Good day, ladies and gentlemen, and welcome to the Third Quarter Huntsman Corporation Earnings Conference Call. My name is Cathy, and I will be your operator for today. [Operator Instructions] As a reminder, this conference is being recorded for replay purposes. I would now like to turn the conference over to your host for today's call to Mr. Kurt Ogden, Huntsman Corporation Vice President of Investor Relations. Please proceed, sir.

Thank you very much, Cathy, and good morning, everyone. Joining us on the call today are Jon Huntsman, Executive Chairman and Founder; Peter Huntsman, President and CEO; and Kimo Esplin, Executive Vice President and CFO. This morning, before the market opened, we released our earnings for the third quarter 2011 via press release and posted it on our website, huntsman.com. We also posted a set of slides on our website, which we intend to use on the call this morning in the discussion of our results. During this call, we may make statements about our projections or expectations for the future. All such statements are forward-looking statements. And while they reflect our current expectations, they involve risks and uncertainties and are not guarantees of future performance. You should review our filings with the Securities and Exchange Commission for more information regarding the factors that could cause actual results to differ materially from these projections or expectations. We do not plan on publicly updating or revising any forward-looking statements during the quarter. In addition, we may also refer to non-GAAP financial measures. You can find reconciliations to the most directly comparable GAAP financial measures in our earnings release posted on our website at huntsman.com. As we refer to earnings, we will be referring to adjusted EBITDA, which is EBITDA adjusted to exclude the impact of discontinued operations, restructuring, impairment and plant-closing costs, income and expense associated with the terminated merger and related litigation, acquisition-related expenses, unallocated foreign exchange gains and losses, certain legal and contract settlement costs, losses from early extinguishment of debt, gain on the consolidation of variable interest entity, and losses and gains on disposition and acquisitions of businesses and assets. A reconciliation of EBITDA, adjusted EBITDA and adjusted net income or loss can be found in the appendix of our slides and in our third quarter earnings release. Let's turn to Slide 2. In our earnings release this morning, we reported third quarter 2011 revenue of $2,976,000,000, adjusted EBITDA of $345 million, and adjusted earnings per share of $0.45 per diluted share. Our adjusted EBITDA was $345 million in the third quarter 2011 compared to $273 million in the prior year, an increase of 26%. Compared to the prior quarter of $318 million, our adjusted EBITDA increased 8%. I will now turn the call over to Peter Huntsman, our President and CEO.

Thank you, Kurt. Good morning, everyone and thank you for joining taking the time to join us. Let's turn to Slide #3. Adjusted EBITDA for our Polyurethanes division for the third quarter 2011 was $140 million. I'm generally encouraged by the demand trends we saw in our MDI products, though we saw different regional trends within the quarter. In the Americas, we saw a strong growth both sequentially and on a year-over-year basis led by improvements in insulation and the automotive sector demand, and further market substitutions for our wood products and furniture sectors. In Europe, demand was essentially unchanged as we focused on margin protection and seeded some less profitable business to the competition. From a demand perspective, we saw the most improvement sequentially and on a year-over-year basis in the Asia region. However, the effect of tightening credit and an increased regional supply led to sequentially lower average selling prices and margin. One of the sectors where we continue to see strong growth is insulation, which compared to the prior year, grew 21% in the quarter and 17% year-to-date. The supply-demand balance for the MDI industry as a whole is relatively unchanged compared to the second quarter. We estimate the MDI industry operated around 90% of nameplate capacity in the third quarter. Propylene oxide and its co-product, MTBE, have performed very well this entire year. Earnings in the third quarter were above historical averages and comparable to those in the second quarter of this year. Strong Latin America demand combined with the large spread between Brent crude, which has an impact on MTBE pricing and WTI crude, which drives certain MTBE raw material cost have the effect of maintaining our high margins. We expect margins to contract in the fourth quarter consistent with typical year-end seasonality. Turning to…

