Good morning, and welcome to the Tronox Holdings plc Q2 2025 Earnings Conference Call. [Operator Instructions] This call is being recorded. If you have any objections, please disconnect at this time. I would now like to turn the call over to our host, Jennifer Guenther, Chief Sustainability Officer, Head of Investor Relations and External Affairs. Please go ahead.

Thank you, and welcome to our second quarter 2025 conference call and webcast. Turning to Slide 2, on our call today are John Romano, Chief Executive Officer; and John Srivisal, Senior Vice President and Chief Financial Officer. We will be using slides as we move through today's call. You can access the presentation on our website at investor.tronox.com. Moving to Slide 3. A friendly reminder that comments made on this call and the information provided in our presentation and on our website include certain statements that are forward-looking and subject to various risks and uncertainties, including, but not limited to, the specific factors summarized in our SEC filings. This information represents our best judgment based on what we know today. However, actual results may vary based on these risks and uncertainties. The company undertakes no obligation to update or revise any forward-looking statements. During the conference call, we will refer to certain non-U.S. GAAP financial terms that we use in the management of our business and believe are useful to investors in evaluating the company's performance. Reconciliations to their nearest U.S. GAAP terms are provided in our earnings release and in the appendix of the accompanying presentation. Additionally, please note that all financial comparisons made during the call are on a year-over-year basis, unless otherwise noted. It is now my pleasure to turn the call over to John Romano. John?

Thanks, Jennifer, and good morning, everyone. We'll begin this morning on Slide 4 with some key messages from the quarter. Our second quarter was impacted by weaker demand across most of our end markets, and this resulted in softer-than-anticipated coating seasons and highlighted competitive -- heightened competitive dynamics across our key end markets. Volumes in Q2 were 2% lower sequentially and 11% lower year-over-year, reflecting weaker-than-usual seasonality. Broader macroeconomic pressures included elevated interest rates and tariff-related uncertainties continue to weigh on customer discretionary spending, while home sales and construction activity remains subdued. Additionally, delays in Brazil's antidumping investigation enabled Chinese producers to exploit the gap between the expiration of provisional duties in April and final duties, which we still anticipate by the beginning of Q4. We are encouraged by our early sales momentum in India following the implementation of duties in May. Our advantaged position in India through the Australia-India freight free trade agreement, coupled with the duties against Chinese imports, presents a significant opportunity for sales volume growth in a fast-growing economy where per capita TiO2 consumption is low compared to other developing economies. In response to the prolonged weakness in the market, we are executing a disciplined strategy to manage the downturn and optimize earnings and cash. Operationally, our costs were in line with expectations. The cost improvement program is progressing ahead of plan and is proving essential in mitigating both raw material and operational pressures. We remain confident in our ability to deliver $125 million to $175 million in sustainable run rate savings by the end of 2026. The idling of our Botlek facility was not a decision we took lightly, but it was the right decision and our costs have improved as a result. Beyond these measures, we are continuing to evaluate all available levers to strengthen our operational foundation, bolster liquidity and reinforce our role as a strategic global supplier to our customers. This includes intensifying our focus on our commercial strategy, further reducing capital expenditures and adjusting the dividend to ensure sustained financial strength and long-term shareholder value. I'll speak to these actions in more detail a little bit later in the call. But for now, I'll turn the call over to John to review our financials from the quarter in more detail. John?

