Hassan Ahmed: Very fair, very fair. And just sort of carrying on with that thought, on the input side – input cost side of things, look, I mean there is some skittishness around sort of call it chlorine pricing there is with housing doing what it’s doing and the like. I mean there is a school of thought that chlorine pricing may come down on a go forward basis. And similarly, I mean like you said, ore pricing through this entire downturn has held up quite well. But again, one hears more and more about there being ample supply of ore. So as you think about beyond Q4 call it, how do you think the input cost side of things will shake out broadly for the industry and specifically for you guys? Because obviously that’s going to play a role in your sort of integrated margins on a go forward basis as well.
Jean-Francois Turgeon: Hassan, maybe I’ll start by your second point on the ore holding. Look, I think that there was a good response by the producer. I think that I mean we have a big producer in Australia that has announced shutting down its production asset for the whole Q4. You have the biggest producer in the industry that has furnace down and that’s in the public domain we have said that we have adjust our production as well. So all of the key raw material producer have adjust to that slow demand market. So that’s – I think that’s why the price has hold stable for feedstock on the supply…
John Romano: Maybe just a little bit on the input cost, you made reference to chlorine, right, that one has gotten a lot of publicity for many quarters and our procurement team did a really good job of creating some opportunities for us to try to leverage an opportunity to get lower pricing. We made reference on the last call that we were going to see a price decrease in the third quarter. It’s pretty public that chlorine prices have started to move. Caustic prices have started to move. So that’s what we talked about that – with regards to chlorine, we would expect just continue to see some opportunity there. And then on other raws, John made reference that we hadn’t seen as much downward movement on pricing, on our raw materials that we had expected. And we are – but we’re starting to see that moving into the end of this year and into the first quarter next year as we start those negotiations for 2024 contracts.
Hassan Ahmed: Very helpful. Thank you so much, guys.
Operator: Thank you. Our next question comes from the line of Vincent Andrews at Morgan Stanley. Please go ahead. Your line is open.
Turner Hinrichs: Hi, this is Turner Hinrichs on for Vincent. I was wondering if you could provide some additional color on the supplier outage as it relates to building a bridge from your 3Q to your 4Q expectations. Will you be able to continue serving customer demand fully out of inventory? And does it imply any additional logistical or other costs that we should consider when building the bridge?
John Romano: Yes. Look, so from the standpoint of being able to continue to supply customers, we made reference that we had inventory in place. We also have a footprint that allows us to move inventory around to make sure we can meet that demand. So at this particular stage, based on the November 11 startup that we talked about, we don’t expect to miss any orders. There will be some additional costs attached to moving that material around. John mentioned the reality is – there will be an opportunity for an insurance claim. We won’t see that in the numbers probably until 2024, but all those additional costs that are attached to that outage at Botlek will be factored into that. And at this particular stage, I mentioned during the call or at some point in the Q&A that we were also ramping up some of our plants to make sure that we had inventory to meet the needs should there be any further downturn on that.
But at this particular stage, based on what we’re hearing from our supplier, we still feel pretty comfortable that November 11 start date for Botlek is firm.
John Srivisal: We’ve mentioned Q3 was burdened about $5 million from the Botlek outage. Since we’re up pretty early in the month, around mid of the month, you expect that only to be a couple of million burden in October.
Turner Hinrichs: Great. Thanks so much for that color. Another one, do you mind providing some additional color to level set our expectations for underlying demand in the macro by region as well as what you’re seeing for TiO2 export trends.
John Romano: Yes. So on the export trends for TiO2 out of China, we saw a tick up in the month of September. I made reference that on a trailing 12-month, it’s about 1.5 to 1.6 million tons. That number was increased because you had a couple of months that fell off that trailing 12-month that were very low. But we continue to compete with the Chinese in areas where we select to. There are some instances where we made some reference that we had to make some adjustments on pricing to maintain what we would define some strategic share in Latin America and the Middle East. But we’re not expecting any significant change in exports at this particular stage. As far as demand regionally, we don’t typically provide specifics on breakdown on where we’re seeing growth by region.
We’re seeing volumes specifically in Asia-Pacific and even in the Middle East where volumes are up Q3 to Q4 and that’s largely driven to destocking running its course and customers needing to make refill their inventory.
Turner Hinrichs: Yes. Okay. Thank you. Congrats to both JF and John as well.
John Romano: Thank you.
Operator: Thank you. Our next question comes from the line of Jeff Zekauskas at J.P. Morgan. Please go ahead. Your line is open.
Jeff Zekauskas: Thanks very much. Producer price indexes peaked in – maybe in November 2022, and producer price indexes have been dropping since that time. Has that made any difference to your TiO2 pricing? Is that one of the factors that’s pressuring them lower?
John Romano: Thanks, Jeff. PPI indexes don’t have anything to do with any of our contracts. Maybe some of our competitors out there have had some PPI indexes that had impact on their pricing or might be tied to contracts. But we don’t use PPI as an indicator on TiO2 for any specific tie to pricing. Not to say that it hasn’t had any impact. If others are using PPI indexes, it could have had an impact on where – what they’re doing, which could drive competitive behavior. Hope that answered your question.
Jeff Zekauskas: Yes. Thank you. You talked about having to meet prices of Chinese competitors. Is that in chloride based titanium dioxide or sulfate based TiO2 or both?
John Romano: It’s predominantly on the sulfate side in China, and the gap between the sulfate and the chloride has been significant. So when we say make some adjustments to maintain strategic share, it doesn’t mean we’re meeting sulfate pricing on Chinese. It means that we had to be more competitive to prevent customers not migrating more of their volume away from the chloride TiO2 to the sulfate. So specific to sulfate and chloride not meeting it, just having to make some adjustments to narrow the gap.
Jeff Zekauskas: Is China more competitive in chloride now?
John Romano: I think over time, China, they’ve gotten – [indiscernible] has gotten more competitive. Their grades are more competitive. We’ve heard they’ve had some quality issues here recently. So I think the short answer to your question is, over time, the quality of the chloride material has gotten better. And in certain areas, we’re competing with more than billions specifically on a head-to-head basis. But its – I think there’s an element of our customers not wanting to have all of their eggs in the Chinese basket, that’s why there’s a limitation to what we believe they can do to substitute Chinese material for Western material.
Jeff Zekauskas: Great. Thank you very much.
Operator: Thank you. [Operator Instructions] The next question comes from the line of Roger Spitz at Bank of America. Please go ahead. Your line is…
