Good day, ladies and gentlemen, and welcome to the Q4 2012 Huntsman Corporation's Earnings Conference Call. My name is Alex, and I'll be your operator today. [Operator Instructions] As a reminder, this call is being recorded for replay purposes. And now, I'd like to hand the call over to Kurt Ogden, Vice President of Investor Relations. Go ahead, please, sir.

Thank you, Alex, and good morning, everyone. Welcome to Huntsman's Fourth Quarter 2012 Earnings Call. Joining us on the call today are Jon Huntsman, our Founder and Executive Chairman; 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 fourth quarter and full year 2012 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 will also refer to non-GAAP financial measures such as EBITDA, adjusted EBITDA and adjusted net income or loss. You can find reconciliations to the most directly comparable GAAP financial measures in our earnings release, which has been posted on our website at huntsman.com. Let's turn to some highlights on Slide #2. In our earnings release this morning, we reported fourth quarter 2012 revenue of $2,619,000,000; adjusted EBITDA of $233 million; and adjusted earnings per share of $0.24 per diluted share. Our full year 2012 adjusted EBITDA was a record $1,396,000,000. I will now turn the call over to Peter Huntsman, our President and CEO.

Thank you, Kurt. Good morning, everybody, and thank you for taking the time to join us. Let's turn to Slide #3. Adjusted EBITDA for our Polyurethanes division in the fourth quarter 2012 was $186 million, an improvement of $107 million compared to $79 million in the prior year. The majority of the EBITDA increase came from the improvements in our MDI urethanes business. Despite the weak global economy, demand for our MDI products is growing at historical rates. Fourth quarter sales volumes increased by 7%. Including our acquisitions in Turkey and Russia, our sales volumes increased by 9%. In North America, we've seen a modest recovery in the housing market. However, our penetration in composite wood products has accelerated and grew at double-digit rates throughout the year. We believe that in 2013, with housing starts of approximately 900,000, our MDI sales volumes in composite wood products will approximate peak levels in 2006 when housing starts were nearly 2 million units. Composite wood adhesives represents approximately 15% of our total MDI sales volumes. However, in the Americas, it represents approximately 1/4. In the Americas, we saw total MDI demand improve at double-digit rates in the fourth quarter, and growth in the composite wood products was the biggest contributor. During the fourth quarter, we successfully raised our MDI selling prices and were able to offset the increase in raw material costs. The cost of our largest raw material, benzene, increased by approximately 50% in the Americas compared to the prior year period and may continue to be a headwind. However, as utilization rates tighten, we expect MDI margins to continue to expand. We blend propylene oxide-based polyols with MDI to create specific polyurethanes system solutions for our customers. In the U.S., we manufacture our own propylene oxide. MTBE is a by-product of…

Thanks, Peter. Turning to Slide 8, let me add a few comments to Peter's about Pigments' business cycle. Long term, we think about our Pigments division as having approximately a $200 million normalized EBITDA run rate. This represents an improvement of approximately $200 per metric ton from pre-2008 recession averages. This improvement is primarily the result of our cost-reduction initiatives and the lower-cost ilmenite feedstock advantage, certain of our sulfate plants have relative to traditional chloride ores. Although 2013 earnings will be lower than this normalized level, we're optimistic that the business conditions will improve and our business will exceed the normalized run rate of $200 million EBITDA in 2014. Earlier, Peter talked about the aggressive restructuring underway in certain of our businesses. Our current restructuring initiatives have targeted annual savings of about $220 million, of which, $30 million was achieved in 2012. We expect future benefits of approximately $190 million, of which, approximately $105 million should be captured in 2013 versus 2012. We expect to complete these programs by the middle of 2014. In 2012, we estimate our Polyurethanes division benefited by approximately $90 million as a result of MTBE industry supply outages, which we don't expect to repeat in 2013. In the first quarter of 2013, we are performing a scheduled maintenance on our olefins and ethylene oxide facilities in Port Neches, Texas, as Peter said. We expect the EBITDA impact to be approximately $45 million. In 2013, we expect increased pension expense of approximately $25 million primarily as a result of lower discount rates. In 2013, we expect our adjusted effective tax rate to be approximately 35%, which is higher than our 2012 rate of 30%. This is primarily due to the effective tax valuation allowances and expected regional mix of income. Let's go to Slide 9.…