Thank you, John. Turning to Slide 5. We generated revenue of $731 million, a decrease of 11% versus the prior year second quarter, driven by lower sales volumes and unfavorable zircon pricing. Loss from operations was $35 million in the quarter, and we reported a net loss of $84 million, including $39 million of restructuring and other charges that were primarily related to the idling of Botlek. While our loss before tax was $81 million, our tax expense was $4 million in the quarter as we do not realize the tax benefits in jurisdictions where we are incurring losses. Adjusted diluted earnings per share was a loss of $0.28. Adjusted EBITDA in the quarter was $93 million, and our adjusted EBITDA margin was 12.7%. Free cash flow was a use of $55 million, including $83 million of capital expenditures. Now let's move to the next slide for a review of our commercial performance. As John covered earlier, in the second quarter, we saw a challenged demand environment, including heightened competition putting pressure on TiO2 and zircon sales. TiO2 revenues decreased 10% versus the year ago quarter, driven by 11% decrease in sales volume, partially offset by a 1% favorable exchange rate impact. Price/mix was flat in the quarter. Sequentially, TiO2 revenues increased 1%, driven by a 1% increase in average selling prices, including mix and a 2% favorable FX impact from the euro. This was partially offset by volume declines of 2%. Zircon revenues decreased 20% compared to the prior year, driven by a 10% decrease in both sales volumes and price, including mix, driven by continued weakness primarily in China. Sequentially, zircon revenues decreased 1%, driven by a 2% decrease in price, including mix, partially offset by a 1% increase in volumes. Revenue from other products decreased 7% compared…

Thanks, John. I spoke earlier about our strategic actions that are well underway. The cost improvement program, the idling of our Botlek facility and further capital expenditure reductions that will help strengthen our position in this challenged macro environment. As this extended lower cycle demand environment continues, we are meeting the challenge by pulling on all the additional levers within our control. We are selectively adjusting operating rates to reduce inventory and improve working capital and free cash flow. This process utilizes our vertical integration to prioritize sites that offer greater flexibility to ramp up and down efficiently and optimizes our ore blend to balance the trade-off between cash flow and EBITDA. On the commercial side, we're developing targeted initiatives and evaluating further strategic sales of the products. As it relates to our capital allocation and cash position, we are scaling back further on capital expenditures while preserving critical investments in our assets to ensure safe, reliable operations. And our Board of Directors declared a $0.05 per share dividend for the third quarter, a reduction of 60% to align with the current macro environment. In this lower cycle demand environment, we are focused on maintaining our market leadership, improving top line performance, optimizing our global footprint, improving costs, bolstering our liquidity and enhancing our financial flexibility. We are confident that this is the right strategy to weather the current macro environment and emerge as an even stronger competitor that will deliver sustained value for our shareholders. Given the slowdown from both a macro and industry perspective, we have updated our 2025 financial outlook. Our outlook is based on what we know today, taking into consideration a multiple of economic factors as well as data and conversation from and with our customers. We now expect 2025 revenue to be $3 billion…

[Operator Instructions] Our first question comes from David Begleiter from Deutsche Bank. [Operator Instructions]

Can you hear me.

Yes.

John, just looking at full year guidance, what are the various drivers and variables that will determine whether you come at the higher end or lower end of the $410 million to $460 million range.

Thanks for the question, David. So largely not dissimilar to what happened, I guess, in the second quarter, a lot of it is going to be based on volume and price. And when we think about the guide, we're not projecting to have any significant bump in volume. There's a little bit of a move in the second half of the year, and that's largely based on some targeted gains that we believe we're going to get in India. That's a market that we continue to see positive growth in. As I mentioned on the call, there is some competitive activity out there in Europe. We saw a bit of a -- it wasn't as if we saw a significant drop, but there was some competitive activity there. So where we had price increases in the second quarter, some of that's going to reverse. So some of the pricing that we had forecasted in the second half of the year is not going to come in, and we're actually seeing some erosion in price. So I'd say largely, when we think about the EBITDA guide, it's price and volume, and there is some active piece of that, that's attached to slowing our production down as well. As we mentioned, we have pulled back some on production. We're doing that in a more -- in a thoughtful way to manage both cash and EBITDA. But we're balancing our sales profile to make sure it's in line with production or vice versa, balancing production to make sure it's in line with sales.

Very good. And quickly, do you have an update on your rare earth activities?

