gaining traction. Because MDI pricing held and expanded, Huntsman successfully offset higher raw material costs, driving a major jump in segment profits. The Advanced Materials segment also gives the company a higher quality pocket, with strength in key industrial markets.
The bear case remains tied to macro risks. Europe is still structurally costly, China has too much chemical capacity, and a weaker global economy could wipe out the early price gains. Furthermore, the fixed exchange ratio of the Olin merger means Huntsman shareholders bear the risk of Olin stock price declines.
The planned all-stock merger with Olin is central to the long term story. It could create a larger chemical company with cost savings and better raw material links. It could also fail to win regulatory approvals, miss synergy targets, or distract management at the wrong point in the cycle.
Specialty chemicals, cyclical profits
Huntsman earns money by making chemical products and formulas for other companies. Its customers use those chemicals in insulation, cars, shoes, coatings, fuel additives, aircraft parts, adhesives, and industrial equipment.
The company competes on plant scale, product know-how, and customer support. In products such as MDI, amines, and epoxy formulas, the goal is to sell more than a basic commodity by helping customers meet exact performance needs.
The model struggles when supply is too high or demand is too weak. Huntsman has been cutting costs, closing or consolidating sites, and moving some functions to lower cost hubs, especially as Europe becomes less competitive.
Cash matters heavily because chemical cycles can last longer than investors expect. Huntsman cut its common dividend by 65% in late 2025, a clear sign that management prioritized liquidity during the worst of the recent slump.
What Huntsman sells
MDI
MDI is the key polyurethane chemical used in foam insulation, automotive parts, and construction products. It drives a large part of Huntsman earnings power when pricing is firm.
Polyols and TPU
Polyols and thermoplastic polyurethane support uses such as footwear, flexible materials, and industrial parts. They add breadth to the Polyurethanes segment.
Amines
Amines go into fuel and lubricant additives, coatings, and other industrial uses. Earlier supply disruptions have now been resolved.
Maleic anhydride
Maleic anhydride is used in coatings, composites, and related industrial materials. Huntsman has been reshaping this area after a major facility closure in Germany.
Epoxy and acrylic formulations
These advanced formulas are used where strength, weight, and reliability matter. Aerospace, power, and automotive demand keep this area growing.
Aerospace materials
Aerospace is a higher quality end market inside Advanced Materials. Management expects growth slightly above aircraft build rates because Huntsman is winning more content per plane.
Polyurethanes sets the tone
Mix is based on Q1 2026 reportable segment revenue before intersegment eliminations. Polyurethanes remains the dominant driver of the story.
What could break the rebound
MDI price gains fade
High impact · Medium oddsThe recovery case depends on global MDI pricing holding up. If customers resist further increases or supply loosens, the margin turn could fail to persist.
Europe and China stay structurally weak
High impact · High oddsManagement has called out European deindustrialization and Chinese overcapacity as major problems. Europe faces high energy costs, while China can flood markets with excess chemical supply. That can cap global pricing.
Olin merger does not deliver
High impact · Medium oddsThe Olin deal could add scale and cost savings, but it is a large merger in a cyclical industry. The fixed exchange ratio of 0.5476 shares adds price risk. Approval delays or missed synergy targets could hurt shareholders.
Raw material and energy squeeze
Medium impact · Medium oddsManagement has successfully absorbed higher raw material costs through price increases in Q2. That only works if price moves stick. Energy shocks or feedstock disruptions would pressure gross profit fast.
In one breath
What is Huntsman most important business?
Polyurethanes is the most important segment by revenue and profit. In Q2 2026, it saw a significant jump in adjusted EBITDA.
Why does MDI pricing matter so much for Huntsman?
MDI is a core chemical used in polyurethane products such as insulation and automotive materials. When MDI pricing is weak, Huntsman margins can fall even if volumes improve.
Is the Olin merger good or bad for Huntsman shareholders?
It could be good if the combined company wins approvals, cuts costs, and improves its raw material position. It could be bad if integration costs are high, approvals take longer than expected, or the promised savings do not arrive.
Why is Finn cautious on Huntsman?
The company has turned a corner in Q2, but the macro environment is still difficult. The pending Olin merger also adds execution and stock price risk to the story.