Thanks, Peter. Let's turn to Slide 8. Let me address some items that affected our earnings during the quarter. We expect our long-term effective tax rate to be approximately 30% to 35%. Our adjusted 2011 effective tax rate has been running below this primarily due to tax valuation allowances in countries like the U.K., France and Spain where we have meaningful Pigments operations. Tax valuation allowances in these countries have the effect of lowering and in some cases, eliminating the tax effect in the P&L from these respective countries. We also have a tax valuation allowance in Switzerland where our Textile Effects business has meaningfully operations. The losses currently being generated by our Textile Effects business in Switzerland, pushed the effective tax rate higher as we are unable to book benefits due to the valuation allowance. The increase in the forecasted losses from our Textile Effects business in the third quarter had the effect of increasing our losses in Switzerland and in turn, increasing our projected tax rate for the year. We are required to adjust our third quarter year-to-date tax rate to our expected full year rate. This resulted in a recognition of more tax expense during the third quarter and 38% adjusted effective income tax rate. We expect our fourth quarter and full year 2012 adjusted tax rate to be slightly less than 30%. As indicated in our release this morning, this had a negative impact of approximately $0.08 per diluted share on our third quarter 2011 results. For the most part, we use the weighted average cost method for valuing our inventories. However, approximately 10% of our inventories are accounted for using the LIFO cost method. Although the LIFO costing primarily relates to inventories in our North American Performance Products business, we account for the movements in…

Thank you, Kimo. In spite of shifting demands, anemic economic growth and uncertainty from one quarter to the next, we had a record quarter of adjusted EBITDA. Even with fourth quarter adjusted EBITDA typically 20% lower than third quarter adjusted EBITDA due to seasonality and de-stocking, we are well on our way to a record year. I will repeat what I have said in previous quarters, I continue to believe that North America and global economic conditions simply do not match most of the dower economic headlines and forecasts. I shall not attempt to forecast global economic directions. However, I do not see the signs of a double-dip recession in North America. If anything, I question where much of the supply will come from should we see a recovery in housing to pre-2008 recession levels. While we are seeing strong earnings in our Pigments division, I personally expect that our MDI, Polyurethanes and Advanced Materials divisions will see major improvements in the coming year. I expect that we will earn record adjusted EBITDA this year in our Performance Products group, and I see room for continued improvements in the coming years. As painful as it's been for us to make the employment cuts in Textile Effects this past quarter as we complete our recently announced restructuring program, we should be generating positive cash flow by the end of the implementation of this program. In short, this company has earned nearly $1.2 billion of adjusted EBITDA in the past 4 quarters. As I look out over 2012 and 2013 barring a global economic recession, I do not see why these should not be stronger years for us. 2011 will be a very strong year for us, but I'm even more optimistic when I look into the future than our past. With that, I'll turn the time over to Kurt.

Thank you, Peter. Cathy, that concludes our prepared remarks. Would you explain the procedure for questions and answers and then open the line for questions.

[Operator Instructions] Our first question comes from the line of Robert Koort.

Bob Koort of Goldman Sachs. Can you guys talk a little bit about the dynamic for MDI in Asia. I guess we've been hearing some commentary recently about some price pressure there, and maybe your Chinese-based competitors seeking volume over price. And then what is the status of the supply additions from BASF and then your own project there?

Well, I think longer term, Bob, the market certainly is going through some de-stocking in the Asian markets as we typically see this time of year. But as we look at the overall capacity utilization rates and the lack of new production coming on, I think as we look out over the next couple of years, we look at our own potential expansion in Asia and what BASF has announced in the anti, we're still looking at least 2 to 3 years down the road and more likely perhaps even longer than that. So I mean as I look out over the next couple of years, I see capacity, if anything, getting tighter in Asia. I would say that in Asia that there are pockets of de-stocking that are taking place right now, but we continue to see the Asian economies grow at a fairly decent rate. And I think, again, longer term, these trends are going to be favorable for us.

Bob, if you look at our year-over-year MDI sales, you remember year-over-year for the quarter, we had roughly 9% increase. Asia had a 16% year-over-year third quarter MDI growth rate in terms of volumes, and that was really led by darn near 50% increase in our construction-related insulation business in Asia and automotive was about 6%. So third quarter sales, pretty strong.

