10 July 2012 18:38 [Source: ICIS news]
HOUSTON (ICIS)--Tronox expects better-than-expected volumes for most of its mineral sands, despite a rival slashing its own outlook earlier this week, the US-based titanium dioxide (TiO2) firm said on Tuesday.
Tronox did not name the competitor.
However, Australia-based Iluka Resources on Monday cut its 2012 production guidance, in particular for zircon and synthetic rutile, because of weak demand amid a worsening economic outlook, prompting a sharp decline in Tronox's share price.
Tronox CEO Tom Casey said that investors may have inaccurately associated the competitor’s negative market assessment with Tronox’s business operations and market position.
“While we cannot comment on forecasts of competitors, we believe it is necessary to clarify our views on our mineral sands business, particularly the aspects of it that differentiate us as the world's largest vertically integrated producer of minerals sands and pigments," Casey said.
"All of our 2012 forecast mineral sands sales other than zircon, where we are seeing sales volume reductions of 25-40%, are committed at prices that are above expectations and at volumes that are 4% higher than our original 2012 budget,” Casey said.
“We think that pigment producers, as we acknowledged in our press release 29 June, are seeing somewhat lower demand, and may be switching more of their feedstock requirements from the higher-priced synthetic rutile to lower priced slag because the input cost savings outweigh the reduced production efficiencies in a soft demand market," he added.
Tronox's primary mineral sands operations include synthetic rutile, titanium slag and zircon, Casey said.
Tronox’s recent acquisition of the Exxaro Minerals Sands business enables the company to produce pigments at a lower cost compared with pigment producers who purchase synthetic rutile from mineral sands suppliers, Casey said.
Meanwhile, demand for titanium slag is up as some pigment producers are substituting slag for higher purity, higher cost rutile and synthetic rutile, he said.
In zircon, demand continues to be soft compared with a year ago but it is not deteriorating sequentially, he said.
Casey added that Tronox views its shares as significantly undervalued. The company last month announced a programme to repurchase shares. Tronox's share price was up 5.4% to $111.01 at 12:01 hours New York time (16:01 GMT).
In related industry news on Tuesday, a DuPont executive said “recent comments regarding demand for TiO2” overstated the softness in the pigment industry.“We expect demand for TiO2 to be stronger than that of ore due in part to changes in inventory levels,” said Boo Ching Chong, president of DuPont’s TiO2 business. Chong did not say to which comment exactly he was referring.
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