ALB
#Hi, P.
J.
, this is <UNK>.
Both businesses contributed well to that growth because on the FCC you may recall that year over year last year we went through a period with a lot of trials.
So the volumes were somewhat better this year together with the strong gasoline demand for the first half.
And on the [CFT] side, as reported earlier, we're expecting 2016 to be better than 2015 as we do not see that same hesitance with the refiners as we did notice over last year.
And that has been confirmed.
We see more change out, we see a better product mix and so also the CFT contributed to that EBITDA growth.
If you look year over year I think it is safe to say we had better performance in CFT year over year.
FCC was solid but ---+ it had nice movement, but the real growth was in CFT year over year.
Okay, let me put it correct.
Last year was the exception where we saw all kinds of measures taken because of the economic climate at that time and the oil pricing.
Over this year things came back to what we call normal; we saw regular change out, we saw the use of fresh catalysts versus regenerated catalysts.
So, I dare to say that we are getting back to normal operations and see the regular change out.
Comes to see now what the recent trends and the oil will do, but I make ---+ confirm that the first half of the year was back to normal business.
No, I would dare to say that it has to do on one hand with the quality of the mix, both the fills and the products that go in there, as well as the use of fresh catalysts versus reused catalysts.
That is one element.
On the other hand, as we reported, we have some variable cost and also favorable variable cost in the beginning of this year, first half year.
I think the thing that you have got to remember in HPC catalyst, particularly, and you focused on HPC, is what is that mix going to be.
So, if you look, we make fine margins on our FCC catalysts as well.
But we get ---+ if we get a use of a really tough complex crude that's hard to get the sulfur out and the amount of hydrogen can have an impact on it.
And if we need our specialty hydrotreating catalyst we can make better margins on that on the mix.
So, the HPC mix that we have more than anything else can impact those margins.
So, I think it is going to from quarter to quarter fluctuate.
I think over time, over a long period of time you are going to see high 20%, 30% kind of percent margins is what I would ---+ somewhere between 25% and 32% kind of margins is where it is going to fluctuate, that is what it has and I think that is what you will continue to see.
<UNK>, this is <UNK>.
That is still correct.
So we have ---+ we were fortunate to have a tailwind with China pricing.
That helped as well as some of the mix of our business in the first half of the year.
So we are seeing flat to slightly improving pricing in our business.
<UNK>, we see overall demand being down.
As you have noted correctly, and I am very proud of our bromine team.
In the first half of the year we did secure some share in the Middle East as well as secured business with existing customers.
So that was very favorable.
And while those customers continue to order into the second half of the year, it is not at the rate that we saw in the first half of the year.
So we would say that overall demand is down, it is down most significantly for us as well as for the industry in the Gulf of Mexico, but down overall.
So, it has a bit of a tail going into the second half of the year and perhaps the start of 2017.
Hey, <UNK>, this is <UNK>.
Remember when we talking about drilling fluids, we are really focused on deep water drilling.
So, it is really ---+ that is our main focus is deep water.
We are not much onshore, or not much in fracking.
So it is really you have got to focus it on deep water.
And I think what ---+ there is such a long tail on that.
And so, I think we are going to see the second half is going to be down.
That is included within our guidance and I think you will see a weak start to 2017 with respect to completion fluids.
It's up 3% overall and that is on the portfolio overall for lithium.
Battery grade material which drove most of that pricing was up much higher than that.
This is <UNK>.
So again, on the technical grade applications there tends to be in some cases a ceiling on price because the value and use, once you go beyond a certain price sometimes you can substitute out products, so you have to be careful on the technical grade side.
But certainly on the battery grade side we have gotten our fair share of price within battery grade.
Also, in terms of the way we define our pricing mix, I mean as the tolling ---+ you have to also remember as the tolling volumes coming on, we are not necessarily counting that in terms of our pricing in terms of the way we have reported out on the pricing percentages.
Right.
I mean I think you might be confusing us with someone else in terms of what we announced.
But what we have said on the call is that for the overall lithium portfolio, not the Lithium and Advanced Materials, but we expect mid-single-digits overall.