Thank you, Kimo. As we conclude a record year of adjusted EBITDA while operating in our current product mix, I feel that we are ending the year on a very strong note. Since our Investor Day nearly 1 year ago, we told you that our focus was going to be to improve the quality of our earnings, controlling our costs and growing our business. With respect to our growth in 2013, each of our divisions are projecting sales volume growth rates greater than projected GDP. Additionally, we continue to make progress in the expansion of our Chinese MDI capacity. This past month, we joined our partner, Sinopec, in a groundbreaking ceremony in Nanjing, China to construct a worldscale PO/MTBE facility. We continue to work towards a DGA morpholine facility in the Kingdom of Saudi Arabia. These 3 projects alone represent nearly $2 billion of investment, of which our capital contribution before licensing income will be approximately $250 million. When complete, these projects will increase our earnings per share, further establish our Asian footprint and do so with a minimal risk and investment. Regarding our focus on cost controls, between now and the end of next year, we will reduce much of -- we will restructure much of how we do business as we align our operations and functions closer to our customers. This transformation will eliminate $220 million of costs by the end of next year. $105 million of these savings will be realized this year. With respect to the increase in the quality of our earnings, we are ending this year in a very strong position. Our Polyurethanes, Performance Products and Textile Effects businesses represent approximately 80% of our revenue. Their EBITDA improved approximately $150 million in the fourth quarter compared to the prior year. Looking into 2013, our non-TiO2 divisions are projected to have a record year. While on TiO2, our Pigments business will start the year around breakeven. Conditions today lead us to believe that we will see this business improve throughout the year, especially in the second half. We leave 2012 quite satisfied with what we have done. As we look to 2013, we see continued opportunities to increase shareholder value. With that, I'll turn it back over to Kurt.

Thank you, Peter. Alex, 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 P.J. Juvekar from Citi.

This is Eric Petrie standing in for P.J. Just wanted to target your comments on lower contribution margin in Pigments for first quarter due to prices. Last week, we saw European TiO2 prices decline by 5%. Do you expect that weakness to spread to North America and Asia Pacific? Or do you see differences in regional supply and demand?

I'm not sure that we see it spreading as much as we see it simultaneously taking place. And I don't think one region falls and then eventually the other regions will fall with it. But I think that what you're seeing in Europe, you are seeing that taking place in North America and Asia simultaneously. We think that this erosion in pricing will continue probably through the first quarter. And I would expect in the second quarter, you'll start to see strengthening, returning to the markets. Demand will be picking up, and prices will be picking up in the second quarter going into the latter part of that quarter and then the early part of the third quarter.

Okay. And then my second question was on the free cash flow, generation improved year-on-year in 2012. Do you have any goals in '13 for working capital ratio targets? And then as a follow-up, CapEx increased from $80 million to $164 million, and could you give us a breakdown or any color onto that?

Sure. I'll take the last bit of your question first. In terms of CapEx, we thought we were going to spend roughly depreciation in 2012, and that's where we came out. It was a little more back-weighted, but they're still pretty close to what we thought we would spend. So no surprise there. As it relates to operating cash flow and working capital metrics, we do have inventory days that we look to. We, in fact, have an incentive compensation scheme for our managers that is working capital-related. And so we're very focused there. We would expect in 2013, if our crystal ball is right around raw materials, that we will generate cash from working capital in 2013.

