TiO2 destocking to end in Q4 – Huntsman CEO

02 November 2012 16:45  [Source: ICIS news]

HOUSTON (ICIS)--Destocking in the titanium dioxide (TiO2) market should come to an end in the current fourth quarter, with demand stabilising in 2013, the CEO of US-based chemicals firm Huntsman said on Friday.

“We believe that destocking will be completed by the end of the fourth quarter, and demand will stabilise and gradually pick up in the first half of 2013,” Peter Huntsman told analysts during the company’s third-quarter results conference call.

“Throughout 2013, we expect a recovery to a more stable and healthy level of earnings [in the TiO2 pigment business],” Huntsman said.

However, in the near-term, Huntsman’s TiO2 margins will remain under pressure and demand will remain weak, and despite better demand in 2013, Huntsman’s pigment earnings are not likely to be much better in 2013 than in 2012, he said.

Huntsman reported a 55% year-on-year decline in adjusted earnings before interest, tax, depreciation and amortisation (EBITDA) in its pigment business in the third quarter, to $72m (€55m), as volumes fell 30%. Sequentially, the segment's earnings were down 46% from the 2012 second quarter.

Huntsman’s third-quarter pigment volumes fell in particular in Asia and Europe amid lower consumer and infrastructure spending.

Peter Huntsman added that with its large position in sulphate-based TiO2 production the company “is in a unique position to take advantage of the lowest-price ores in producing our TiO2.”

He rejected suggestions that sulphate-based TiO2 is a product of the past, being replaced by chloride-based TiO2.

“If you look at all the capacity that has been added to this industry in the last couple of years, it has all been sulphate, and I have yet meet a single paint customer willing to pay anything more for chloride than for sulphate,” he said.

Huntsman’s overall adjusted third-quarter EBITDA for all five business segments rose by almost 16% year on year to $401m, well above analysts’ estimates, Hassan Ahmed, head of research at New York-based equity research firm Alembic Global Advisors said in a note.

Huntsman managed to improve margins in all segments in the third quarter, with the exception of pigments, Ahmed said.

Margins were particularly strong within Huntsman’s polyurethanes segment, mainly on the back of methyl di-p-phenylene isocyanate (MDI) strength,” Ahmed said.

“Huntsman’s pigments segment margin declines, while large, were in line with our expectations and recent third-quarter 2012 results reported within the performance chemicals segment at DuPont,” he added.

($1 = €0.77)

By: Stefan Baumgarten
+1 713 525 2653

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