Huntsman to Boost Texas Output on Cheaper Gas Supplies

Huntsman Corp. (HUN), the world’s biggest maker of textile dyes, plans to increase production of ethylene and related chemicals in Texas and is evaluating additional expansion projects to take advantage of cheaper natural gas.

Ethylene oxide capacity at Huntsman’s Port Neches, Texas, plant will rise 25 percent from 1 billion pounds a year, Chief Executive Officer Peter Huntsman said today in an interview. The chemical will be used in the manufacture of ingredients used in soaps, resins and other products. An adjacent ethylene plant will expand by 50 million to 75 million pounds from 450 million pounds, he said.

“If you did not see the cheap gas that we see today in North America, I doubt very much that this project would be taking place,” he said in a telephone interview from his offices in The Woodlands, Texas.

Huntsman, Dow Chemical Co. and Westlake Chemical Co. are expanding U.S. production after rising gas output from shale rock helped push domestic prices to a decade low. Cheaper gas is doubly advantageous for chemical makers, who use it for energy and as a raw material. Huntsman is evaluating other projects for the U.S., the CEO said.

“I hope we are in a position here in the next quarter to announce further expansions based on the competitive raw material situation,” Huntsman said.

The Port Neches expansions should be operational in 18 months to 24 months, he said.

Rockwood Bid Unlikely

The company, which is based in Salt Lake City, Utah, doesn’t plan to build a domestic ethylene plant or join with other companies on such a project, Peter Huntsman said.

Huntsman also is unlikely to bid for Rockwood Holdings Inc. (ROC)’s titanium-dioxide business because it would be contrary to its goal of reducing debt, Chief Financial Officer Kimo Esplin said. Rockwood, which last week said the unit may be sold or spun off in an initial public offering, may get more than $2 billion for the business in a sale, he said.

“It is unlikely that Huntsman would write a big check for that business,” Esplin said in the interview. “We are not going to leverage up.”

Huntsman today posted first-quarter earnings excluding restructuring costs and other items of 74 cents a share, topping the 39-cent average estimate of eight analysts surveyed by Bloomberg.

The shares rose 8.9 percent to $15.42 at the close in New York, the biggest gain since Nov. 30.

To contact the reporter on this story: Jack Kaskey in Houston at jkaskey@bloomberg.net

To contact the editor responsible for this story: Simon Casey at scasey4@bloomberg.net

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