Look, the rare earth is something that we're continuing to work on. I mean that's -- there'll be a capital piece of that, that will come later. And right now, it's not part of our capital allocation strategy. But we are continuing to work on that. I made reference to some sales of other products in the back half of the year, and part of that has to do with a rare earth opportunity that we've developed along with some other products. So it's still -- it's a big buzzword right now. And as we think about our capability to continue to feed the elements that go into that equation, largely monazite and then neodymium and praseodymium, it's something we're continuing to work on, and there is an element of that in the fourth quarter.

Our next question comes from Peter Osterland.

Can you hear me?

Yes. We can hear you, thank you, Peter.

Just wanted to start with the 2% sequential decline for TiO2 volumes that you saw in the quarter. Could you break out what you believe the growth rate was for underlying demand quarter-over-quarter? And how much of the decline you realized was driven by market share?

Yes. So North America is normally where we have, I'd say, it's Northern Hemisphere is where the big coating season comes in. And in North America, we did see some uptick in volume, but it was not in line with the normal coating season. So again, I think a lot of that had to do with -- I don't believe we had market share loss in North America. That was just largely driven by a muted coating season because we were up slightly in North America, 2% to 3%. In Europe, Middle East and Africa, there was some volume decline. Part of that was the market actually wasn't as robust as it was in the first quarter. So it kind of slowed down. And I think there is some element of that macroeconomic environment along with some of the tariff issues that probably weighed on some people's decision to pull down inventory. There was an element of competitive activity there. As I mentioned, we raised prices in the second quarter, and there were some competitors that pulled back for volume in that region. So Europe, Middle East and Africa was down a bit. Asia Pacific was actually up, up pretty much in line with what we expected, and that was largely driven in India because there were other areas where we saw some volume decline, but India was a big push in Asia Pacific. Latin America was flat, but it was down a bit from what we expected, and that had a lot to do with some of the delays in the final duties going into place where we thought they were going to come in earlier in the third quarter. It looks like they're going to come in towards the back end of the third quarter now. Hopefully, that adds some color you were looking for.

Yes, very helpful. And then just as a follow-up, I wanted to get some color on the new reductions to your CapEx forecast. Just given that some of the mining cost headwinds you've had this year were driven in part by delaying some capital investments in the past, I guess, could you just talk a little more about what you're cutting back on this year and maybe what you might be sacrificing in terms of future efficiencies as a result?

Maybe I'll start and then I'll let John make a comment. So to be -- the mining investments that we had in Fairbreeze and East OFS are still on track. Fairbreeze is now up and running. So the money that we spent on Fairbreeze that -- Fairbreeze is the new mine that is being commissioned. East OFS will come online in November, and that's still on track. So the capital reductions that we were looking at were not directed to those strategic investments. As John mentioned, 44% of the capital in the quarter was actually strategic and almost all of that was exclusively in the mining. John?

Yes. So we've been reducing, obviously, as we've gone across the year from a range of $375 million to $395 million when we first gave guide earlier this year, down to $330 million. So a pretty significant reduction. And it really has been in the discretionary areas. So while we believe are very high-return capital projects, and we put them on hold right now just to manage cash. So of the $330 million that we have now, $15 million relates to capitalized interest. And as John mentioned, $135 million relates to the 2 very strategic South African mining projects. So we do have about $180 million left there. And as we've mentioned, about $150 million, $175 million is from a maintenance perspective.

Our next question comes from Fabian Jimenez from Mizuho.

This is John Roberts. Could you elaborate on the repositioning of inventory that increased your freight costs? And why are bulk shipments higher cost for freight? I would think that bulk is lower cost freight than non-bulk.

