Good day ladies and gentlemen, and welcome to the Fourth Quarter 2008 Albemarle Corporation Earnings Conference Call. (Operator Instructions). I would now like to turn the presentation over to your host for today’s conference, Ms. Sandra Rodriguez, Director of the Investor Relations. Please proceed ma'am.

Thanks Francine. Good morning everyone and thank you joining us today for a review of Albemarle’s fourth quarter and full year results, which were released after the market closed yesterday. Our press release contains preliminary results for the quarter and this information is subject to further review by the company and our auditors as part of our year-end audit process. Please note that we have posted supplemental sales information, as well as reconciliations for net debt and EBITDA on our website under the investor information section at albemarle.com. I would also like to caution that the remarks today contain forward-looking statements. Factors that could cause results to differ from expectations are listed in our Annual Report on Form 10-K. Participating with me on the call this morning, are Mark Rohr, Chairman and CEO; John Steitz, Executive Vice President and Chief Operating Officer; and Rich Diemer, Senior Vice President and CFO. At this time I will turn the call over to Mark.

Thanks Sandra and good morning everyone. I would like to start this call by wishing you all the best for 2009. We appreciate the opportunity to share our results and we look forward to answering your questions at the conclusion of our remarks. So let me start by commenting on the strategic events that occurred in the fourth quarter, some of which were reflected in the special items noted in our press release. During the quarter we completed the sale of our Port-de-Bouc France facility to ICIG, the International Chemical Investors Group. The one-time after tax charge of $33.4 million was recorded for net asset value write-offs and other exit related costs. We expect the cash tax benefit over time is more than enough to offset the cash required to close this deal. The asset was a high cost facility that weighed negatively on margins in both Fine Chemicals and Polymer Additives. We are pleased to have completed this divestiture and look forward to the economic benefits in the future. As global consumer related businesses ground to a halt last year, we took steps to advance some of our restructuring plans. We originally presented to you at the corner of our Vision 2010. Responding to the challenges we saw rapidly unfolding in the fourth quarter, we began to streamline our infrastructure and seek improvements in operating efficiency to match or reduce volumes we were experiencing. The cost of this restructuring has been reflected in the one-time pre-tax charge of $22.5 million outlined in the earnings release. Going forward these measures should reap annual benefits in the range of these one-time costs. In addition to these organizational steps, we have implemented other measures that will help us meet our annual cost reduction target of approximately $30 million in 2009. You will…

Thanks Mark and good morning everyone. I will begin with our Polymer Additives segment. Following a slower volume year in 2007, this segment showed positive improvements on volume and pricing through the third quarter of '08. While all indicators were pointing to a weaker fourth quarter, the decline was far greater and faster than we ever expected. Net sales for the fourth quarter totaled $149 million, down 36% from the fourth quarter of 2007. We saw significant volume declines across the segment. The total metric ton decline was nearly 35% year-over-year and sequentially, with most of that occurring in the back half of the quarter. Polymer segment income for the quarter was just over $5 million. Margins were diluted by higher unabsorbed fixed cost due to reduced production volumes in both, flame retardants and stabilizers and curatives portfolios. Responding to the rapid demand decline, we idled virtually all Polymer production units in the U.S. and overseas, and do not plan to restart these units until we have firm orders in hand that can be set aside with existing inventory. While fourth quarter volumes were severely depressed, our pricing held up well. This, along with actions we have taken to optimize assets, right-size or operations and reduce costs, will help enhance our ability to improve our bottom line segment results as we move through the year. Moving on to Fine Chemicals. The recession-resistant nature of our Fine Chemicals business supported the delivery of solid results in the fourth quarter. Decreased volume in pricing drove fourth quarter net sales up 23% over the fourth quarter of last year. Segment income for the quarter of $18 million increased slightly over the fourth quarter of 2007, despite lower bromine volumes in our flame retardant products. On a full year basis, Fine Chemicals posted double-digit…

