Huntsman to boost pigment production

Salt Lake-based Huntsman Corp., the fifth-biggest U.S. chemical company, plans to spend 54 million pounds ($103 million) to expand a U.K. titanium-dioxide plant, boosting output of the white pigment by 50 percent to meet growing demand.

Production capacity at the Greatham factory will increase by 50,000 metric tons, bringing total U.K. output to 150,000 tons by early 2008, Huntsman said Wednesday in a statement. The company currently can make 550,000 tons of titanium dioxide a year, or 12 percent of global capacity, at seven plants, spokesman Don Olsen said.

Chief Executive Officer Peter Huntsman plans to sell commodity units by the end of the year to focus on specialty chemicals, including pigments. Demand for titanium dioxide, used to add opacity and brightness to paint, paper and plastics, follows global economic growth, and little capacity has been added in recent years, Olsen said.

The U.K. expansion is "the first of several major steps" to strengthen the pigment business that will be announced over the next several months, the company said in the statement.

Shares of Huntsman rose 53 cents, or 3.1 percent, to close at $17.46 on the New York Stock Exchange. Before Wednesday, they had dropped 21 percent in the past year.

Huntsman is the world's fourth-biggest titanium-dioxide producer with capacity 10,000 metric tons behind Tronox Inc., UBS Securities analyst Jeffrey Cianci said last month in a report. DuPont Co. is the largest with 1.14 million tons of annual capacity, followed by Lyondell Chemical Co. with 670,000 tons.

Limited capacity additions over the next five years will increase plant operating rates gradually, boosting producers' profit, Cianci said. Cash margins for titanium dioxide will average 20 cents to 25 cents a pound through 2008, higher than historical averages, he said.

Dow Chemical Co. is the biggest U.S. chemical producer by 2005 revenue, followed by Exxon Mobil Corp., DuPont and Lyondell.