Yes. So thanks, John. So some of that was repositioning inventory attached to the closure of Botlek. So we repositioned inventory to make sure that we had volume available to offset as we drew down the Botlek inventory. So that was a piece of it. There's also a piece around our mining group. So as you know, there's lots of discussion around tariffs, and we repositioned a fair amount of our pig iron out of South Africa into the U.S. ahead of that. So those were the 2 primary pieces that had to do with freight. And you're right, bulk shipping is cheaper, but there was a mixture of container and we shipped zircon by bulk -- I mean, I'm sorry, we shipped the pig iron by bulk.

And one other thing to a lesser extent was, as John mentioned in his prepared comments, just due to the -- our business planning process and taking advantage of the vertical integration, we did move our feedstock around a bit to different plants. So that resulted in a slightly larger cost on freight, but obviously an overall benefit.

And then the higher second half other product sales, you mentioned there might be some rare earth-related products there, but will the bulk of that be ore that you'll be selling in the second half?

We're not going to go -- what I can say is that this is not an ore in the form of slag or anything like that. These are -- historically, we've had other product sales. They've been more attached to tailings. We're continuing to progress our strategy around rare earth. So there's a rare earth element attached to that. But this is not selling feedstock in the market.

Our next question comes from Josh Spector with UBS.

I just wanted to ask on free cash flow and specifically working capital. I think, John, in your earlier comments, you said you're matching production to demand. I wasn't sure if that was the pigment or the mining side. And just wondering kind of what flexibility you have there, when you might take the initiative to reduce mining production to address working capital at the expense of EBITDA or how you're thinking about that trade-off over the next 6 to 9 months?

Yes. Thanks for your question, Josh. And so the short answer is we are looking at the mining side as well. There's a little bit more work that goes into making adjustments on that side of it, but it's the mining, it's the smelters that we upgrade the material. So largely the inventory reduction we're talking to right now when we made reference to adjusting production to sales is attached to the TiO2 side of the business. But as I've mentioned in the prepared comments, everything is on the table now, and we're looking at all of that. We're trying to use our vertical integration to make sure we manage that balance between cash and EBITDA.

Yes. And if you take a look at our working capital -- both our working capital and our free cash flow, we do expect to generate cash from both in the second half of the year, primarily due to the reasons that John had mentioned for bringing our production, which impacts more heavily in the second half as we did build inventory in the first half of the year. So seeing inventory come down. Additionally, the cost improvement program will help our inventory as well as it will be lower cost inventory that we're going to place on the balance sheet ultimately to be sold. And then the other big drivers of working capital relate just to active management of the other working capital, AR and AP.

I think it's worth maybe just a little bit more color on the cost improvement program because when we announced that program, it was $125 million to $175 million run rate by the end of 2026, and we had a target of $25 million to $35 million run rate by the end of 2025. As I mentioned in the prepared comments, we are well above that, more than double that at this stage, and we're making great progress on that. And a lot of that will -- as we get into -- there is some EBITDA impact in the fourth quarter, but most of that will be working its way into the production process and through the balance sheet as we get into 2026. But we have a high level of confidence in what our teams are doing at every one of our sites to look at creative ways to pull cost out, and we're well ahead of where we thought we would be and have high expectations that we'll exceed those targets.

I appreciate all that. And I guess if I could just follow up quickly. I mean, this might be too tough to answer. But if we go sideways from here, is working capital a tailwind next year? Or is it still a headwind based on how you're producing?

Well, if we go sideways from here, we'll continue to match production with sales. So the TiO2 would not be an increase. And that becomes the question on the mining side of it, how we manage that, right? So that's the work we're still managing through right now. But suffice it to say that we're looking at mining as well.

We have additional levers that we can take right now based on what we see the market outlook and using the value of our vertical integration, we think it's appropriate at this point.

And the adjustments we made to production are not the same order of magnitude EBITDA impact as they were in this last downturn because we're looking at sites that can be flexed more efficiently. And to John's point, we repositioned some ore to make sure that we had the right ore blends to optimize cash and EBITDA.

Our next question comes from Jeff Zekauskas at JPMorgan.

