Huntsman wishes it had acquired Tronox – executive

HOUSTON (ICIS)--Huntsman wishes it could have acquired pigment producer Tronox in 2009, the chief financial officer of the US-based chemicals major said on Wednesday.

Back then, Huntsman had launched a stalking-horse bid for pigment plants of Tronox, which at the time was under US Chapter 11 bankruptcy protection. Huntsman later abandoned the bid.

“Tronox was a great opportunity, I wish we could have bought it for $500m (€365m),” Huntsman chief financial officer Kimo Esplin told analysts during a webcast investor conference in New York.

“With [Tronox's] market cap of $2.5bn today, that would have been a nice trade,” he said.

However, Esplin ruled out that Huntsman may now go ahead and buy Tronox for $2.5bn. Nor will Huntsman undertake any big acquisition that could change its credit profile, he said.

As for the pigments market, Esplin said the surge in titanium dioxide (TiO2) prices was driven by tight supplies, not demand.

“Coatings demand has not been good for three years, it’s pretty lousy,” he said.

The real drivers were TiO2 plant shutdowns during the 2008/2009 economic downturn. This meant that when demand got back to normal levels, supplies quickly became tight.

Another factor curbing TiO2 production are tight raw material supplies, Esplin said.

“Ore is very limited, and I think all of the players in the industry are scrambling to find ore to supply their current capacities, let alone further expansions,” he said.

Even with the economy staying flat, TiO2 markets should stay tight for two or three more years, he added.

Huntsman expects to expand its TiO2 capacity by about 40,000 tonnes over the coming three years, from its current capacity of about 550,000 tonnes/year, he added.

($1 = €0.73)