Huntsman Corporation announced that a fire started on 30 January at the company’s TiO2 facility in Pori, Finland. According to the release, the fire brigade responded quickly and extinguished the fire, and the company is committed to repairing the facility as quickly as possible, though no guidance was provided on a potential restart date. The Hunstman facility in Pori is capable of producing  130,000 tonnes per year of TiO2, equivalent to around 15% of Huntsman’s capacity and 10% of total European demand. We estimate that this facility represents around 2% of global demand for TiO2.   What does this mean? It is too early to tell what the impact of the fire will be, as we have no indication yet as to how much damage occurred nor how long the plant will be shut down, and the company has not announced a force majeure as of yet. But if the plant is down for an extended period of time (several months), this is likely to be a positive for prices in the short term, especially as the latest reports imply that the global TiO2 market has been somewhat tight to start 2017 (link 1, link 2), and that inventory levels are relatively low (this could trigger some restocking). Higher European prices are likely to spill over into other regions, as more exports are directed to Europe to cover shortfalls there, improving supply balances elsewhere.   What kind of impact was there historically due to similar shutdowns? The most recent precedent that comes to mind is of a large TiO2 plant declaring force majeure for an extended period of time was Cristal’s Ohio plant in 2010 (215,000 tpy), which caused the company to declare a force majeure for a couple of months. During this period, TiO2 prices in the US and globally improved about 5%. As such, we are not necessarily expecting huge price increases on the back of this but at the very least -if Huntsman does end up declaring force majeure- it will be easier for producers to push through their planned price increases for 2017 and should improve market dynamics ahead of the peak seasons in 2Q and 3Q.     What is the impact on Tasnee? Positive in the ST, but fundamentally, we remain Neutral: Assuming the shutdown lasts, we expect this to benefit Tasnee in the short term. Tasnee’s European capacity is around 20-25% of the company’s total capacity, so these assets would see a direct benefit. However, as mentioned previously, the impact is likely to be felt in all regions as shipments get diverted to Europe, putting upward pressure on prices in other regions. That said, we do not see this as a game changer for the company, but it could trigger some short-term excitement on the name (stock today +3%). Fundamentally, we remain Neutral on Tasnee and still see some challenges ahead this year. (Company disclosure, Yousef Husseini)   National Industrialization Company: SAR16.54 as of 1 Feb. 2017, Rating: Neutral, TP: SAR14.50/share, MCap: USD2,950mn, NIC AB/2060.SE