Our next question comes from the line of Laurence Alexander. Laurence Alexander - Jefferies & Company, Inc., Research Division: First of all, just eyeballing the gives and takes, it looks as if -- do you think your EBITDA can be flat in 2013? Or are you looking for it to be down a little bit by like $100 million or $200 million?

So much of it is going to depend on our TiO2 business. I think that, as I said in my comments, the non-TiO2 businesses, I think there are, in total, are going to have a record year for us. And you can look at a scenario where TiO2 is going to be down from the previous year $200-plus million. You can look at scenarios where it's going to be less than that. But that really is going to be, in my opinion, depending on how you view and project your TiO2 numbers. It's going to be the biggest difference. But I certainly would say in 2013 that the quality of the earnings, meaning, from the source of the earnings geographically, the source of the earnings technologically and the source of the earnings from all of the divisions across the board with the exception of TiO2, we believe will be strengthening throughout the year and will end the year equal to, if not stronger, than where they were in 2012.

Laurence, if I could just add, you've heard us say in our opening comments that we have about $140 million worth of headwind 2012 to '13 when you include the turnaround in Performance Products and the $90 million of MTBE benefits we had in '12 because of outages. So we said very clearly, we think those 2 divisions offset that headwind in 2013 and will be similar to 2012 profitability. Textile Effects will be up, Advanced Materials would be up. And then we said that in Pigments, that normalized EBITDA is $200 million roughly, and we will be below that. So when you think about $200 million or lower relative to what we did in 2012, that is another fairly large market headwind, if you're really trying to get to that 2012 level. My guess is we won't make that 2012 EBITDA level. Laurence Alexander - Jefferies & Company, Inc., Research Division: Then separately on poly, on the MDI business, as you look farther out 2014, 2015, how comfortable are you that utilization rates continue to improve into the middle of the decade?

I think that we feel very confident about that. I mean, we have a pretty good view as to who's bringing capacity into the market. And as we look out over the next 24 months here, there's roughly about 100 -- well, there's about 300,000 metric tons of capacity, new capacity that will be coming into the market over the next 2 years. Now if the market is expanding at the rate that it expanded this past year, which is about 7%, and that's an expansion on 5.7 million tons of capacity, the industry will need about 400,000 tons of capacity per year of new capacity just to stay even with where we are today. So I would say that over the next 24 months, obviously, that we need about 800,000 tons of new capacity coming into the industry to stay flat with where we are today. And what our numbers are showing us is that we believe that the addition of new tonnage in the industry is going to be closer to about 300,000 tons. Now depending if somebody -- there might be some small gives and takes in those numbers. But we believe, over the course of the next 2 years or so, that you're going to have certainly a tighter market 2 years from now than you see today. I believe that the industry is operating in the very high 80% utilization rate. So that's a tough one to get your hands around because it's tighter in some areas around the world than in other areas. But by and large, I would -- I feel very confident that over the course of 2013 and moving to 2014 and even into 2015, that you're going to see utilization rates tighter than they are today, barring a major global…

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

Peter, when you were talking about the Polyurethanes business, I'm trying to look at the puts and takes in the various -- the 2 major drivers, the polyurethanes -- I'm sorry, the urethanes versus the PO/MTBE. It looks like you got that $90 million headwind, but you've got about $40 million of incremental savings. So you're expecting that business to grow about 7% EBITDA x that restructuring growth. How would you partial that out between the 2 major segments? I just wanted to get a little more information on that.

Well, I would say that about 2/3 of our -- if you look in the past year, about 2/3 of our improvements, when you strip out the onetime benefits of outages, about 2/3 of the improvements that we experienced this last year came from MDI over PO/MTBE. And I think that going forward, as we look at the improvement in that business, we would say that this next year, probably about half of that improvement will come through cost reduction, half of that improvement will come through an improvement in our MDI and our margins and moving further into our systems and moving further downstream. Of that $50 million, $40 million of cost reductions, $45 million or so of improvements in the MDI.