Thanks John and good morning everybody. The items I would like to cover on today’s call include income taxes for the quarter, the year and the year ahead, corporate expense, cash flow, and our year-end balance sheet and financial position. Let's start with taxes, where we were able to reach settlement with the U.S. Internal Revenue Service for the exams covering the 2000 to 2004 tax years. The settlement resulted in a net refund of approximately $2.3 million, we received $2.5 million in Q4 and we will make a small payment in Q1 of 2009. With those exams behind us, we were able to record a one-time gain of $32.4 million, net of 9.3 million in new tax reserves and a valuation allowance on foreign NOLs that we felt were needed, we recorded a one-time special item for the quarter and the year of 23.1 million or $0.25 per share, largely a non-cash gain. Excluding this one-time net gain and the tax impacts of the Port de Bouc disposition and our restructuring charges at other company locations, the full-year effective tax rate was 12.4%. The Q4 effective tax rate excluding all specials was negative as we adjusted our nine month to date effective tax rate of 18.6% to the full-year rate. Our current planning is for 2009 full-year effective tax rate in the range of 18% to 19%. Unallocated corporate expenses were 15 million in the quarter and 50 million for the year, flat with the prior year. Our outlook for 2009 is for corporate expenses of approximately $45 to $50 million for the year. Our EBITDA in the quarter excluding special items was $68 million. Full-year EBITDA was $402 million down $33 million or 8% from 2007 levels. We ended the quarter with cash and equivalents of $253 million.…

Thanks Rich. Okay, at this time we will open it up for your questions.

(Operator Instructions). Our first question comes from the line of Jeff Zekauskas of JPMorgan. Please proceed.

Hi, Good morning.

Good morning, Jeff.

Good morning, Jeff.

Your shareholders equity on a sequential basis went from $1.254 billion to $10.65 or down $189 million. Why is that?

Jeff, this is Rich. That is principally due to a number of things. Number one would be, the FX impact on the where the translational adjustment goes through equity. It also is involved with the fact that our pension funding is significantly different this year versus last year and that is another component. So, those two things are the principle item that was pushing that down. Obviously, we also paid a dividend in the fourth quarter, and things like that. So, yes, the normal impacts but the one-time unusual items that resulted in that decrease of the items that I mentioned.

So, do your pension costs go up next year and by what amount?

Yes. Our pension costs are going to be up probably in the $5 million to $6 million range next year versus what we thought they would be as we were planning the year out, and then part of that is due to the discount rate that we are using at the end of the year and part of that obviously has to do with the change in the investments, one year versus another. We smooth that over a period a time, so you do not get all that impact at one time, but certainly there is an impact that goes through to pension expense.

So you said that it was $5 million to $6 million more than what you had expected.

That is correct.

So what is the net amount that you expected to be up? I do not know what your previous pension expectations were?

Well, it is probably about $5 million to $6 million year-over-year going to be in increase.

Okay. AND second, or lastly in Polymer Additives, I think John said that all of your units were currently down. Can you talk about what the accounting impacts in that are, I know, but this morning DuPont was expensing through its income statement more costs because its utilization had fallen to I think below 60%. Are there any of those effects on you and how do you run an operation where all your units are down?

Well, I will do the accounting part and then John, can do the operation part. This is Rich. Jeff, we have in each of our businesses, approaches that we do not have the place to capitalize normal recurring ups and downs in how much we have our operations running. BUT in the case like this, we would not capitalize abnormal variances, so to say. So, anything has a result of being shut down in December what has hit our P&L.

Okay.

John. Let me just comment on the issues. Our goal is to absolutely work on bringing our inventory down to absolutely low as possible. The real key here is keeping in close contact with the customer base to get us a good understanding of where they see things going. Right now, at least in my career, I have never seen a higher degree of uncertainty about where these markets are going. So we do have to deal with that and you are exactly right, it is really very difficult to deal in a market where the uncertainty, not only of our customers, but of our customer's customers so high. The other issue we are dealing with, if you look at that, and I referred to this in script…

Yes.

…was the brominated flame retardants and its impact on Fine Chemicals. Because as we lower the utilizations of our bromine fields and our bromine production capability, that has an impact on Fine Chemicals as well. In the fourth quarter alone that was roughly between $6 million and $7 million impact on Fine Chemicals. So, we are also dealing with that, but it is a very complex situation.

Jeff, just to wrap that up. What I would say is that, one of the things we are trying to manage this uncertainty on the part of our customers. We just really reacted very quickly and everyone started to take vacations, we cut all over time, we [fro lowed] some people in some situations, we cut contractors. We are doing all those things, and where we sit today is we are trying to assess a background here on what is going to happen next. John may talk to this in more detail in a minute, but we are seeing things like customers come in with orders for delivering at four weeks. A week or two later come back and cancel those orders. A week later ask for an emergency shipment for some portion of it. So there is just a lot of uncertainty out there now. What we are doing is, we are cutting our cost where we can, and in some cases even shuttering units that do not make sense, and holding on here just a little bit to see what happens.

