Tronox Inc. (TROX)

[titaniuminvestor]

The February MOR is encouraging. However, this only provides a window into the US Tronox operations and does not provide a good picture of what is going on in their European and Asia Pacific business operations, which are not included in the bankruptcy. They are still separate entities. And, their financial performance is not visible to us.

Under bankruptcy, I believe Tronox is holding the earnings from their offshore business units in those companies.

So, the February MOR certainly shows that the US operations are improving quickly.

Here is the good news:

Global titanium dioxide demand is surging around the world. Supply is tight and is now entering a supply crisis not seen since the late 1980's.

Even prices in North America are now starting to move aggressively. Buyers now realize that to secure supply, they have to pay the price. And, even at higer price levels, many buyers are now finding supply of TiO2 is difficult to secure.

Now, the even better news:

Prices for TiO2 in the Asia Pacific region and Middle East Africa and Latin America regions are surging. Prices are now at levels not seen in over 20 years with more signs of increases on the horizon. And, they are going higher over the next 6 months.

The Tronox Tiwest joint venture in Kwinana in Australia which supplies into Asia is now minting money. This will not be noticed in the February MOR, as these earnings are held offshore in their Australian business unit. And, this Australia plant is bringing on 40,000mt of new capacity between now and the end of the year. What a great time to bring on new capacity. Invest in the down cycle and bring on the capacity in the up cycle!

If we really want to see what the Tronox share price should be doing, look at Kronos, symbol KRO. This stock is a more pure TiO2 play, much like Tronox, however, with more presence in Europe and North America.

Out of bankruptcy, Tronox is a much better TiO2 company than Kronos. Tronox shares will soon skyrocket once all of this is understood.

We are entering a time in this industry where pricing power is in the hands of Tronox and other TiO2 producers. And, Tronox will have some of the cleanest low cost producing assets in the world, all chloride technology and no sulphate high cost assets out of bankruptcy.

I think we will see this stock really surge in the June timeframe, so let's all be patient. These MM games will soon end. Restructuring is never easy and takes time, however, we are not more than 3 or 4 months away. We have all waited a long time, so 3 more months should be no big deal.

Sit back, relax, and get ready to make a lot of money!