DuPont May Delay Mexico Pigment Plant by 12 Months

DuPont Co., the world’s biggest maker of titanium dioxide pigment, will delay the start of a plant to make the whitening chemical by as much as a year because of weak demand.

The new line in Altamira, Mexico, will be completed in 2015, Wilmington, Delaware-based DuPont said today in a regulatory filing. The company previously said the Mexican facility could be operating by late 2014.

“The timing for the startup will be adjusted by up to 12 months based on market conditions and customer needs,” Gregg Schmidt, a DuPont spokesman, said today by phone. “We have not changed the investment decision.”

Titanium dioxide, which is used to add opacity to paints and plastics and is known by its chemical formula TiO2.

DuPont is spending $500 million to boost TiO2 capacity at the Altamira site by 200,000 metric tons a year. TiO2 pigment prices have declined about 20 percent from their mid-2002 peak, according to Bloomberg Industries. TiO2 margins will drop as much as 9 percentage points this year, DuPont said Jan. 22, compared with an earlier forecast of as much as 7 points.

Delaying the plant start “makes complete sense because pricing is down and demand is weak,” Hassan Ahmed, a New York-based analyst at Alembic Global Advisors, who rates the shares hold, said in an interview. “All we have seen is every quarter earnings have gone down.”

Chairman and Chief Executive Officer Ellen Kullman is forecasting per-share profit growth of 2 percent to 7 percent this year as lower earnings from TiO2 offsets gains in other units. The TiO2 market should stabilize by midyear as excess inventories are used up and demand hits bottom, Kullman said Jan. 22.

Kullman said on an Oct. 23 conference call that the Altamira plant would start in “very late 2014, early 2015.”

The Altamira expansion would add about 3 percent to global supplies, Vincent Andrews, a New York-based analyst at Morgan Stanley, who rates the shares hold, said today in a note.