And that in the battery side we have good double-digit price increases on the battery side.
So, we are getting ---+ we are in line with where we think the market needs to be.
<UNK>, we are not in any way getting left [blind] on the pricing in battery grade applications.
If you do the math on our battery grade applications, you can see they are up double-digits, and it is not 10%, it is well into the double-digits.
So, it is right in line what you are hearing from the rest of the industry on pricing and I would expect to be able to see strength in that going forward.
As we've said that ---+ I mean, each of the contracts are going to be negotiated on an individual basis.
In terms of when we decide to adjust prices, I mean I would say those prices could take effect within the quarter.
So, I mean they can be ---+ I mean it can react pretty quick, but it really depends on when we decide to take action.
And again, each agreement is negotiated individually.
<UNK>, this is <UNK> <UNK>.
I mean we continue in the bromine business not only to make sure we are delivering cash out of the core business, but we do continue to invest in R&D as well as business development efforts into new markets, whether that be specialty applications or other core uses.
We certainly look at that and that is our best avenue to reducing some of the lumpiness.
But this business ---+ it does see headwinds and it sees tailwinds based on various end markets and various geographic considerations.
And over the cycle we continue to focus on cash delivery and making sure that our cash flow delivery is consistent year-over-year to fund the growth in the catalyst and lithium businesses.
Yes.
I think it is ---+ as I look across it what I would say is that I think lithium has got ---+ is kind of a double-digit growth for the next ---+ if you look now through the rest of this decade and as long as we get the additional resources continue.
So, I see continued strength in lithium, at least double-digit growth year over year for the next four or five years.
And that is about as far as anybody can see, right.
And that could be accelerated based on energy storage, based on EVs and other items.
But I don't see any change coming on that.
On refining solutions, demand for transportation fuels is going to drive that and that is usually going to grow somewhere around 2% to 3% to 4%.
And I think we will grow a little bit better than that because of our capabilities in the complex tough to crack crude slate.
So, I feel great about our ability to have year-over-year growth there.
It will I think moderate from what we have seen this year.
Remember this year was a bounce back year, [wouldn't] expect to see that type of growth well into the future.
But I think that the strength of our innovation in catalysts will allow us to continue to grow that low- to mid-single-digits.
And dependent upon how our incumbencies are in clean fuels we could pop above that from quarter to quarter.
But I think there is still continued growth in that catalyst business.
Bromine, as I said before, this year that bromine is outperforming my expectations.
We said they were going to be down, I still think they are going to be down this year year-over-year.
But they have got a fighting chance to get close here to what they did in 2015.
That business ---+ we are not counting on it for growth, but if we get a little bit of growth from bromine over the years, certainly the free cash flow generation from that is going to accelerate our ability to drive more of our profits into lithium.
So I think you will see that.
I think the free cash flow will continue very strong.
We will have some capital that we need to invest in lithium obviously.
But even with that I expect our maintenance capital, if you will, to probably be around 4% across our base and you are going to have growth capital in lithium that will take us up higher than that.
So, a continuation of the free cash flow story here and I think good solid growth and growth opportunities between lithium leading the way followed by refining solutions and then counting on bromine to remain flat.
It may go up one year a little bit, down one year a little bit, but overall I feel great about the ability of these portfolios to drive shareholder value.
This is <UNK>.
The operation rate is in the [90s], as we said ---+ as we announced before, so it's not changed.
We have had a strong quarter.
The demand for fuel has been very strong maybe a little pressure on it for the coming months because the industry is dealing with the [inventory].
But overall longer-term picture we believe that the demand for ---+ and the gasoline production will come back and will remain strong into the [17s].
Yes, I will let <UNK> talk about that.
We are not going to give what the specific volumes are, <UNK>, for obvious reasons.
But, <UNK>, you want to talk a bit about that and what is built into our guidance.
Okay, well, we have been supplying a different [rhythms] over the beginning of the year and did supply well into July.
For remainder of the year we do not foresee any additional volumes and that has been solidly built into our guidance for this year.
This is <UNK>.
