InterviewUS Huntsman's Tronox bid to strengthen TiO2 market

31 August 2009 17:56  [Source: ICIS news]

HOUSTON (ICIS news)--Huntsman's $415m (€291m) bid to buy three pigment plants from the bankrupt Tronox removes uncertainty for the future of the sites, strengthening the market for titanium dioxide (TiO2), a consultant said on Monday.

"There was a great deal of uncertainty in the minds of pigment consumers as to what's going to happen to Tronox," said Jim Fisher, chief executive of IBMA, a US consultancy for TiO2 pigments and minerals.

That uncertainty undermined Tronox's ability to raise prices, Fisher said.

"That uncertainty is now gone," he said. As such, he said, producers may successfully raise prices.

In addition, prices for TiO2 could increase as the key US housing market continues to recover, Fisher said. Pigment prices could increase through the end of this year and into 2010, he said.

If Huntsman's bid is successful, it should strengthen the company's pigment unit, since the Tronox plants all use the chloride process. All but two of Huntsman's TiO2 plants rely on the sulphate process, according to the company's annual report.

Pigment produced through the chloride process is preferable in several applications, Fisher said.

Plus, the chloride process consumes less energy and generates less waste than the older sulphate process, according to an annual report from Tronox.

Huntsman's bid came as a surprise, since the company's executives had said that they did not have long-term interest in the TiO2 market, Fisher said. "I think this says that at the right value, they have an interest in it."

Tronox's TiO2 plant in Savannah, Georgia, was excluded from the Huntsman bid.

That plant will likely be permanently closed, Fisher said. "That plant has been a high-cost operation or many, many years."

Huntsman's offer could still be beat by a higher bid. Moreover, it needs approval from the bankruptcy court and from regulators.

The following lists the Tronox plants included in Huntsman's bid:

Location	Capacity
Hamilton, Mississippi	225,000 tonnes/year
Kwinana, Western Australia*	110,000 tonnes/year
Botlek, the Netherlands	90,000 tonnes/year

*joint venture with Exxaro Resources

($1 = €0.70)

For more on TiO2 visit ICIS chemical intelligence
For more on Huntsman visit ICIS company intelligence
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By: Al Greenwood
+1 713 525 2653

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