Moody's lowers Tronox rating on squeezed margins

25 March 2008 17:20  [Source: ICIS news]

HOUSTON (ICIS news)--Moody's Investors Service has lowered the ratings of US pigment producer Tronox due to the company's inability to pass through rising costs, the ratings agency said on Tuesday.

Tronox produces titanium dioxide (TiO2), a pigment used in architectural coatings and polyvinyl chloride (PVC), Moody's said. Demand for those two end-uses has dropped due to a downturn in the US housing market.

"Tronox's and the industry's pricing power has been adversely affected by a downturn in the North American housing industry, which Moody's feels may continue into 2010," Moody's said.

At the same time, costs for Tronox continue to increase, Moody's said. As a result, operating margins have dropped from 6% in 2006 to just below break-even in 2007.

Another risk is Tronox's legacy environmental liabilities, which Moody's said are unique in size and complexity.

For more on PVC and TiO2 visit ICIS chemical intelligence

By: Al Greenwood
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