Huntsman Corporation (HUN)

[eastunder]

Huntsman May Relocate Some Capacity to U.S. After Gas-Price Drop

By Jack Kaskey - Feb 16, 2012 2:10 PM MT

http://www.bloomberg.com/news/2012-02-16/huntsman-may-relocate-some-production-capacity-to-u-s-on-gas-price-drop.html?cmpid=yhoo

Huntsman Corp. (HUN), the world’s biggest maker of textile dyes, plans to expand chemical production in the U.S. and may relocate some capacity from other countries to take advantage of a drop in domestic natural-gas prices.

Gas is cheap enough to justify shifting some production to the U.S. for energy-intensive products such as MDI, an insulation ingredient, and surfactants, which are used in detergents, Chief Executive Officer Peter Huntsman said today in a telephone interview.

“In some of those products we already have taken steps to more fully utilize our North American cost advantage,” he said. “In the course of the next 18 months, we will incrementally be expanding capacity and continuing to look at capacity in North America to take advantage of the gas situation.”

The company plans to fully utilize existing North American capacity while it plans expansions to be announced at a later date, said the CEO, whose brother Jon Huntsman Jr. withdrew his candidacy for the Republican presidential nomination last month. Adding 10 employees at a factory creates 100 jobs in related fields such as shipping, construction and maintenance, Peter Huntsman said.

North American gas prices are the equivalent of crude oil costing $15 to $20 a barrel, compared with $60 in Europe and $90 in Asia, he said. U.S. gas futures fell last month to their lowest in a decade.

Construction Recovery

Huntsman, which is based in Salt Lake City, joins chemical producers Dow Chemical Co. (DOW) and Methanex Corp. (MX) in expanding U.S. production to take advantage of cheap gas. Dow plans to spend $4 billion to boost production of chemicals such as ethylene and propylene in Texas and Louisiana. Vancouver-based Methanex plans to move a Chilean methanol plant to Louisiana.

Peter Huntsman said earnings before interest, taxes, depreciation and amortization this year probably will be unchanged from 2011, although growth in the U.S. and China appears stronger than last month when company was working on its budget. Accelerating home construction could result in unexpected earnings growth from titanium dioxide, a white pigment that accounted for 60 percent of fourth-quarter profit, he said.

“If I were putting that budget together today, I’d still say ‘flat,’ but I’m more optimistic that it could be on the upside,” he said. “We are going to see real improvement in our polyurethanes business, in our advanced materials business and in our textiles effect business.”

‘High’ Valuations

Huntsman rose 7.7 percent to $13.99 in New York. The shares gained 40 percent this year.

Ebitda excluding some items rose 39 percent last year to $1.21 billion, Huntsman Corp. said today in a statement. Ebitda in 2012 is estimated to be $1.33 billion according to the average estimate of seven analysts in a Bloomberg survey.

Huntsman said he doesn’t plan “to get overly aggressive” in pursuing acquisitions, particularly in titanium oxide, where valuations are “running on the high side.”

The company, which is run from its office in The Woodlands, Texas, unsuccessfully offered to buy titanium-dioxide assets in 2009 from Tronox Inc. (TROX), a competitor that was in bankruptcy at the time.