09 August 2012 20:54 [Source: ICIS news]
HOUSTON (ICIS)--Titanium dioxide (TiO2) production rates at Kronos are expected to rise during the second half of 2012 on expected limited economic improvement, the US-based pigment maker said on Thursday.
“We don’t need a robust recovery to get back to a shortage situation,” CEO Steven Watson said during the company’s second-quarter earnings conference call.
"We think it’s reasonable that there will be some pick up in demand in the second half of the year,” said Greg Swalwell, chief financial officer, especially in northern Europe, where the company said its sells five times as much TiO2 than it does in southern Europe.
“Indications are that inventory levels have started trending down,” Greg said. “We believe most customers are running low on inventory and that there will be some restocking at the end of the year.”
The company’s second-quarter net income fell by 28% year on year to $64.5m (€52.2m), as sales and production volumes dropped.
Operating rates hovered at about 86% on weaker demand and higher inventories. The rate reduction was designed to reduce inventory levels that some market sources have said have held at 100 days’ supply or higher for the market at large.
Kronos did not address its second-quarter inventory levels except to say that it produced several hundred metric tonnes less than it sold during the period.
The company did not specify where rates would be during each of the year’s final two quarters, but said the rates would likely increase, giving Kronos a full-year average run rate of 90-95%.
While ore supply is expected to improve, Kronos said production costs will continue to be pressured by ilmenite-ore feedstock costs.
North American TiO2 prices will likely be assessed down for the third quarter by 5-10 cents/lb ($110-220/tonne, €89-178/tonne) by ICIS, based on market consensus so far.
Other North American TiO2 producers include DuPont, Cristal, Tronox and Huntsman.
($1 = €0.81)
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