Kronos TiO2 margins to compress in second half 2012 - Deutsche Bank

10 May 2012 23:04  [Source: ICIS news]

HOUSTON (ICIS)--North American titanium dioxide (TiO2) margins at Kronos will taper off in the second half of 2012 as low-cost inventory is depleted and production costs increase by as much as 60%, analysts at Deutsche Bank Equity Research said on Thursday.

In its report, Deutsche Bank said gross margins at Kronos will contract throughout the remainder of the year from 46.6% in the first quarter. The bank also maintained its hold rating on Kronos stock and set a target price of $22/share.

"While we expect TiO2 supply and demand to remain tight through at least 2014 due to uneven global demand patterns,” an analyst said, he added that the industry will be well-supplied intermittently.

However, most market sources currently describe plentiful supply levels and soft demand in North America.

The root of most of the past year’s price increases has been the rising cost of ilmenite ore, but Kronos expects ore costs to stabilize over the next few years, enhancing margins and eventually allowing TiO2 capacity expansions.

Other North American TiO2 producers include DuPont, Cristal, Tronox and Huntsman.

($1 = €0.77)

By: Larry Terry
1 713 525 2653

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