Lastly, will you lose money in Polymer Additives in the first quarter?

No, we hope to a build on where we are in the fourth quarter and sequentially improve that business through the first half and we will see where the market take us from there. The answer to that question is no.

Our next question comes from line Laurence Alexander of Jefferies. Please proceed.

Good morning.

Good morning, Laurence.

First of all just a follow-up on the capacity utilization question, how much of that hit was the work down of inventories in the Polymer Additives segments in Q4?

I do not know. I mean that that is going to be in the base of about that we really, we have a setback and work through that but it was pretty material because we quit running the plants.

Yes, I think if you look at the business sequentially, you know it is down roughly $20 million and it could be half in half, half driven by the drop in demand and other half just dropping the production.

AND you secondly in the Catalysts segment can you walk us through with a little more detail the volume trends and placing trends in a FCC and HPC catalyst and then also what you are seeing in terms of order flow for the alternative fuels business.

Yes. Let me first start with HPC. The HPC volumes were finished in the fourth quarter more or less as we expected. It was down sequentially low double-digits, but we saw it at the gate, very strong here. As a matter of fact, I think will end up spying more in month of January then we did in entire fourth quarter. Laurence so good trends there. I think we have got all of both our plans running very hard in Houston. We have got our plant in Amsterdam running very hard and I think supply and demand is going to be very tight in '09 and I think that helps pricing in general. In FCC, it was a very good traction on the pricing front. I know you are asking the question Laurence as a modeling question and I think going forward we are going to see pricing in FCC close to the 4000 a ton and 3000 a ton, so good traction there. There is some volume slowdown in the first quarter, but that is typically seasonal as these refineries generally are preparing for the driving season, there is a lot of turnaround because of refinery margins there has been a general slowdown too, but good price in traction. AND other pricing related issues in flame retardants, so I can talk about separately. BUT the AFT business, I think this year we have got some orders booked that are equivalent to '09 level but there is pretty significant ramp-up in 2010. Amazing to see if we ship any of those orders at the end of '09, but we will see.

Lastly because you raised the terms, what are you seeing on terms tetrabrom pricing?

Well, probably let me talk about flame retardants Laurence if I can, expand your question a bit. Mark mentioned we lost money in mineral flame retardants. There continues to be a lot of raw material pressure there. I mean it is contrary to what you would see but 88 share of pricing in the raw material side has hung up there quite well. It has been an issue that we have had a deal with for 18 months now. We have seen some good pricing traction and actually in the double-digit range. So if we can get some volume return in the mineral flame retardant business, we are somewhat hopeful there. On brominated flame retardant the situation is different. The demand has been so weak that there have been very cheep customers in the market. So, it is created a lot of discussion on pricing front, as a result of that our pricing for the base business continues to hold on quite well.

Thank you.

Thank you, Laurence.

The next question comes from the line of Steve Schwartz of First Analysis. Please proceed.

Good morning.

Good morning Steve.

Good morning Steve.

Can you tell me why SG&A was so high in the fourth quarter, its looks on that relative to sales and then in absolute dollar terms it was significantly higher than I thought it would be?

Steve this is Rich. Obviously the sales declined a lot more than we thought they did, so it tried to adjust that one on a dime. So that in terms of the things I would spike out in terms of SG&A in the fourth quarter, first thing I would mention as we boosted our allowance for doubtful accounts for bad debts, we are fully accrued for any of the customers that may have issues on this. One prominent one that is impacting the chemical industry in terms of an announced bankruptcy, portfolio accrued for that in terms of our exposure. We did have some expenses in connection with our IRS settlement. We had some normal corporate type cost there also and then ultimately we through up our budget accrual in the fourth quarter also, so that had a little bit of an impact also.

Okay. So it should settle back down going forward?

Yes, especially given some of the benefits we will get from the headcount reduction.

Okay. AND should we still assume that Bayport would be full utilized by year-end?

Yes, we have Steve on the HPC side on the FCC side remains to be seen. Our projection now is that volumes would be flat for the year.