Got it. And then, Kimo, in the past you've been helpful talking a little bit about your cost position on titanium ores, certainly the ore providers talk about some pretty dramatic increases. Can you give us some sense of how those phase into you and what we should expect fast forward from a cost standpoint?

From an ore standpoint, your remember we said that 2011 ore prices would increase about 40%. 2012, the jury's still out but it could be as much as double. So you might want to think about it in TiO2 terms, we might see as much as $700 a ton increase in TiO2 terms in ore costs in 2012. Now that $700 a ton obviously, in TiO2 terms, you got to think about pricing. This year alone in 2011, we've probably seen $1,000 a ton in terms of price increases.

Kimo, you're talking when you say you could see $600, $700 of ore costs, that's your net year-on-year, not some benchmark, is that right?

That's what we -- we're kind of thinking about what market would be.

Okay. I guess that's where I'm asking for some clarity because these contracts, the legacy in ore was for annualized multiyear contracts and now the industry's trying to go to shorter durations.

My guess is that our mix of contracts looks an awful lot like everyone else's. Everyone has multiple contracts. The roll over 1 year, 2 years, 3 years and they are all going shorter. So my guess is, is that a possible doubling of ore costs in 2012 is going to be pretty close to what everyone else is going to experience.

Bob, this is Peter. One thing that again, that you might want to just bear a note, I mentioned this during the call, is that obviously not all ores raw materials are the same for all producers. You look at something like chloride slag this next year, that could increase as much as close to $1,000 a ton, where ilmenite, which is a raw material for a sulfate plan increased by around $100 a ton. And so as we look at our sulfate production, about 40%, 45% of our raw material for the sulfate production is ilmenite. And I think that as we look out at least over the next couple of years, is ore -- titanium ores are going to be tight here. I'd much rather be in a position with a sulfate facility buying ilmenite than a chloride facility that is going to be paying much, much higher raw material cost than what Huntsman would pay. And in short, I think that our portfolio of production facilities will advantage us to the rest of the market.

Our next question comes from the line of Kevin McCarthy.

This is Kevin McCarthy with Bank of America Merrill Lynch. With regard to your TiO2 volume in the quarter down 8% year-over-year, can you give us a feel for how much of that might relate to industry conditions with slower macro growth, for example, relative to the inventory-related constraints that you cited?

I think virtually all of that was inventory. We were able to sell everything that we could make in the third quarter. I mean, there might have been 1% build in inventory or 1% or 2% build in inventory during the time. I'll remind you that typically during -- especially during the fourth quarter we're building inventory. So the only reason that we saw a decrease in the third quarter sales is because we didn't have as much inventory to sell in the third quarter as the year ago. Had we had that same amount of inventories a year ago, we would have been able to sell that.

You remember, Kevin, we said that we weren't going to see much seasonality in our business in the second, third quarter simply because of that reason. We didn't have the kind of inventory to be able to pick it up this year.

If we make it, we're selling it.

Okay. I guess in that context, how would you characterize your TiO2 Pigment inventory in days at September 30. I imagine it's a relatively low number, but where would you put that?

We're significantly below the industry, which is in the low 40s. We're well below that.

Okay. And then coming back to ore, if I may. You mentioned ilmenite was 40% of your mix. How would you break down the remaining 60% among rutile slag and other?

It's similar to -- obviously, it's going to vary on pricing and then used demand. But let's...

If you think about our ore requirements just in terms of tons of ore, this doesn't reflect sort of the contained ore, if you will. But we'll purchase roughly 32% of ores, our chloride-based ores, that's chloride slag and rutile. And that 68% of ores are sulfate ores. Now again, that doesn't reflect the contained titanium, right. You have to adjust that for the contained titanium. And so sulfate ores are roughly split 50-50, sulfate slag and ilmenite, and same with chloride slag and rutile for our chloride ores.

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

Is it fair to say that the real bottleneck in TiO2 is in the ore, and so any value creation going forward will flow upstream to the ore, guys?