Frank, you've heard us describe this business as half of it is utilization rate-sensitive and half of it is more system-based and more stable margins, and we're starting to see that more utilization rate-sensitive side of it really expand in terms of margins. And we think this is a business that can do $1 billion of EBITDA in the future. And that's not going to be driven by PO/MTBE, that is MDI-based sort of uplift.

So we should continue to see an improvement in MDI operating rates in 2013?

Absolutely. I look at where we were in 2005 -- 2004, '05 and '06, in that time period, we're still quite some distance away in MDI of reaching what I would say would be a peak sort of level of margin performance. So I'm happy with where we are in MDI, but we've still got a ways to go.

Okay. All right, great. And then lastly, Peter, I think when you were talking about Advanced Materials, you said that you anticipate '13 to be better by -- than '12. But I think that you attribute it all to the restructuring benefits that you anticipate realizing. What are the difficulties that you're seeing in your end markets there? I mean, obviously, wind energy is an issue. But can you spend a moment or 2 talking about the pluses and minuses by the various parts of AM?

I think that as we look at the business, we kind of look at it over a multi-year period. We continue to be very satisfied with the growth of our aerospace business. The electronics business is growing for us robustly around the world. A lot of the coatings, flooring businesses, some of the more niche and specialty adhesives business applications continue to grow and do quite well. But we have a large volume driver of what I would call very commoditized BLR, basic liquid resins, and that business is at historical lows. And you probably have heard some of the CEOs of some of the other companies that have made comments that are in that same business talking about some of their plant closures and so forth that are taking place. And I personally believe if we look at BLR, I'm not projecting this next year that thing turns around and goes through the roof. But I think that there's a sense in the industry that there are so many people that are hurting in BLR, that capacities will be rationalized throughout the year. That's already been publicly announced by some of our competitors. We're evaluating some of our own capacity as part of that exercise. And so I would think in the BLR side that you probably have seen the bottoming of that taking place, and you'll see a gradual recovery. But if we look to this business, our growth rate over the course of 2013, 2014 and '15 is really going to be largely based on those applications that continue to do well for us. As I look at our January order patterns and so forth, they continue to do well for us today in aerospace, electronics, coatings and so forth. And this is going to be the engine of our growth going forward.

Our next question comes from the line of Kevin McCarthy from Bank of America Merrill Lynch.

Kimo, in putting forth your TiO2 pigment earnings guidance for 2013, what are you baking in with regard to cost of titanium-bearing ores? And perhaps you could just comment a little bit on what you're seeing out in the marketplace as it relates to your rutile, ilmenite and slag?

Sure, sure. Ilmenite really hasn't changed. It was, 18 months ago, maybe $200 a ton, and now it's $300 a ton. And it really didn't move up that high, and it doesn't look like it's come down much. As it relates to the slags, chloride slag hasn't moved much at all either. It's about $1,500 a ton. Now sulfate slags are lower than chloride slags by $200 a ton, roughly. And rutile is the one that really has come down quite a bit. You remember it was $2,200, $2,300 a ton a year ago. And right now, you're seeing it at parity with the chloride slags on a contained-titanium basis. So if you sort of do your numbers on a contained-titanium basis, you've got roughly $600 a ton for ilmenite, call it $1,600 a ton for rutiles and slags, you're really $1,000 a ton different in contained titanium between the 2 ores.

Okay, that's helpful. And then second question, if I may, on taxes. I think in your press release, Kimo, you indicated an increase to 35% for 2013, and you talked a little bit about geographic mix and also valuation allowances. Can you explain what is going on with the valuation allowances and also comment on whether or not your cash tax rate might change in '13 versus '12?