Okay and then one last one, you were expecting a start up in an accident facility in Shanghai sometime this summer. Is the plan still in place for that and what do you think that would do to your volumes in that business?

There are a few issues and market demand Steve and that has dried up just like the downs of our business. So we have got our plans in China idled right now. I know we made the comment in the script that virtually all of our polymer additives units are down and those units are down as well. So the expansion has been basically put on hold right now.

Okay. That what I though. Thank you

Welcome.

Our next question comes from the line of Mike Sison with KeyBanc. Please proceed.

Hi good morning.

Good morning, Mike.

Mike. Good morning.

Hey John did you comment that HPC volumes would be flat in '09 versus '08.

No.

That was FCC, Mike.

FCC. Okay.

The one time when I did say relate HPC was we are seeing a January that is more than the entire fourth quarter.

Okay. So HPC volumes based on your order pattern look pretty good, just show a pretty good growth in '09 versus '08 as expected. Does the first quarter really kick in gear then?

Yes. Mike we have been talking about this for quite some time. So its time for us to step up and deliver and we have got high expectations for this business. We need to execute.

Right then, I think you said you would definitely see some growth in Catalyst in December you suggested something like double-digit growth and possibility year-over-year, is that still in the same card, is it little bit better, little bit weaker?

Yes, we still see. Mike, our view currently is 18 plus percent segment income margins and over a billion dollar plus business.

For 2008 to 2009.

That is correct.

Okay, great. Then in terms of just curious in terms of raw material what was the final impact on you in 2008 and as that number falls assuming that petrochemicals fall and some are metal prices fall, how much of that, do you think is you can capture into ’09?

Yes, Mike it ended up in 2008 versus 2007 being a raw materials and energy in the range of $170 million. It is really a mixed bag, it is a very complex question which you just asked, I mean so if you could bear with me just for a moment. We have got a lot of big mix of issues. We still see certain products like caustic, very strong on the pricing front from raw material perspective. ATH has been strong; we are still working to recover of the last two years of raw material inflation on that side. We have electricity and gas cost in Europe which are still very high, and we have got to deal with such an issue. In the back half of the fourth quarter we saw molybdenum and cobalt go down, but we were not in the market. So now we have got, to me it really becomes pricing issues going forward and how we deal with this high cost of inventory from a carry over of '08 and we are working hard on that around the globe, and I talked earlier about the pricing trends in various markets. But, right now there is so much uncertainty, Mike I really cautioned to give you a number because just the volatility has been so incredible, but I know it certainly is not going up. The trend is to go down. So we will try to keep you all informed to that as the year unfolds.

Okay. Last question, Mark, assuming for what it is worth there is not a better improvement in the economy in the second half of '09 which could happen I suppose. How does Polymer Add to end up, the volumes start to stay as weak as they are and you attract fourth quarter possibility, a little bit better on a quarterly basis as we attract to the full year?

Well, you can outline a worst case scenario. I think what we have directionally been doing is looking at other cost reduction efforts that could offset some of the fall-off we have seen. Those would not all be in Polymer Additives, those were corporate ways. So, I do not know quite I would answer that yet today, but I would say that as John said, we think we can add incrementally to our profit sum in the first quarter. We have plans in place to add incrementally to that at the second quarter, into our third and into our fourth. So, I think even in a pretty weak scenario we should be able to grow our profits from where it ended in the fourth quarter. Clearly we need business to come back to really get to those more respectable levels.

Our next question comes from the line of Chris Shaw of UBS. Please proceed.

Hi. Good morning everyone.

Hi Chris.

Hi Chris. Good morning.

One of the questions I had was around the Fine Chemicals and the bromine that you sell or produce for the Polymer Additives. If all the Polymer Additives plants are down, does that means that you are not recording any revenues for bromine in the Fine Chemicals segment?

No. We said essentially. I mean, there is business. We are still on things, we are running some plants. On a relative basis, we used run these businesses way north of 80% capacity utilization. We have pretty low capacity utilization now. So maybe 50%. I do not know. I am making that up, but something like that.

How much is the element of bromine sales make up the Fine Chemicals? Is it like 20%?

No, it is less than 10%.

Okay.

That is a great thing about our Fine Chemicals business. It is so diversified. There is not one particular product line that is more than 10% of our profit in Fine Chemicals.