I'm not sure that, that's necessarily accurate, P.J. Look, if you see a drop in demand or de-stocking that's taking place in TiO2, so it's not like ore is going into TiO2 and a host of other products. If the demand drops for TiO2, demand is also going to drop for ore. I don't just don't buy the argument that you're going to see prices skyrocket because demand skyrockets in ores and without demand doing likewise in TiO2.

I think TiO2, supply-demand is very, very similar to that which is found in ore. So as Peter said, when you have a situation where the downstream product and the upstream product are similar, I think you're going to see very similar pricing practice.

No doubt in 2010 and '11 you saw TiO2 leading the price charge. But in 2012, perhaps you'll see the ore side of that. But I believe that if ore prices go up at the TiO2 industry, if they absorb those ore prices, we'll also be able to pass that on to consumers.

Fair enough. And second question for Kimo on operating cash flow. It's been somewhat weak this year, and I know that you had working capital build year-to-date. So when do you see that operating cash flow improving?

Well, P.J., that's a function really of our raw materials. In short, sort of where natural gas and crude and ores have gone. And as I mentioned, our days inventory and days receivables are very consistent with the historical trends. And as we have seen raw materials moderate here in the third quarter, I think you're going to start to see some benefits. Where I'm sitting today, you should expect to see cash flow from working capital in the fourth quarter given those raw material trends.

Our next question comes from the line of Jeff Zekauskas from J.P. Morgan. Jeffrey J. Zekauskas - JP Morgan Chase & Co, Research Division: Thanks very much for the adjustments to your financial presentation. Providing pretax income on an adjusted basis, it was really easy to work with this morning. You took $102 million in restructuring charges, what did you spend that on in cash charges?

That's almost all headcount reduction. Jeffrey J. Zekauskas - JP Morgan Chase & Co, Research Division: So how many people did you let go, or how many people do you plan to let go?

Roughly 600.

That's in the Textile Effects end of the business. On the Advanced Materials, another 120 positions. So roughly about 720 to 730. Jeffrey J. Zekauskas - JP Morgan Chase & Co, Research Division: And why won't you see the benefit next year? Why do you have to wait till '13?

We will be actually operating -- so picture as we shutdown a facility, we have facilities today that are literally producing scores of different grades of Textile Effects products. And we don't shut down one plant on one day and the next day we operate, start operating the second plant. We have to transition those products from one product to the next over to a new plant. And so that plant needs to continue to absorb its fixed costs and it needs to continue to operate until the last of those products have been certified, accepted by our customers and matched, if you will, by a second low-cost facility. So again, hypothetically, we have a facility in Switzerland that's slated to come down. It's being replaced by a facility, a lower-cost facility closer to our customers in China. That facility in Switzerland will continue to have its fixed cost and will continue to operate until the very last of those grades has been transferred, accepted by its customers. So over the course of 2012, you'll see those grades transferring to China. The facility in China will have to increase its production, have to increase at its cost to be able to take those grades. So essentially, over 2012, while that transfer is taking place, we're operating 2 facilities simultaneously. And won't be until the latter part of 2012, we believe that there'll be full certification, full transfer of those various grades to where you can fully shutdown and eliminate all of the fixed costs associated with your Swiss assets. We will be pushing that as aggressively as we can and as hard as we can, but I think we're also hindered a little bit by how quickly our customers will accept requalifications and so forth. So sorry about the long laborious answer, but I think it's a very good question. We're cutting our costs as quickly as we possibly can, but we will have to do this in order. Jeffrey J. Zekauskas - JP Morgan Chase & Co, Research Division: Okay. In the quarter, you spoke of a $17 million currency hit from the appreciation of the Swiss franc, but it also looks like you had some other currency benefits. What was to the net currency effect in the quarter?

The $17 million is the net -- the headwind from Swiss franc was greater than the $17 million. Jeffrey J. Zekauskas - JP Morgan Chase & Co, Research Division: Okay. And in TiO2, it looks to me like you're selling your product at an average price of somewhere between $3,900 and $4,000 a ton, is that right?

I think on average, that would be -- yes, on average.

I think the average price in the third quarter was $3,650 a ton. Jeffrey J. Zekauskas - JP Morgan Chase & Co, Research Division: Is that exclusive of currency benefits or inclusive?

