17 September 2013 19:44 [Source: ICIS news]
HOUSTON (ICIS)--Huntsman’s titanium dioxide (TiO2) capacity is “pretty well sold” out, with the company’s plants running at between 80 and 90% of capacity utilisation, the CEO of the US-based chemicals producer said on Tuesday.
Peter Huntsman went on to add that there was no reason for the company to cut back or close TiO2 capacities. He was responding to analysts during a briefing on Huntsman’s planned acquisition of Rockwood’s TiO2 business.
Huntsman’s TiO2 capacity is 565,000 tonnes/year, and Rockwood’s is 340,000 tonnes/year, according to Huntsman. The combined business will have a 16% share of global TiO2 capacity, making it the world’s second-largest TiO2 producer after DuPont.
Peter Huntsman said that global TiO2 industry inventory days are currently in the low 60s, while Huntsman’s are in the low 40s.
Industry inventories should rise a bit in the next couple of months before the industry will get into “typically seasonally higher demand” in the first and second quarter of 2014, he said.
Huntsman said that global TiO2 demand was recovering after a longer weak period, and the industry is now back to “normalised profitability.”.
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The improved industry outlook was an important factor in Huntsman's decision to agree to the Rockwood acquisition. In addition, Huntsman expects to achieve “significant cost-synergies” of about $130m (€98m) from the combination of the two TiO2 businesses, the CEO said.
“This [acquisition] is an excellent opportunity for this company to create additional shareholder value, and it also is a fulfilment of our commitment to provide optionality to our pigments group in a very creative way,” he said.
Only 18 months ago, when TiO2 margins, prices and demand were falling, Huntsman was weighing options for its TiO2 business, including a possible sale, the CEO said.
Hassan Ahmed, head of research at New York-based equity research firm Alembic Global Advisors, said that some market participants had been speculating on a potential acquisition of Huntsman’s TiO2 assets by Tronox, a back-integrated global TiO2 producer.
Huntsman plans integrate the acquired business with its TiO2 business and list the combined Huntsman-Rockwood TiO2 business in an IPO within two years after closing the Rockwood deal. The deal is expected to close in the first half of 2014, subject to regulatory approvals.
DuPont said in July that it was looking at strategic options, including a spin-off, for its performance chemicals business, which includes TiO2.
($1 = €0.75)
Additional reporting by Graeme Paterson in London
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