Sure. It's really all about TiO2 and European countries. So we have NOLs in places like the U.K., France and Spain. We have several manufacturing facilities from our different divisions in those countries. But for the most part, they're driven by TiO2 profitability. In a year -- well, in a quarter, like the fourth quarter when we generated $10 million of EBITDA, you can expect that those countries saw pretax losses. Unfortunately, when you have pretax losses in valuation allowance countries, you can't book a benefit for that loss. It has the effect of pushing your effective tax rate up. And so in 2013 when we're projecting it to be a tough TiO2 year, you would expect that our effective tax rate will be higher because we will have losses in certain European countries because of TiO2, which will push that rate to the higher end of our range.

And then if I look out to '14, you signaled TiO2 goes back above your normalized levels. And presumably, that's the reason your tax rate starts to drift back down from the 35% level, is that correct?

Exactly. You start making money in the U.K., you start making money in places like Switzerland because of Textile Effects. And you'll see that effective tax rate drop to, well, something like we did in 2012, kind of a 29% rate.

Our next question comes from the line of Robert Koort from Goldman Sachs.

Got a couple of, I guess, unrelated questions. First on the MTBE side, I think you said you had an increment of $90 million of sort of extra earnings this year. Could you give us a sense within that $800 million polyurethane EBITDA for the year how much in total MTBE would have been?

It is a tough calculation because you got big plants and that fixed cost relates to, of course, both PO and MTBE. So you're making up numbers at that point, truly. I mean, I suppose you could try to look at MTBE profitability on a on-purpose basis. But we don't run in on-purpose plant, and we'd be guessing at some of those assumptions as well.

So the guess for $90 million of incremental earnings was just based on what?

Outages, and we saw MTBE prices rise above what we would have expected otherwise because MTBE markets were tight. So that's purely a price view in terms of what we thought we got from these outages.

Okay. And then when I look at your $5 billion Polyurethane business, in trying to figure out what kind of leverage you would have in the U.S. housing, can you tell me what share of that revenue base would be into the U.S. housing markets?

Well, we said that 25% of our U.S. Polyurethanes business is composite woods, but that's clearly U.S. housing. Before we go to insulation, let's just sort of try to think about what percentage of our overall business is North America, and it's roughly about 1/3. Yes. When you think about our business, it's probably 1/3 Europe, 1/3 U.S. and 1/3 sort of Asia and Rest of the World. And so that gives you the composite wood. Now there are some insulation that goes into housing in the U.S. But for the most part, it's commercial application and panels and so forth. But there are some polyurethane that goes to that, to homes.

So maybe somewhere north of 10% of the Polyurethane division seem reasonable?

That's a good number. It's probably a little higher than that, actually.

Yes, it's probably a little higher than that, Bob. I would think also, as you think about some of the fastest-growing markets that we see in Europe and in Asia, it's also around OSB in those markets as well. So I mean I know you're focused on U.S. housing, but we're also -- one of the areas that we're seeing a growth taking place in a lethargic economy like Europe is in OSB applications in Europe. That's one of the growth industries we see growth year-over-year. And in Asia, we're seeing the same thing, as people are moving more and more towards similar sort of building materials as we see in North America.

Got it. And my last one, in Performance Products, you guys talked about a $45 million hit in the first quarter, which seems like a pretty large hit if I think about sort of lost production volumes and ethylene cracker spreads and that sort of thing. So can you give me a sense of what you're getting for that $45 million?

Well, the $45 million, we're having to do a maintenance turnaround that we'd have to do, whether that number was $100 million or nothing. Every 4 years, we have to take the facility down and completely overhaul it and replace a lot of the equipment and so forth. So it's really not -- it's more of a license to continue to operate the facility, if you will, more than any incremental expansion or business investment cases taking place.

Not to throw -- Bob, not to throw fuel on the fire, but it's in fact, the investment is a lot more than the $45 million, right? I mean, the cash cost of this turnaround is roughly $70 million, and we take that and we amortize that over the next 4 years. On top of that is lost sales or having to purchase outside raw materials that otherwise we would have manufactured. That's the $45 million that we're speaking to. So put those together...

I got it. So are you squeezing out a little extra production from that cracker?