That is net with changes in currency. Jeffrey J. Zekauskas - JP Morgan Chase & Co, Research Division: So it doesn't include the currency benefits.

It does include the currency benefits. Jeffrey J. Zekauskas - JP Morgan Chase & Co, Research Division: It does. Okay. And then lastly, you said that you thought TiO2 would be pretty -- or Pigments would be pretty strong over the next few years. Did you mean that you expected your adjusted EBITDA to grow or just to stay high or you were agnostic about that?

I think I'd try to avoid any sort of quarterly numbers. Again recognizing that TiO2 will continue to be a seasonal product where you'll see very strong demand in the second and third quarter, weaker demands in the first and fourth quarter. But I think that as you look at year-on-year 2011, '12, '13, going into '14, as far as we can see, I believe that TiO2 will continue to be a very strong, some quarters improving and perhaps some quarters we see de-stocking slackening a bit. I'm not trying to be evasive on the answer. I wouldn't get into trying to forecast it on a yearly and quarterly basis, but I do believe that the sort of margin percentages that we're seeing today will continue with variations, with seasonality throughout the year. Jeffrey J. Zekauskas - JP Morgan Chase & Co, Research Division: But what I meant was over a multiyear period, did you expect your adjusted EBITDA to grow or to shrink or to stay the same not on a quarterly basis, but over the next several years.

I think that we would expect it to remain in the general vicinity where it is today. I mean, again, but with opportunities to expand some quarters and you'll probably see some quarters where you'll see contraction. But I don't think that this is going to continue to grow up towards 40%, 50% EBITDA margins. I look at the margins today, I don't see TiO2 peaking, I see it plateauing. And I see it plateauing for a couple of years that way, at least for a couple of years.

Our next question comes from the line of Roger Spitz of Bank of America.

Could you speak about how propylene oxide volumes and contribution margins move versus Q2 '11 and any outlook on PO demand for Q4 '11?

Roger, your remember that propylene oxide MTBE, we have a very stable propylene oxide contribution and it's the MTBE that sort of moves around. A good benchmark for that would be C factors. And C factors fell second quarter to third quarter from a roughly $0.120 per gallon to about $1.05 a gallon. So they fell roughly $0.15, $0.16. And I think that's probably a good sort of relative change from -- on a sequential basis in our PO MTBE margins.

The C factors, you remember, deals exclusively with MTBE. On the propylene oxide side, again, I think that you'll see fairly stable earnings as a lot of that business is done on a poll basis. So we don't see a great deal of volatility in the PO side of the earnings.

Okay. And on Advanced Materials, which, if not both, raw materials were responsible for that contribution margin compression? And Q3, was it Epi or BPA or perhaps something else or both?

I think I believe it's a combination of both.

Okay. And lastly on Pigments, you said you expect that prices -- I think I heard up in 2011 or $1,000 a metric ton. You spoke about expecting ore cost in TiO2 terms up in 2012 on $700 a metric ton, but have you said or can you say what you expect ore costs in 2011 to be up in TiO2 terms?

2011 ore costs were up about 210 -- about 20%.

Just to follow-up on Roger's question. I think bisphenol A prices rose year-over-year about 34%, and epichlorohydrin prices rose about 18% in Advanced Materials.

So it's both. Just to clarify, the ore costs in 2011 were up about 20% over 2010. Just want to make sure I have that clear.

Our next question comes from the line of Frank Mitsch of Wells Fargo.

I've got some good news for you guys. Your forecast on insulation sales are probably light given how cold my house is without power. So a lot of people here in the Northeast are going to be buying a lot of insulation so I think I'm going to goose my numbers there, so that's good news for Huntsman.

Frank, you have polyurethane spray insulation in your attic?

Obviously, if he's not freezing, he's warm.

You got that damn pink stuff in your attic.

Yes, I'm getting rid of the pink stuff and going with the spray foam, absolutely. Hey, keeping on the topic of TiO2, your prices were up 15% sequentially in the third quarter. We've heard from some others that they are anticipating prices up in Q4. Do have a feel on how much pigment prices might be up in the fourth quarter relative to the third quarter?