Sure. On some of the new orders for renewable energy catalysts for this year, and you know that risk, are they firm orders or can they be canceled?

You know I see that there is pressure of course on energy across the board, but especially with the new administration, the potential incentives on renewables, and we see these orders very firm, and maybe some upside in 2010 and beyond. They are firm orders. We are working hard to fill them in the second quarter and beyond, and 2010 really looks great.

I think you mentioned on the call that equity income was down, but it looked like minority interest was up really sequentially?

Yes, that is JBC. So, when we ran JBC, remember that have alternatives of where we can source the bromine and JBC from the bottom line impact does is the best place. To extend we can use that arbitrage, we kept JBC running during the quarter.

Okay. That makes sense. Then just finally, when you mentioned that $170 million raw rise in energy, increase for 2008 or 2007. Is that inclusive of things, the raw materials that would just be pass-throughs?

Yes, that is the gross number if you will.

Is there a net number?

Well, I mean you see it in margins. I mean, Chris, your question really evolves around margins. We never for example in Polymers, we never got the pass through on mineral on ATH.

Okay.

We are working on getting that today. Metals has been a pass through issue, and that is one we are still dealing with. So, the energy tends not to be, but the U.S. energy costs going down are being offset by the price inflation in Europe on gas and electricity. So, it is a mix bag there for us.

Okay. Thanks a lot.

Thanks Chris.

Our next question comes from the line of P.J. Juvekar of Citi. Please proceed.

Yes. Hi, good morning.

Good morning P.J.

John, you mentioned that you have shut down most of your Polymer Additive plants, how much inventory do you have in brominated flame retardants that you can keep selling and when do these plans come online. Secondly, do you believe your competitors also shut down plants?

P.J., the inventory level, we worked very hard and focused on cash generation in the fourth quarter. We worked hard to bring those units down as rapidly as we could, but I will say, the sales progression from October, November and December, just continued to get worse as the quarter developed. So, the best way to reduce inventory is by selling product and sales just were not there, but I think we did do a good job overall in managing inventory for the company. We are still sitting on 80 days of inventory probably in Polymers. So that is why I think we have to keep in close contact with the customer base as to when things do turn around. The Chinese New Year is now behind us and we are anxious to get feedback from customers on what their plans are for gearing up production. If any of all, but we will try to keep in close contact there.

So, your plans could be pretty much down for the entire first quarter if demand does not improve because of 80 days of inventory?

Yes, that is right.

That is right. P.J., you should be mindful that in many of these products we produced in more than one location, so we will have one plant down and the other plant still operational. So that is in some cases, John mentioned in China, we have got our facilities down in China. We do not see those restarting until the second quarter based on what we see currently today, and as John said, we have got inventory that we will work through and we will make sure that we need to bring them back before we do. I think that the first quarter we are going to be largely selling out inventory until we see what happens.

Yes. AND related to your question on competition, yes, I think our peers and customers are all faced with the same mission, P.J.

Okay. On the Catalyst side, a couple of years ago, you had expected a big chunk of replacement demand in '08 and '09, but then you had the refinery cuts in runs, so how do you see those two issues, the replacement demand versus refinery cuts in refinery runs.

Yes. I think we have worked through those issues, P.J., and the first quarter I believe will ring through to that, and we will build the base for a good year in HPC. What remains to be seen is how the economy goes forward and how that relates to fuel consumption. That tends to be the big driver on FCC. So, we will just patiently wait on that. On the positive side again, good price traction and that continues. So, as the petrochemical universe gears up, if we see our propylene market improve for example. I think that, that will bode well for our mix of products supplied in that market.

Okay. A quick for Mark. Mark, you are quite knowledgeable about the Chinese market. The fact that you are to shut down all your plants in China, is China much worse than what people are expecting?

Well, I think what we are seeing in China is a lot of export market around consumer related products is dried up. That is no different than, it is also the case in Japan, it is also the case in Taiwan. Non-year for most of plastics for instance, which makes the lion share of circuit boards for the world is essentially shutdown. It goes beyond China, just simply to say that consumer related electronic components which is the majority of these businesses from cell phones to TV's. That export market is really big. There are rumblings out there, the post Chinese New Year, volumes are going to start to come to back up, and we are playing that, we are just taking that with a grain of salt and saying, we are going to wait and see that it actually has come before its comes on.

