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Westlake's Q2 Earnings to Surge on Robust PE, PVC Prices Amid Iran Conflict, TPH Says

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Westlake (WLK) is poised for a rebound in Q2 earnings as supply disruptions stemming from the Middle East conflict boosted prices for polyethylene, PVC, and caustic soda, TPH Energy strategists said in a note on Wednesday, although profit is still projected to fall short of Wall Street estimates.

Matthew Blair, analyst at TPH Energy, raised his estimate for Westlake's Q2 adjusted EBITDA to $608 million from $506 million, a significant recovery from $198 million in Q1 excluding inventory-related impacts. The forecast, however, remains below the consensus estimate of $645 million.

The company's Performance and Essential Materials segment is projected to account for the bulk of the improvement, with TPH projecting EBITDA of $406 million.

Global outages and supply disruptions stemming from the Middle East conflict lifted prices across key products, particularly polyethylene, where US contract and spot prices are estimated to have risen by 34 cents and 26 cents per pound, respectively, from the previous quarter.

TPH said PVC prices also strengthened, with US contract and spot prices expected to rise by about 9 cents a pound despite Chinese carbide-based producers maintaining high operating rates.

Caustic soda markets saw additional support, with US contract prices rising by about $20 per metric ton and spot prices climbing by roughly $60 per ton.

The bank said lower feedstock costs, especially for US ethane and natural gas, combined with higher operating rates, further improved margins. Westlake's PEM unit is forecast to generate more earnings in Q2 alone than it did in all of 2025.

However, TPH was more cautious on the company's Housing and Infrastructure Products segment, where it forecasts EBITDA of $227 million.

Westlake recently indicated that results would likely come in at the lower end of its full-year revenue and margin guidance ranges. Demand indicators have also weakened, with US housing starts falling to their lowest level in five years in May and the Architecture Billings Index declining amid elevated mortgage rates and rising construction costs.

Higher PVC contract prices are also expected to weigh on margins in the quarter, the bank said in a note.

Going forward, TPH expects profitability to moderate in Q3 as market conditions normalize. The brokerage forecasts EBITDA of $529 million, below the consensus estimate of $652 million.

Spot prices for US PVC and polyethylene are currently about 6 cents and 13 cents a pound, respectively, TPH said, below second-quarter averages, while operating rates are expected to ease as supply flows recover.

Price: $74.56, Change: $-1.92, Percent Change: -2.51%

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