Well, we -- from the third quarter we announced the $450 a ton increase and about 50% of that has been achieved, and we're still fighting in certain areas for it, and so forth. But again a 50% increase, $450 a ton, that's a pretty solid increase.

So 50% has already been achieved, great. And on the Performance Products area, you did talk a little bit about the LIFO impact there with raw materials and obviously, ethane costs are up here in the fourth quarter. Would you anticipate a material negative LIFO impact in Q4 in that segment?

I wouldn't expect that to be material in the fourth quarter.

All right, great. And then lastly, obviously, you bought back 4 million shares that, if my math's correct, at a price $0.07 above where the stock is trading right now. Actually it's been in rising as we've been talking here. What sort of expectations should we have on the completion of that -- the timing of the completion of that share repurchase program?

I think again I don't want to get out in front of our board, Frank, but our board continues to believe that our stock is undervalued and we will continue to follow the direction of the board as far as buying additional shares going forward. So I think that it would be unfair for me at this point to try to say what the last 50 million of that, how that will be spent and so forth.

Our next question comes from the line of Laurence Alexander of Jefferies. Laurence Alexander - Jefferies & Company, Inc., Research Division: I guess first question just on pension funding, do you plan on making a pension contribution in the fourth quarter?

I think it would be modest. I think it's roughly $15 million. Laurence Alexander - Jefferies & Company, Inc., Research Division: Okay. On TiO2, just want to triangulate a little bit on the fierce comments that you've made on the fourth quarter. Given how much de-stocking occurred this quarter, do you expect volumes to be down sequentially just with seasonality offsetting the impact of the de-stocking?

Yes, I think that again in the fourth quarter, we are expecting and seeing a combination of seasonality, which is what we see every fourth quarter. That shouldn't be coming as a surprise. And with the increases in pricing that we see, you will see de-stocking taking place in the fourth quarter, particularly in Asia. I think the supply lines, and this is probably -- I don't want to be too general here, but I think this is probably typical in a lot of chemicals not just TiO2. Between suppliers and customers in North America and Europe, you typically have a few middlemen, traders, distributors and so forth and supplies inventories from what I see. Just anecdotally, and this would be for TiO2, but also for other products. You'd see very little inventories, particularly in North America. I think between the producers and the customers, inventories are very low right out. Typically in China where you have a lot of distributors, you have a lot of brokers, you have a middlemen, if you will. You have more inventory built into the system in Asia and you have greater room for de-stocking that typically goes on for 2 to 3 months. And typically that happens during the fourth quarter and usually typically ends sometime around Chinese New Year, which is in the latter or middle part of January. Now again, that's been pretty typical in the chemical industry for about the last 5 to 10 years now. I'm not saying that anything is all that revolutionary. I think that we would be seeing many of those same trends taking place in TiO2. We will see in the fourth quarter both seasonality taking place, inventories will be built up in the season and you'll also see some de-stocking taking place. Laurence Alexander - Jefferies & Company, Inc., Research Division: Now would the impact of the incremental margins on the de-stocking be enough to offset the price increases that you've put through so that net-net, your margins will be down sequentially?

I think that your margins are going to most likely remain stable, and your volumes are what are going to be going down. Margins, if anything, in the fourth quarter with the announced price increases and everything, may well be going up. But again on seasonality and de-stocking, with volumes going down, the health of the product per ton naturally will increase in the fourth quarter. But it's going to be the volume being down the fourth quarter. Laurence Alexander - Jefferies & Company, Inc., Research Division: And then lastly, just quickly as you think about the raw material profile for next year given the rise in ore prices, do you think in aggregate your raw materials will be a source for use of working capital next year?

In this particular end of the business, I think... Laurence Alexander - Jefferies & Company, Inc., Research Division: No, sorry, I guess I just mean across the entire portfolio?

Across the entire portfolio, it would all depend on what happens with raw materials in general. I mean in the last couple of months, we've seen benzine prices and natural gas prices, crude prices, by and large trending downward. And should that continue through 2012, that should be freeing up working capital for us.

Our next question comes from the line of Gregg Goodnight of UBS.

