HOUSTON (ICIS)--Tronox keeps working to improve pricing for its titanium dioxide (TiO2) products and already had “some success” in the current Q3 in Asia and Europe, John Romano, chief commercial officer of the US-based integrated global TiO2 producer said in an update on Wednesday.
He declined to disclose details.
Overall, Tronox expects Q3 TiO2 prices flat or up slightly sequentially from the second quarter, Romano told analysts during the company’s Q2 earnings call.
The executive noted recent upward movement in prices in China.
He linked this to the run-up to the 70th anniversary celebration of the founding of China’s People’s Republic in the first week of October, plant outages, as well as tighter supplies because of stricter enforcement of environmental rules for chemicals plants.
That was putting some pressure on lower inventories, with upward pressure on pricing, he said.
Tronox's global TiO2 production network includes a 46,000 tonne/year plant at Fuzhou, China, which was part of its recent acquisition of the TiO2 business of Saudi Arabia's Cristal.
On a pro-forma basis Tronox, which acquired the Cristal business effective 10 April, reported an 8% year on year decline in TiO2 prices in Q2, while volumes rose 3%.
Romano said that since 10 April Tronox implemented price harmonisation for the combined TiO2 business and as such the year-on-year Q2 price decline was “essentially a prior-year issue” linked to Cristal’s legacy pricing approach.
Sequentially, Q2 TiO2 prices slipped only 1% from Q1, with volume up 17%.
CEO Jeffry Quinn said that amid the ongoing uncertainties in global macro-economic conditions, Tronox would improve its profitability on the back of synergies from the combination with Cristal.
Also, despite the uncertainties, TiO2 pigment markets in Europe and Asia stabilised as inventory destocking in those regions had run its course, he said.
Meanwhile, North American TiO2 market conditions remained “resilient”, he said.
He reiterated Tronox’s full-year 2019 adjusted earnings before interest, tax, depreciation and amortisation (EBITDA) guidance of $635m-$740m, but narrowed the guidance to the lower half of the range.
For Q2, Tronox reported pro-forma adjusted EBITDA of $200m – down 22% year on year from $257m in Q2 2018, but up 42% sequentially from $141m in Q1 2019.
The following table shows the company's financial performance. Figures are in millions of dollars.
|Q2 2019||Q2 2018||Change (%)|
|Cost of sales||672||348||93.1|
Additional reporting by Tracy Dang