Our next question comes from the line of Bob Koort of Goldman Sachs. Please proceed.

Thank you. Good morning.

Good morning, Bob.

Good morning, Bob.

Mark, it strikes me a lot of what you said today, it echoes the misery and pain we have heard from other companies. What caught my attention was a more aggressive stance on using your balance sheet or financial flexibility for both acquisitions and share repurchase when many of your peers seem much more paralyzed at the moment. Can you talk a little bit about how aggressive you might be on either accounts, and then specifically on the acquisition side, are there actually businesses out there that have been upward slope to their business fundamentals or is it the function of some opportunistic purchases of stuff that is cyclically down. Thanks.

Thanks Bob. I will make a couple of comments for those of you that have followed us, you may have a sense of the strong earnings capabilities this corporation and that is held true in good times and bad. So, we are expecting even in these tough times pretty good pre-cash flow generation. John mentioned the Herculean effort that is underway to pull cash out of our system and build our cash reserves and we had $250 million of cash. We ended the year little debt, no maturity in the future and I will be disappointed if we do not add $150 to $200 million as we progress through this year as well. So we have a lot of cash in hand to look opportunistically with acquisitions. At the same time we have raised our borrowing, we are willing to buy. In other words we are only looking at good opportunities that fit in from a niche point of view in our business portfolio. The actual Catalyst business was a great example of that. So we are working with people that have other small pieces of business that do not necessarily fit that are good business into our portfolio that we can pay cash for and close the deal in a short period of time. That is our primary focus. At the same time my belief system, where we feel pretty good. I think others have yet to really start suffering like they are going through as they go through this year. If you are going to have to sell assets and there is going to be distressed sales, and add up for us another opportunity for us. So, we are trying to mindful of that and we are starting to work with some people that have those opportunities or maybe present those opportunities to us. The last thing I will say about stock is that the market is under valued and our corporation is right near with everybody from that point of view and we will be looking to continue to do what we have been doing which is optimistically about stock back. We are also going to take care of our dividends. So you will see us continue to return large amounts of cash to shareholders through this year and then the next.

Then if I might a follow-up, I know when Honeywell pre-announced last year they toughened their UOP business about deferrals of reloads on catalyst. I am trying to wondering if you would one more time go through what you would expect to have in sequentially and why you have the confidence that the deferrals that we have been waiting to end are finally going to end.

Well Bob, it is a tough question. Firstly, let me just comment on our UOP venture that it continues to do extremely well and we are very pleased with that. We are continuing to add technical resources and fire power to that venture and we are very happy with the prospects going forward and the volume in particularly in HPC, their deck-and-dry force in 2010 and beyond. We have conducted a number of studies done in what the impact of the economy is having on some of these mega operations going forward and it really almost what we are finding is it, depends on who you ask and how you ask it. I mean roughly I think maybe half of the some of the new refineries out there could be delayed. Now there is, also the economic issue that the cost building these is going down. So that could help improve some of the economics. So, it is very mixed bag. We are continuing to study but our current view is that some of these will be delayed in 2012 and beyond. It is not a train wreck by any stretch of imagination.

Got it. Thank you.

Thanks Bob.

Our next question comes from the line of Dmitry Silversteyn of Longbow Research. Please proceed.

Good morning.

Good morning Dmitry.

A lot of my questions have been answered, but I just want to go back and maybe touch up some of the answers. Can you give us, with the French plant closed can you remind us what the impact will be on the top line as well as what we could expect on margins of the Fine Chemical business.

Fine Chemical business Dmitry, we really and we are hoping for may be just north of a 100 basis points improvement through the course of this year on margins and we think minimal top line impact.

Okay. So the French plant really will not have a much of an impact and versus your, or versus the base line you have a about a 100 basis point improvements from those sales being out of your mix?

Yes, and that will help us because we do have this bromine issue that we are dealing with in Fine Chemicals.

Okay.

Okay, at the under absorption of Fine Chemicals that hit from lack of bromine flame retardants sales, so we are dealing with that as well.

Right. Okay, on the Polymer Additives segment you talked about, if some details about the mineral and phosphorous flame retardants being impacted as well as the obviously be the tremendous impact you are seeing in bromine added flame retardants, can you talk about the minority of your business that is the antioxidant and you re-part of the business so stabilizers which you saw that in the fourth quarter versus the other segments. Going forward which markets are responsible for it?