It's tough being in the back in the queue with so many good questions asked by my colleagues. But could I ask about MDI, you noted the weakness in Asia. My question is, have you been able to hold MDI prices up in North America and Europe in October, November with the weakening of benzine or MDI prices drifting downward?

There certainly is pressure to move downward, but demand, I would that as we look at demand, the areas if you would've asked me 6 months ago what's the region that would most surprise me from what we've actually seen, it would be the America. And I think that as you look at the U.S. economy personally, just my personal gut is that the U.S. economy is doing better than the numbers we'll bear out. And I would very much hope that as we see benzine prices go lower that this ought to be an opportunity to expand on MDI prices in the European and U.S. markets. Now again a lot of that will depend on what we see over the course of the next couple of months in Europe, which if you look at the trends in the stock market in the last 6 or 7 trading sessions where we've gone up hundreds of points per hour almost depending on what's going on in Europe.

Okay. Second question, you mentioned that you're expanding 40,000 tons in titanium dioxide. Could you remind us what the timing is on that, and why isn't that a bigger number? Are you just bottlenecked in your plants?

Well these tend to be older plants and the de-bottlenecks that could be done for the most part have been done and it's pretty pricey to get tons out of these plants. And I think that's the case for all of the facilities around the world of our competitors as well. And so 40,000 tons really comes over 3 years and multiple plants and they tend to be $2,500 a ton kind of de-bottleneck opportunities.

Okay. So what is your expectation, say, next year? Will you get a significant chunk of that or is it further down the line?

I think it is probably further down the line. I think as we look at our TiO2 business, and one thing that I mentioned in the call that I hope was picked up is the real shift that we've seen in the Huntsman business, this is beyond the industry changes in the Huntsman business of moving towards more specialty oriented grades. And I would hope that as we look at the business profile in 2012 versus 2010 that we are more profitable per ton in comparison to the rest of the industry because of the transformation that we are taking in moving our tonnage into higher-quality, higher-margin, more consistent margins end use applications and being less dependent on just 1 or 2 large macro applications.

Okay. Last question, if I could. In terms of ore security of supply, a major consultant has projected a shortfall in ore supply in, say, 3 to 5 years, and recently, a competitor of yours has made a move to back-ended [ph] grade of ore. My question to you is will you be able to get ores to sustain your operating rates in, say, a couple of years? I mean, what are you doing to assure that you're going to have access to ores?

We have strong contracts that are in place today. We continue to have to multiple suppliers and multiple sourcing. Again, I'm just speaking in my personal opinion here. I think that there's been a lot of hype about titanium ores. Titanium -- the demand for titanium ores are only going to grow as fast as the TiO2 industry. And I don't see that the titanium ore producers, all of them obviously are looking, a number of them at least, are looking at expansion, de-bottlenecks and where they can get their last ton just like TiO2. I struggled to see a scenario where ore supplies somehow diminish in the coming years and supply demand for TiO2 substantially increases, and we're running around trying to figure out where we'd pick up ore. I just -- I don't buy that scenario, and I have a tough time seeing how that comes about. I think we're going to continue to be well positioned to continue to receive a wide variety of grades of ores from a number of suppliers. And if anything, this should work to our advantage. And I know I have said this before, but I believe that these assets of Huntsman comparison to the rest of the industry, I don't think that there is another supplier or another global quality TiO2 producer out there that's able to buy as much ilmenite and processes as much ilmenite as we do. And the diversity of that supply I think is going to be a unique advantage to Huntsman.

Is there another question, operator?

Yes, sir. Our next question comes from the line of Bill Hoffman of RBC Capital Markets.

Peter, you mentioned before, you just talked about sort of the normal seasonality in inventory just talking about this sort of 20% into the fourth quarter. I just wonder if we could -- we obviously talked a lot about TiO2. But if you look at the other businesses Polyurethanes, Performance Product, Advanced Materials, et cetera, how are you guys planning this year end versus normal year end, just given the amount of uncertainty out there? And I'd also be curious what you're hearing from your customers as far as their outlook going into next year?