I mean we are progressing really well in La Negra in terms of qualifying the product with really a great portfolio of customers.
You should expect to see contribution really in 2017.
And we ---+ as we said, we are focused on the long-term agreements and we have already started to pre-sell that volume with customers.
So we will bring on capacity in line with our customers' demand.
Thank you.
Okay.
<UNK>, you want to talk about HPC volumes.
Yes, I can shed some light on that one.
Year-over-year the volumes are getting better.
Longer haul there is the structural fundamentals that more fuels are going to be consumed and that more fuels need to be cleaned up so there is a structural growth pattern in there.
Looking at a different segment, however, we see that there is a shift, that one segment is growing faster than the other.
We see stronger demand in the (inaudible) area where more complex oils are being processed.
But to answer your question, we have gone through a dip last year with a lot of uncertainty on the refiner side.
We are still cautious, but we see that coming back this year, that's ---+ like I said before, we are getting back to the normal patterns.
And for the longer haul we expect the HPC volume to grow because you just need to process more oil going forward.
Thanks, <UNK>.
And if I look at ---+ your question really was about what parts of the value chain would we look at in the batteries.
And we really like where we are today.
What we are good at is resources, taking those resources, converting them into quality lithium carbonate, lithium hydroxide and other byproducts from lithium that drives higher value.
So, as I look at that, we are going to stay true to who we are, <UNK>.
I don't think you can expect to see us buying a cathode company or anything like that.
What we want to focus on is driving value which is an acceleration of our strategy to be able to gain faster growth in lithium carbonate, lithium hydroxide and in the catalyst space.
So, that is what you will see us doing.
We will be consistent with who we are.
Yes, <UNK>, this is <UNK> <UNK>.
I think we see both sides of this.
We certainly see a great leverage effect on volume and the drop through to the bottom line.
So we do take efforts on securing additional business when we can.
For example, the China opportunity this year with the favorable pricing in China was something that we jumped on in order to pick up some additional volume.
And pricing as we go forward, that is always a lever.
There is still room on the cost side, that is something that we continually look at.
We saw some cost improvement particularly in raw materials, for example, from favorable buying in the first half of the year, so we look at that continually.
And as I said before, we look at all the levers we can pull to continue to deliver consistent for growing year-over-year cash flow into Albemarle.
And that includes cost, capital as well as on the sales side.
Yes, our priorities are going to be ranked ---+ you shouldn't look at them as we look at brine versus rock versus conversion; you ought to look at it on ways that we believe it will accelerate our strategy and deliver higher shareholder value.
And that is what we would look at as opposed to focusing any one geographic area or any one particular asset.
It is going to be ---+ if we find one, if it makes sense, if we can get the right type of accretion it would all be related to driving an already articulated strategy.
Well, I mean what we will do is ---+ what I said we would do is we would have cash on the balance sheet to allow us to accelerate our strategy.
So, accelerating the strategy could be we develop more assets in Chile as well.
So, you are reading too much into it that I am going to do one or the other.
What we are going to do is we laid out a strategy, we are going to maximize the resources that we have today as rapidly as we can to meet the market demand.
And then if an acquisition allows us to accelerate that we will do it.
But it is going to be ---+ if you look at our Chile operations today with the MOU, we have already got a plan to build out the revenue capacity to use up 100% of that resource over time.
We will accelerate that and we are in the process of accelerating that today.
And if there are opportunities in Chile we are certainly ---+ we are down there, we know those resources and we will certainly continue to look to pursue those.
There are other ---+ in other areas of the world there could also be some opportunities that we would proceed from a resource standpoint as well as from an asset that may accelerate our strength and our position in that area of the world.
And that is what we are going to do.
So, we are looking at ways to accelerate our strategy and strengthen our overall global leadership position.
So, it is not going to be anything that comes out of left field; it is going to be ---+ if we do anything it is going to be very consistent with the strategy that we have articulated since we bought Rockwood in 2015.
Thank you very much.
We would like to thank everybody for taking time to be on our call today.
And we look forward to continuing our performance in 2016 and the acceleration of our strategy into 2017.
Thanks a lot.
Bye-bye.
