US Huntsman sees modest rise in TiO2 prices by Q4

31 July 2013 22:14  [Source: ICIS news]

HOUSTON (ICIS)--US-based Huntsman expects prices for titanium dioxide (TiO2) to rise modestly by the fourth quarter, allowing earnings for the company's pigment segment to reach normal levels, the CFO said on Wednesday.

TiO2 prices have fallen sharply in the past year, dropping from an all-time high of $2.06/lb ($4,541/tonne, €3,406/tonne) in August 2012 to $1.625/lb, where they have remained since January 2013, according to ICIS.

The market has contended with bloated inventories and weak demand, caused by slow economic growth.

Huntsman has been working on the first part of the industry's problem, and the company's inventories have shrunk to about 40 days, which is normal for this time of the year, said Peter Huntsman, CEO. He made his comments during an earnings conference call.

For the industry as a whole, inventory levels are at 60 days, compared with 100 at the end of 2012, Huntsman said.

The market likely bottomed out in the first quarter, and it should improve throughout the remainder of the year, he said.

"We are seeing price stabilisation for TiO2 as the result of lower industry inventories and improving demand. We expect margin improvement in the second half of this year."

That margin improvement should come in part because of future price increases that could take place largely outside of the US, said Kimo Esplin, CFO. Those increases would be very modest.

Huntsman's competitors have already proposed price increases, with Tronox nominating a hike of 6 cents/lb and DuPont 8 cents/lb.

If successful, both would be implemented in the autumn.

Regardless of the outlook for TiO2, the product dragged down Huntsman's Q2 earnings. The company's Q2 net income was $54m, down from $128m for the same time last year.

Huntsman's attributed the decline in part to its TiO2 business, whose Q2 revenues were $334m, down 18% from $407m in Q2 2012.

Huntsman is considering several options for the business, including merging it, selling it or combining it with another business and spinning it off.

Its peers are also exploring exit options for their TiO2 businesses.

DuPont is considering spinning off its performance chemicals business, which includes the company's TiO2 unit.

Rockwood Holdings expects to leave the TiO2 business by the end of the year.

($1 = €0.75)

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By: Al Greenwood
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