Yes, you bet. The overall stabilizers and Curatives business we have seen similar down turns in antioxidants. I will say on a positive front as the lube and fuel business continues to hold up quite well and that is encouraging, the Curatives business continues to hold up quiet well, so some of these specialty applications are doing well. Generally we found what I would call commercial construction is holding up quiet well. So some of those base products that go into commercial construction are doing fine. The other weakness, home-building of course and electronics and automotive, that those are probably the three end markets that are hurting us most.

Okay. Now you did say that because of the lack of demand and really lack of any sales in the second part of the quarter, prices held stage because there was not anybody coming in asking for volume at a lower price. As volume comes back in the first quarter in the first half of the year, do you expect pricing to be an issue here especially if raw material prices start coming down more noticeably?

Well, I do not believe so. On the mineral front, we are gaining some traction there as I mentioned and I hope that continues, because we have to offset a couple of years of inflation in that area.

Okay.

Brominated is not, I think there has been a lot of discipline and still to over the last decade. I would hope that, that would continue.

Okay. On the Catalyst business you sounded fairly confident in the recovery on HPC volumes, beginning even as we speak, and I understand your reason behind that confidence. What is your outlook for the polymerization catalyst. We are hearing a lot of softness in the polyethylene, polypropylene markets right now. How is that impacting your polyolefin catalyst business?

Our polyolefin catalyst business continues to be quite resilient, Dmitry. So we are pleased with that. Our Organometallic Piece and our New Catalyst businesses are holding up quite well. So we believe that, that will continue.

What is the drama behind that, John? I mean, is it market share gain, is it that you predict the products you are selling, trying to go into applications that are continuing to grow?

Well, they are, yes. I mean, everything has not come to a screeching halt, right. I think some of our new cats are quite unique, highly value added products. In our organometallics, I think there is. If you are just going to run a plant, aside from the utilization factor, you still require a certain minimum amount of organometallics to run that polymerization unit. I think we are getting some help on that side.

So, as long as the there is not a widespread plant shut down, as long as it is just a cut back in capacity utilizations and productions that should not be very impactful to your volumes?

We believe that to be the case Dmitry.

Okay. On the Polymer Additives, I think, John, you said in your answer to your previous question that you thought the fourth quarter drop in operating profit in terms of dollars was about 50-50 between inventory correction and just volume declines?

Yes.

Is that correct?

Yes, that is a directional yes, is the way I put it.

Right, I understand that. There was also probably some part in there from high raw material costs which were still a factor in the fourth quarter on a year-over-year basis?

That is correct.

As inventory correction is working its way through, and hopefully we will see some lesser amount of that in the first quarter in raw materials, perhaps directionally, at least it starts heading down. I am not sure where they are going to end up on a year-over-year basis, but sequentially as we say it should be down. How do you see the profit recovery in the Polymer Additives business assuming another double-digit decline in volumes? Are we talking about getting back to high single-digits or maybe even low double-digit margin or do you still expect kind mid single-digit margins?

No, Dmitry, I think our view of success would be of we can see sequential profit improvement through the first three quarters, driven by things that we can control in terms of cost.

Okay. About when you picked off the dollar profit or margin profit?

Dollar profit.

Dollar profit. Okay. Final question, on the ATH contract, that is seems to be holding back the profitability of the Catalyst business. Can you remind us when that expires and what the benefit will be of renegotiating a lower price?

I am sorry, repeat that question, Dmitry. I did not quite.

The ATH contract that is been blamed for impacting the profitability of the Catalyst business, when does that expire?

Well, there are some ATH and rare earths and things like that go into FCC.

Right.

Those contracts are negotiated routinely. Those raw materials have continued to stay relatively high.

Okay. We are not seeing any relief on that front yet?

No, we are not.

Okay. Thank you very much.

Thanks Dmitry.

Thanks.

Ladies and gentlemen, that concludes the Q&A portion of the presentation. I would now like to turn the call over to Ms. Sandra Rodriguez.

Thank you. I would like to thank everyone for participating on the call today. If there are any further questions, you can contact me at the number indicated on our press release. Have a great day everyone.

Thank you for your participation in today's conference. This concludes the presentation. You may now disconnect. Have a good day.