It'll have a higher rate of operations, slightly higher rate, and the reliability will be better. Typically, when you enter the end of your 4-year cycle, your catalysts and so forth start to deteriorate. So I would hope that we'd have stronger production rates. These aren't -- I don't think this is going to be material to our earnings. Also, Bob, I would just note that when we talked about that $45 million, that's our best estimate that we have right now. We won't know that number until really we're completely done and we've been able to go back and look at the price of raw materials during that time period and the price of ethylene and the price of product for resale that we had during that time period. So unlike the turnaround itself where we know that we're going to be spending $70-some-odd million in parts and labor and so forth, the actual EBITDA hit, it may come in a few million dollars less than that. But I think that from what we're seeing thus far, the $45 million I think is a very safe number as far as the lost EBITDA that we've incurred by having the plant down for maintenance. I'll make sure that we emphasize this because some people, when they look at our -- when they project our first quarter, for some reason, they forget that number. And so a $45 million hit in our Performance Products, and what we're telling investors again is in 2013, we believe that the business, the Performance Products business, will improve its EBITDA enough in 2013 to be able to make up for that $45 million EBITDA hit, to be able to make up for that and which just tell you that that's a bottom line growth in the business of greater than 10% that we'll see throughout the year.

Our next question comes from the line of Michael Ritzenthaler from Piper Jaffray.

In your outlook for 2013 in Polyurethanes, do you have a good sense for the Yantai JV facility in PO/MTBE? You did a good job of articulating the Sinopec agreement for next year, but I was wondering if you could give us a little more context around the first such agreement that you guys entered into with Yantai.

Yes, you're talking about the Yantai propylene oxide MTBE joint venture?

Yes, exactly.

Okay, yes. We're just licensing that technology to them, and we'll be receiving a licensing income from that, but we will not be deriving any value from the sales and so forth of that project. So that really shouldn't be something that we're factoring into our MDI business strategy going forward.

Okay. And then I just wanted to touch briefly on Textile Effects, if I could. In the year-over-year increase in volumes, I mean, you highlighted in your prepared comments that you were taking share. Is there something specific that's going on there that's enabling you to do that? And how much runway is left in that incremental capture?

Well, I think as that incremental capture just -- firstly, in my opinion, is just starting. I think when you look at most of our major competitors in that business, either they are in the process of selling their business or trying to sell their business or making substantial reductions in their R&D and so forth. We are in the midst right now of a cost reduction. But much of that cost reduction is actually strengthening the business. We're shutting down production and our costs in Switzerland, and we're moving into Asia. The same week that we have the groundbreaking in Nanjing, China for the PO/MTBE joint venture with Sinopec, we also have the ribbon-cutting for production in Mahachai, Thailand, of a lot of our production that has taken place in Switzerland has now been qualified, is now up and running, we have product out of that Thai facility that will be servicing customers. So as we look at the Textile Effects business going forward, I think that we have an opportunity to continue to grow that business at strong single digit sort of sales rates, assuming that the industry itself grows only at 1% or 2%. I think that we are investing more on new products. We're investing certainly more in new production than our competition is. And I think that the customers and the ultimate consumers are really rewarding us for that.

Our next question comes from Gregg Goodnight from UBS.

One question I had, Peter, you're laying out a pretty good argument in terms of industry growth and the lack of capacity after 2014, '15 that the industry is going to require some more capacity. Could you update us on what your thinking is on your potential North American MDI expansion, and when might you get to some sort of decision point?

