No upturn seen in US housing market in 2012-13 - Rockwood CEO

19 October 2011 20:02  [Source: ICIS news]

Housing to see no upturnHOUSTON (ICIS)--Rockwood Holdings’s CEO expects no upturn in the US housing market next year or the year after, he said on Wednesday.

“We are not optimistic about that for 2012 or 2013,” said Seth Ghasemi, chief executive at the US-based specialty chemicals firm, in an earnings conference call.

Rockwood makes titanium dioxide (TiO2), a major ingredient in architectural paints and coatings and considered a good chemical indicator of the health of the US housing market.

Housing, in turn, is a large end-market for such chemical products as plastic pipe, insulation, paints and coatings, adhesives, roofing materials and synthetic fibres.

The American Chemistry Council (ACC) estimates that each new home built represents $16,000 (€11,520) worth of chemicals and derivatives used in the structure or in the production of component materials.

While Rockwood’s third-quarter sales of TiO2 rose 31%, Ghasemi said the jump stemmed from increased pricing because of higher raw material costs. Actual TiO2 volumes declined 17% from low demand.

Ghasemi said the company now is sold out, but it will make more.

“What we do know is that we are going to raise our prices by 8%” in the fourth quarter, Ghasemi said. “At the end of the day, it doesn’t drive our numbers.”

The products that did much of the driving in the third quarter and pushed Rockwood to almost double its net income to $75.9m from $38.0m in the same period last year were its lithium, surface treatment and additives businesses.

Ghasemi said the slowdown in consumer electronics had impacted sales of lithium, which is used in batteries, but that drop was more than offset by the demand increase in power tools and batteries for electric cars.

Rockwood has already announced a lithium price increase of 20% for the fourth quarter, and Ghasemi expects the market will accept the raise.

“What’s going to happen in 2012, that’s anybody’s guess,” he said.

($1 = €0.72)

For more on TiO2, visit ICIS chemical intelligence

By: Lane Kelley
+1 713 525 2653

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