12 February 2013 21:23 [Source: ICIS news]
HOUSTON (ICIS)--The world titanium dioxide (TiO2) market should return to more normal operating conditions by the end of the year as demand recovers from a destocking binge, the chief executive of US-based Huntsman said on Tuesday.
Destocking characterised the industry in the third and fourth quarters of 2012, said CEO Peter Huntsman, who made his comments during a fourth-quarter earnings conference call.
"You definitely see destocking that is taking place," he said. "You see customers that are burning through their inventories."
The destocking was prevalent in Asia, and for the industry to turn around, year-on-year growth needs to return there, Huntsman said. That has started, and destocking seems to have come to an end in Asia, he said.
For the first quarter of 2013, volumes should rise slightly from the fourth quarter, but sales prices should fall, Huntsman said.
As such, the company's pigment earnings should bottom out in the first quarter before volumes and selling prices improve in the second half of the year.
By the end of 2013, the industry should return to more normal conditions, Huntsman said.
Regarding prices for feedstock titanium ores, if they are compared on a contained-titanium basis, ilmenite is about $600/tonne (€450/tonne), Esplin said. Rutile and slag are about $1,600/tonne.
Huntsman has been upgrading some of its sulphate slag plants so that they can consume more ilmenite, the company said during its conference call for its Q3 earnings.
For 2012, TiO2 made up nearly 13% of Huntsman's revenue through the company's pigment segment.
The segment reported sales of $1.44bn (€1.08bn), down about 12% from $1.64bn reported for the same time in 2011.
The pigment segment reported $362m in 2012 adjusted earnings before interest, tax, depreciation and amortisation, down almost 29% from $508m reported for 2011.
For the fourth quarter, adjusted EBITDA was $10m, down from $145m reported for Q4 2011.
The substantial drop in earnings came as North American TiO2 prices fell in the fourth quarter.
The fourth-quarter prices fell by 20 cents/lb ($441/tonne) to $1.55-1.70/lb, according to ICIS.
($1 = €0.75)
Additional reporting by Larry Terry
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