Chemours sees double-digit growth potential for TiO2 volumes in 2021 - execs

Author: Joseph Chang


NEW YORK (ICIS)--US-based Chemours sees double-digit volume growth potential for its titanium dioxide (TiO2) business in 2021, senior executives said on Friday.

“We see an opportunity in a tighter market dynamic which we’re experiencing today to regain share, and therefore to take a disproportionate share of the high-grade pigment growth as we go into this year,” said Mark Newman, chief operating officer of Chemours, on the company’s Q4 earnings conference call.

“That could translate to even low double-digit growth potentially as we look to the full year,” he added.

The executive expects the overall TiO2 market to grow in the mid-to-high single digits in 2021.

“Don’t forget that we have capacity… to meet the needs. And the way our AVA (Assured Value Agreement) contracts are structured, if the market grows… we grow with them,” said Chemours CEO Marke Vergnano on the call.

“We have the capacity and ability to grow beyond market growth,” he added.

In Q4 2020, Chemours’ Titanium Technologies segment saw sales gain 13% year on year to $691m and adjusted earnings before interest, tax, depreciation and amortisation (EBITDA) up 30% to $149m. Volumes were up 17% in an unseasonably strong Q4 while price was down 6%.

TiO2 volume momentum appears to be continuing in early 2021.

“In the fourth quarter I think we saw every segment, every region have significant growth. We’re seeing that continue as we go into the beginning of this year,” said Vergnano.

The CEO aims to get Chemours’ TiO2 volumes back to its “capacity share” by the end of 2021 or early 2022. The company had lost market share after the introduction of its AVA contracts in early 2019 but has been steadily gaining back share since, including through its online Flex Portal.

For upside pricing opportunities, customers under AVA contracts get price stability with some adjustments possible based on producer price index (PPI) movements.

Thus, most of the pricing opportunity will be in Chemours’ online Flex Portal where prices offered for certain volumes can be adjusted. Volumes sold through distributors also have more price flexibility.

“The Flex Portal obviously gives us the biggest opportunity on price… We have the ability to move that price every day and in fact we continually move that price, and that is moving on a steady stream up right now,” said Vergnano.

In the Titanium Technologies (TT) segment, Chemours will target its capital spending (capex) to lower costs.

“A lot of the capex we’re going to use on the TT (Titanium Technologies) side is… to drive down cost, whether that is to expand our ore capability at our Florida and Georgia mines, or whether it’s to allow us to use the lower grade ore across the broader portfolio of Chemours,” said Vergnano.

Chemours has contracts in place for most of its ore supply, so there should be minimal impact on the cost side from rising ore prices, he added.

For Titanium Technologies, the company expects a “modest cost step-up” in 2021 from transient sourcing issues and spending to support increased operating rates.

Focus article by Joseph Chang

Thumbnail image shows white paint, which is made with TiO2. Photo by Shutterstock