Well, I think that we are presently evaluating debottlenecking projects. Our next phase is then to evaluate putting in a new line. And then you'd look at actually adding something that would be similar to a new facility. And I think like most chemical investments in North America right now, we feel pretty good about the market conditions today, but there's just still a great deal of uncertainty. And unless you're building a large commodity facility around cheap gas play on gas frac-ing, I think that we're taking a longer term. We're optimistic about where MDI is going, about where the demand is going. But there just seems to be a sense of uncertainty in the overall economy of North America. And so I think that we're looking now at projects that will further incrementally expand and further downstream derivatize our MDI business. Again, one of the areas of MDI growth for us as a company, I believe, is not necessarily adding more tonnage to the industry, but it's taking our existing tonnage and moving that further downstream through systems, through variance and adding that with other Huntsman chemistry to create value with that. So in North America, Polyurethanes, MDI, we're going to be focused on where we can get the cheap pounds, added cheap pounds, and also where and how we're best going to be able to add value to the existing tonnage that we already have.

And a decision point on, say, an incremental expansion, when would that be?

I think that if we decide to do something, that you're probably looking in the next 6 months or so. I also would just like to correct something I said earlier that 40% of our $76 million cost savings in MDI would fall to the bottom line this year. I should have said $40 million. So $40 million, we view, in the MDI business, we have a cost improvement process that is going on right now of $75 million. $40 million of that is going to be hitting the bottom line in 2013.

Okay. Second question for Kimo, in terms of your 2013 CapEx target, can you mention any big bucket projects that are included in that CapEx, and how much is just purely maintenance?

Yes, every year, it kind of moves around in terms of maintenance, Gregg. I kind of think about maintenance meaning sort of mandatory environmental health and safety sort of -- that sort of thing. It's kind of $125 million. In a turnaround year like this year, it'd probably be $150 million. So there's a lot of discretionary capital, as you mentioned. Some of the projects that we're focused on in titanium dioxide are providing greater or flexibility around ilmenite, around some of our current sulfate slide plants. We have a large project in Calais, France in TiO2 related to magnesium sulfate fertilizer that will deal with some of the by-product that comes off that plant. We also have expansions in, as Peter said, in some of our variance or more specialty MDI businesses in Europe. It's a large project. We have expansions in our amines businesses. And then in Advanced Materials, we've announced publicly a large expansion in our McIntosh facility here in the U.S. for aerospace. So there are several projects, not any one big throw, but we have several of them. Another project is expanding our ethylene oxide facility in North America that will capture some of the North American advantage that exists here.

Our next question comes from the line of Hassan Ahmed from Alembic Global Advisors.

Listen, first question, if I may, on the TiO2 side. I know everyone has been talking about it a fair bit. I just wanted to get a better sense of -- or your views of just the shape and base of this evolving next cycle? And the way I'm thinking about it, as I look at current quarter's EBITDA margins, 3.5%, very comparable to the distressed period of Q2, Q3 '09. And then thereafter, going back to '09, we saw this snap up in terms of margins, 17.5% EBITDA margins in 2010, 30% EBITDA margins in 2011 at Huntsman. We're really not seeing much of a supplier response right now, and you guys clearly have a bit of a feedstock advantage as well. So is there a case to be made that we see a similar snap up?

Sure. There's a case to be made. I think that as we looked at 2013, I think that as you look at the Q3 and Q4 performance of 2012, you definitely see destocking that is taking place. You see customers that are burning through their inventories, and the worst place that we saw that happen was in Asia. And quite specifically, I tried to highlight in my call that as we look at the turnaround, we believe that for the turnaround really to come in to this industry, you've got to start seeing Asia seeing some year-over-year growth. And for the last couple of quarters, we have seen that. And in the fourth quarter, we actually did see a year-over-year growth in TiO2. Now as we look at 2013, I would say that 2011 was definitely a year of almost panic buying on the sense of the customers. I think that 2012 was a year of massive destocking from the customers, the world didn't come to an end. I think 2013, as we look at the volumes, I think 2013 is going to be more of a normalized year. It's going to start the year very poorly, obviously, as we've already said. But I think that throughout the year, and by the end of the year, I think that you're going to be going into more normal operating conditions. Now could it swing up from there? I think that it certainly could. I'm not going to sit here and say that we're going to see margins go from 0% to 30% in the next couple of quarters. I think it has a much likely higher probability, just again my opinion, has a higher probability of doing that than it does of staying at fourth quarter sort of run rate margins throughout the year. But I think that, again, my view is kind of more between the 2. I think that by the end of 2013, you're operating this business more in normalized market conditions. And we define, for Huntsman at least, normalized this business ought to be doing around $200 million EBITDA sort of condition.