Well, I think that, that's a very difficult question to answer and I'm not trying to be evasive. We have seen orders, long-term orders. So if I'm in October ordering for November where I'm ordering 2 months in advance, we've seen those orders have diminished. Where short-term orders, where I'm in November ordering for November delivery, those orders have increased. And so what that tells me isn't that people is necessarily buying less product, but the people are waiting for the last moment. People are running low on inventories. Again, this is not in every product in every market around the world. There's not a lot of long-term vision out there that we're seeing from our customers. I think that fourth quarter for us, as you look over the last 5 or 6 years with Huntsman and with the industry in general, you typically see third quarter is one of the stronger quarters of the year, fourth quarter is usually down around 20% in EBITDA. And I'm not sure that ours would be too dissimilar to that.

Ahead of seasonality. So in addition to sort of the typical seasonality, we have been more aggressive in reducing our inventory levels given the uncertainty in the world.

Okay. And then the second question is really for you, Kimo, just with regards to CapEx still targeting this 350 for the year means a really big fourth quarter. But as you look into next year, as you finish off some of these projects, can you give us some guidance on what you're thinking about for next year?

Yes, I think we'll probably spend close to depreciation next year.

Okay. And most of that are sort of front-end weighted, like I say, as you finish some of these projects you're working on?

The way we -- the pattern every year of our capital is really back-end weighted, and I think that will continue to be the case where we budget and it just takes a while to be able to get those projects up and going. And typically, we spend more in the second half of the year.

We also have a process internally where as the year progresses that we reapprove, if you will, internally those projects. So if the economy should flow for some reason or if there are some reason why we don't want to go forward with those, we also take that into account as well. Operator, why don't we take one more question here before wrapping it up.

Our next question comes from the line of Bill Young.

It's Bill Young from ChemSpeak. On the Textile Effects business, there have been restructurings and shifting this production, doing this and doing that for years now and it seems like it's been really tough to generate a return. I realize what you said that while we expect to have $70 million annual cost savings after a couple of years as a run rate, but tell me is it worth staying in the business. It seems like it's been a real challenge long term and if you don't get the $70 million, you just have to question why Huntsman stays in the business?

Bill, thank you for the question. I think management needs to explore all ways to fix the business and to possibly exit the business. As we explore those alternatives, if we can affect the business, we got to affect it, we got a change it and that's what we're doing here. With these kinds of margins, I'm sure you would understand that it's probably not the easiest business to sell.

Well, at some point, maybe someone has to bite the bullet. Second, the epoxy business. It doesn't sound like it's doing that well. Underlying everything, what could be better or what are the issues that are confronting the epoxy business right now.

Well, I think that if we look at the epoxy business. The epoxy business is doing much better than perhaps the numbers would suggest, and as I said in my prepared remarks I think that 2012 will be an improvement over 2011 as we are increasing our volumes, our sales. I think that as we look at the delays that they've taken in supplying products to the avionics, aviation industry and so forth. I think that the business is about $20 million, $25 million less on its last 12 months since I've looked at it. It's about $25 million below its average, 150 EBITDA run rate. And we've taken about $20 million-ish or so in the last 12 months of a currency hit on that. We've also cut $20 million and we believe, I think going forward, we're going to lessen our exposure to the Swiss franc. But I remain very bullish on this particular business. I think we've got the right management team in place. I think that we are getting our cost structures rapidly put into place and I think that our aggressiveness in moving volume, particularly moving into the higher end to the aviation industry and so forth, again I think that as I look into 2012 and I rarely make forecast going into a year out, I think that this business is going to be materially improved in the next 12 months.

Thank you very much, Bill. And again, I would just emphasize what I said in my prepared remarks. As I look across the board, at our businesses here, it does appear that capacity even with a rather anemic global growth that is taking place across the spectrum, we see very little new capacity that's coming on globally. And I think that as we look out over the next couple of years, I think we remain to be very optimistic about the macro trends that we're seeing. So Bill, thank you very much for your question. With that, I think that we'll thank you all for joining us. And operator, that should conclude our call.

Ladies and gentlemen, this concludes today's conference. Thank you for your participation. You may now disconnect and have a great day.