13 November 2012 16:42 [Source: ICIS news]
HOUSTON (ICIS)--Tronox is confident that titanium dioxide (TiO2) pigment demand will improve next year, even as its 2012 third-quarter pigment sales fell by 30% and demand is expected to stay weak in the 2012 fourth quarter and the 2013 first quarter, the CEO of the US-based producer said on Tuesday.
Tronox reported third-quarter pigment sales of $279.8m (€221.0m), down from $399.4m in the 2011 third quarter because of lower volumes, particularly in ?xml:namespace>
“While demand for our pigment products has been weak, we believe the fundamental conditions underlying the demand for these products have begun to recover and we believe sales will begin to increase next year,” CEO Tom Casey told analysts during Tronox’s third-quarter results conference call.
“We remain convinced that demand will recover in 2013, and we strongly believe that our vertically integrated structure gives us a material cost advantage,” he said.
Casey said that Tronox’s customers in the paints, coatings and plastics industries have completed or soon will complete their destocking.
Meanwhile, US housing and construction markets are gaining strength, and demand in
The stronger Chinese economy will boost Tronox’s direct TiO2 sales there. At the same time, Chinese TiO2 exports to Asia-Pacific and
“This should have a positive effect on pricing in the region, into which that surplus [Chinese TiO2] supply has been shipped over the last year,” he said.
Tronox’s margins will improve with higher plant utilisation rates and the benefits from its feedstock integration, Casey said.
“As the market strengthens in the second half of 2013 and into 2014, we believe these advantages will contribute to a more rapid recovery and higher margins, cash flows and net income for us than other firms not similarly structured,” he said.
However, ongoing short-term economic uncertainty prompted Tronox to hold back on paying out special dividends for the time being, Casey said.
“We think there will be strengthening in the market in the second half of , but we cannot predict what happens with the ‘fiscal cliff’ negotiations in the US, and what happens with Greece and Spain and other eurozone considerations, or what happens with the effects of the leadership transition in China,” he said.
“The prudent course for us was to say, we are not going to [pay special dividends] now, and whether we will be doing it in the future will be a function of the cash we generate.”
In June, Tronox had said it was considered issuing a special dividend as a way to return capital to shareholders.
($1 = €0.79)
Additional reporting by Muhamad Fadhil in Singapore
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