TiO2 market near bottom of trough - Tronox

14 February 2008 00:02  [Source: ICIS news]

HOUSTON (ICIS news)--The titanium dioxide (TiO2) market could be at or near the bottom of a cyclical trough, US pigments producer Tronox said on Wednesday.

Global industry growth could reach or exceed 3% this year, the company said.

The company’s basic strategy is to maintain market share during this “challenging” period, said Tom Adams, chairman and chief executive. He made his comments during a conference call with analysts.

While Adams would not forecast when the US could emerge from a recession, he said signs of health in the TiO2 market would be a harbinger of the nation’s recovery.

He said the slowdown in the TiO2 market, which he estimated to have begun in mid to late 2006, preceded the recession under way in North America. Both the TiO2 market and the broader economy continue to ail.

This week, Tronox reported preliminary losses of $57.4m (€39.6m) during fourth-quarter 2007.

Several factors have exerted downward pressure on industry margins.

Raw materials costs have risen precipitously, ocean-going coke and ore freight costs peaked in November but remain elevated, and caustic soda hit a record high in December, Adams said.

North American fourth-quarter demand for TiO2 fell from the same time last year, he said. In addition, summer price initiatives from Tronox and other producers were not implemented until late last year - and then only partially.

For the industry to correct itself, Adams said producers will need to continue reducing operational costs, possibly reduce capacity and, crucially, raise prices to recover margins. Tronox's own internal efforts are a year ahead of schedule, he said.

“This industry will require price increases to sustain the business and justify reinvestment,” Adams said.

($1 = €0.69)

By: Larry Terry
1 713 525 2653

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