US DuPont looks to 2013 for recovery in TiO2

23 October 2012 19:07  [Source: ICIS news]

US DuPont looks to 2013 for recovery in TiO2HOUSTON (ICIS)--DuPont expects its titanium dioxide (TiO2) business to begin improving next year, primarily because of higher infrastructure investments in China and elsewhere in Asia, a stabilisation in Europe, as well as continued growth in US housing, company executives said on Tuesday.

In addition, DuPont remains committed to its TiO2 expansion plans, despite a difficult 2012 third quarter and tough near-term prospects in that business, they said.

The TiO2 market should bottom out in the first half of 2013 but then recover, CEO Ellen Kullman and investor relations vice president Karen Fletcher told analysts during DuPont’s third-quarter results conference call.

“As we look out to next year we do see some stabilising forces around TiO2,” Kullman said.

She pointed to continued improvements in the US housing market and expectations of higher infrastructure spending by China as that country’s government transitions to new leadership.

“Yes, it is going to be a tough end of [2012], but we see stabilisation occurring in the first half of next year, and as the macro-economic picture plays out we can get more specific on that,” Kullman said.

At the same time, DuPont remains committed to its planned TiO2 expansions at Altamira, Mexico, and other sites, Kullman said.

“We will bring on the expansions in a very disciplined manner and will continue to gauge the market, but we are committed to those expansions, and I think they will serve us well over the long term because demand of TiO2 is going to continue to grow at about GDP,” she said.

Altamira could start up in late 2014/2015, but “whether it’s delayed a quarter or whatever, time will tell, as this market plays out”, she added.

However, for the 2012 fourth quarter, DuPont projects a further fall for TiO2, after a decline in the third quarter, as TiO2 sales suffer in weak industrial and construction markets, particularly in Asia, Karen Fletcher said.

“We expect continued softness [in the fourth quarter] while TiO2 producers reduce existing inventory levels,” Fletcher said.

“On a positive note, customer inventory levels have declined from previous highs and long-term industry fundamentals remain solid,” she said.

“Long-term growth remains tightly correlated with GDP, so for now we continue to stay close to customers and drive productivity, and we look for this market to bottom in the first half of next year,” she said.

For the three months ended 30 September, sales in DuPont’s performance chemicals business, which includes TiO2, fell 19% year on year to $1.7bn (€1.3bn).

Sales declined on lower demand for TiO2 and fluoropolymers, with volumes pressured by softness in Europe and Asia-Pacific primarily due to lower infrastructure spending and weak construction markets.

Meanwhile, stock prices for DuPont and other US producers of TiO2 plunged on Tuesday following the release of DuPont's third-quarter results.

Additional reporting by Larry Terry and Al Greenwood

($1 = €0.77)

By: Stefan Baumgarten
+1 713 525 2653

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