Very good. And a follow-up, if I may. On the polyurethane side of things, obviously, right now in this market, there should be a huge differential between the PO/MTBE production versus the PO/SM production. So just your views on the sort of where those 2 stack up on the cost curve as it stands today.

I'm trying to expunge all of the styrenic memories from my mind, to be honest.

Fair enough. But there clearly is capacity out there.

I've got to be honest with you, I have no idea what PO/SM economics are. I would say that from what limited knowledge I have in that area, I think that PO/MTBE is absolutely the right way to go, particularly if you have a strong MDI business that can take that PO and create value with it.

But I mean just a sense of scale or whatever. I mean, do think that PO/SM would be breakeven-ish right now on the cost curve?

I'm not trying to evade an answer. I'd share with you. I just have no idea. And internally, that's not even a number that we track as far as propylene oxide styrene monomer.

Hassan, let me jump into your first question and just add just a little bit of color on TiO2 trends regionally that I think is interesting, maybe a point that we haven't made, and that is in the fourth quarter, we saw something interesting in Asia, as Peter pointed out. We've shown slides before in our conferences where we show kind of a 5- to 7-year band of demand and where we sit today in that 5-year, 7-year demand. And Asia actually in the fourth quarter moved to the top of that band. So clearly, not only through the inventory correction, but really on the high side of demand. At the same time, we saw Chinese exports to Europe primarily fall dramatically, which leads me to believe that Asia is consuming much of their own production in TiO2, which really allows Europe, primarily, to see pricing stabilize and actually strengthen. I think that's an important dynamic.

Next question comes from the line of Andy Cash from SunTrust.

I just want to turn in now to titanium dioxide in Europe, I was just curious with that TiO2 business in Europe up for sale, do you think that had an impact on the TiO2 market? And do you think there's any -- what are the odds of a transaction happening in 2013?

Yes, I don't think that it's -- we don't really compete with much with that facility, and I wouldn't say that -- I wouldn't categorize them as a stabilizing force or a reckless force. We just -- to be honest with you, we don't really come across that particular facility very much. And as far as what they might do, I just -- I have no idea. I mean, it looks like they've been fairly aggressive last year, so trying to get rid of it. And I don't know if the markets are really improving that much for that [indiscernible].

I mean if it goes in the hands of a newcomer to the business, maybe that could be disruptive for a longer period of time until they kind of learn the ropes. Do you think there's any risk of that happening?

If it does happen, again, we really don't compete against that certain -- the output of that facility goes into kind of a specialty niche area. And we have a little bit of overlap there, but not a great deal. And if somebody got in there and kind of had the learning curve or whatever, where they messed up those end user -- or end markets, I just don't see it affecting our pricing and margins because we just compete in different areas.

Okay, that's very insightful. Just one other thing. So most of this disruption in the TiO2 is clearly just an inventory disruption. Do you have any evidence -- is there any demand changes in TiO2 made from chlorine, chloride versus TiO2 made from sulfate? Or is it just too disruptive right now to kind of figure that out?

Well I don't think that it's -- I think again, as I said in previous calls, I think one of the big misconceptions of this industry is somehow that this chloride product gets a premium, it's in higher demand, that, that's the new product that's coming into the market. If you look at when was the last chloride facility built that really added into the market -- years and years ago, you look at all new capacity that's coming into the market that's displacing chloride, it's sulfate material. We sell both into the market. There's absolutely no difference in demand trends or pricing trends, and I think it's going to continue to remain that way.

We have no further questions left in the queue.

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