15 November 2013 09:52 [Source: ICB]
A weak North American market makes a Q1 price increase less likely. A hike could come in Q2 2014
North America titanium dioxide (TiO2) prices are more likely to rise in the second quarter of next year than in the first quarter, US-based pigment producer Tronox said on 7 November.
Despite improved inventory levels, which most sources estimate at about 60 days, “we think there is still some excess inventory in the system”, chairman and CEO Tom Casey said during the company’s Q3 earnings call.
That and seasonally soft sales in the fourth quarter of this year and the first quarter of 2014, he said, will keep any price gains “to a relatively modest level, if at all”.
Three major producers – Tronox not among them – have announced efforts to raise first-quarter prices by 5-6 cents/lb ($110-132/tonne, €81-98/tonne).
“I think it’s fair to say that we see recovery as a bit more extended,” he said, adding that price increases are likely in the second and third quarters of 2014, when demand picks up again in the northern hemisphere.
INVENTORIES STILL HIGH
Inventories didn’t fall as quickly as the company hoped they would, but Tronox said it intends to see stocks slip to about 50 days’ supply by the start of the second quarter.
Casey predicted operating rates would stay in the low- to mid-80% range through the early part of next year.
Tronox previously reported a net loss of $49m in the third quarter on increased expenses, despite an incremental increase in net sales.
“We remain confident in the industry,” Casey said. “It’s obvious that it’s taken us a little longer to turn the corner… but we believe we are at that point.”
Casey added that Tronox is aggressively seeking acquisition opportunities, noting the strength of the company’s vertical integration but not specifying any targets.
“We think the market is ripe for consolidation, and we intend to continue to participate in that process,” Casey said, while achieving a vital low-cost structure over the next few years.
To that end, he added: “You can assume that if there are any TiO2 assets that move from one owner to another and they don’t move to Tronox, it’s because Tronox didn’t want them at the price they were sold at. We’re looking at everything.”
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