Michael Sison: Got it. And then when you think about 2024, what do you think could happen to China, Auto and some of your end markets? Any initial thoughts when you talk to customers of what the demand environment could be next year?
Lori Ryerkerk: Yes. Again, if you can tell me what December is going to look like, maybe I would be better at thinking about 2024. I mean things are very uncertain and volatile at this point. I would say on Auto, consistent with the forecast you are seeing on auto build, we expect to see some moderate growth in Auto, really across all sectors, a couple of percent. And our growth should track that. We expect medical continue to be strong. I would say, based on conversations with customers, I would expect some moderate growth across next year as we start to see some demand coming back. But I would also say the timing of when that starts and the pace at which that happens is very uncertain. So certainly a lot less conviction at this point on next year than we might usually have at this point given the volatility we are seeing.
Operator: Next question today is coming from Josh Spector from UBS. Your line is now live.
Joshua Spector: So I wanted to follow up on the price cost or like the inventory or lower cost inventory that can flow through. I guess, Lori, you sound a bit more uncertain on that, but it still could be large I guess if you look at where pricing is in fourth quarter, is that a level if that holds, you would actually get a spread benefit into next year? Or do you need pricing to move up from here? Just wondering around the kind of moving parts there.
Lori Ryerkerk: No. Look, even I think at the pricing we are seeing now, we are starting to see some pull through of that lower cost inventory, and we see that as a moderate impact on our quarter-on-quarter growth. So I think even at these pricing, we would expect to continue to see some portion of that pull-through. . Obviously, if we saw pricing increase, that would help more, but we also have to consider what the price of rods going in, and we are seeing some upward pressure on raw materials this quarter as well. But look, I would say in all cases, we expect some impact from that flushing through of higher cost inventory. It is just the magnitude will depend on raws as well as future pricing.
Joshua Spector: Okay. Yes. I guess just maybe depend that when you talk about it being the biggest bridge item, if pricing stays where it is, is that a true statement? Or does that come down?
Lori Ryerkerk: I would say pricing in raws stay where they are, that would still be a true statement. .
Operator: Next question today is coming from Vincent Andrews from Morgan Stanley. Your line is now live.
Vincent Andrews: I just wanted to ask a couple of things. One, in Acetyl’s in the third quarter, there clearly was a benefit despite a bunch of headwinds from outages in Asia. So I’m wondering if you have any way of sort of sizing that in the third quarter and what you anticipate in the fourth quarter? It seems like there is some comments that you are still going to have some higher pricing flowing through in the fourth quarter. And I’m just wondering if that is just sort of a delay of inventory flowing through or what? And then secondly, on the tax rate, I understand why it is lower this year and that it was originally contemplated in the lower guidance. But if the demand environment is going to stay not all that different from where it is today at least through the first half of next year, does that mean you have a lower-than-normal tax rate next year as well?
Lori Ryerkerk: Yes, Vince, let me see if I can answer that. What I would say is we did see a positive influence from the higher Asia pricing that we saw as a result of supply outages in the third quarter. Most of those occurred in the last few weeks of the year. I would think of those as pretty much offsetting the impact of the contract pricing reduction that we had called out and the turnaround impact that we saw. . What I would say is, going into the fourth quarter now, we have seen that price drop back to closer to the cost curve, maybe slightly above it. So we have kind of lost that benefit in China. We will see a little bit of benefit, although significantly less of that in the Western Hemisphere in the fourth quarter. because typically, Western Hemisphere pricing lags by about a quarter. So we will see some benefit, but not to the same extent that we saw the benefit in the third quarter.
Scott Richardson: And then on the tax rate, Vincent, a lot is just going to depend upon the geographic mix of earnings, if things stay exactly as they are this year, then certainly, we could be at lower levels. If we things normalize back to kind of what I would say is the normal mix of geographic demand, then we’d be back more next year in that kind of 12% range.
Operator: Next question today is coming from David Begleiter from Deutsche Bank. Your line is now live.
David Begleiter: First, congratulations to Scott Truck & Ashley. Lori and Scott, just on EM pricing. Pricing is up about 38% in 2021, 2022, should be down this year, maybe around 8%. If we do go back to pre 2021 cost levels, do we retain some portion of this price increase? And if so, why is that the case?
Lori Ryerkerk: That seems like a very long time ago, Dave. What I would say is the good news is we are seeing volumes come back. And so in some areas, like medical, like auto, we are kind of back to 2019 levels. I think – so pricing similar, our margins probably similar. Again, consumer demand, durable goods, electronics, very, very soft. Pricing for differentiated grades, okay, I think that is something that we can keep I think with the kind of the current low demand and therefore, the long supply for some of those standard grades, we are going to need to see some more demand before we can get the pricing back up to those kind of levels.
Scott Richardson: Yes. David, I would just add, I think given some of the structural changes that we are making, we do think we should be able to hold that price as we get back to kind of normalized raws. And I think one of the things we have talked about is now with the Engineered Materials business and the acetyls business being about the same size, as we see in more normalized demand environment, the raw material landscape move up and down, we should see some countermovement in margins in EM versus acetyl. So overall, it should kind of fundamentally lower earnings volatility for the enterprise as a whole once we get back into kind of normalized conditions.
David Begleiter: Very good. And just on Clear Lake, the expansion for next year, how should we think about the ramp-up to the $100 million of normalized annualized earnings should be half of that next year in that range or something more or less?
Lori Ryerkerk: Yes. Look, the Clear Lake asset expansion will start up within the first quarter. And so I would expect that ramp up to start kind of immediately after the startup.