I think your EBITDA guide is $410 million to $460 million for this year, and you did $205 million in the first half and $93 million in the second quarter. So in order to reach the bottom of your guide, you've got to do $102 million or $103 million on average for the next 2 quarters. To reach the top of your guide, you need to do $127.5 million. In general, the fourth quarter is usually a seasonally light quarter. What is it about the third and fourth quarter in EBITDA terms that might lead you to earn more than you did in the second and that if you earn at the second quarter rate, I think you get to something like...

Thanks, Jeff. So when we think about Q2 to Q3, you should think flat, up or down a little bit. It's not going to be a huge lift. And the big -- the fourth quarter impact, and we mentioned this other opportunity that we're working on. Historically, we have -- in the past, we've had these other product sales, and that is likely to come in the fourth quarter, and that is the piece that will have a swing in that number in the fourth quarter. John?

Keep in mind, those are very profitable sales for us. So -- and if you look at the magnitude of what we've done in the past, it would approximate the amount that you laid out. One other thing as well is the cost improvement program that we've taken over and underway. And as John mentioned, we expect more than double this year, a lot of that goes to the balance sheet. We do see real savings this year. And as you go across the quarters, it does increase just due to timing of execution and getting full run rate of those savings.

But we're anticipating maybe as much as $10 million of cost improvement that will fall into the bottom line largely late in Q3 and Q4.

And then can you talk about what's happening in India and what kind of volume you may be picking up? And you talk about Brazil and what kind of volume you may be losing? And can you give us a sense of the geographic pricing dynamic that is where competitive conditions greater where they...

I'll start with the last question first. So the competitive environment right now, I would say, as far as pricing goes in areas like Europe, Middle East and Africa, I mentioned that there was a volume decline in that region where we had price increases in the second quarter, and we had some competitive activity where some competitors actually reduced price to move volume. So you've got Europe, Middle East and Africa. Middle East is a competitive environment right now. It's not a duty affected area. And so there's obviously some competitive activity as China continues to reposition to try to manage some of their sales, although they are -- India has been a big impact for them. Latin America, there's been some competitive activity with even some Western suppliers moving volume there. Now that being said, our volume wasn't down Q1 to Q2 on -- in Latin America, but we were expecting a little bit of a lift there. North America has been -- as I mentioned, our volumes are up slightly there. It's been stable on price. And in Asia Pacific, again, due to some of the shifting around the volume, largely duty impacted areas, we see volume upside in India, and there's competitive activity in a lot of the other areas in Asia Pacific, where China is continuing to try to reposition from some of the share that they're losing in those duty-affected areas.

Our next question come on Hassan Ahmed, Alembic Global Advisers.

John, first of all, just wanted to sort of understand a little more about how you guys thought about the dividend cut. Look, I mean, at the end of the day, I understand this downturn has been far more sort of drawn out than prior downturns. But I mean, the industry is cyclical and will continue to remain cyclical. So I'm just trying to understand the logic, in a cyclical industry of having a fixed dividend. I mean, did you guys think about maybe incorporating some variability into that dividend, maybe having possibly a fixed payout ratio? I mean, just the thought process around the magnitude of the cut as well as the logic behind having a fixed dividend.

Thanks, Hassan. So obviously, we did spend a lot of time thinking about that reduction in the dividend, and it was aligned to the current macro environment. And as I said in prepared comments, as the macro changes, we'll continue to evaluate that to make sure it's a competitive dividend. We still feel that the dividend is important. It's part of our capital allocation strategy. But in this environment, we felt it was rightsized so that we can manage our liquidity through this longer downturn than we expected. John?

Yes. Obviously, we looked at a lot of different analyses, had a lot of different discussions around it and obviously did cut in several other areas. So all that went into our calculus of cutting the dividend by 60%. We really want to just maintain our financial flexibility in this market. And as we mentioned earlier, we will relook at the dividend at the appropriate time period.

Understood. Understood. And as a follow-up, I know the whole rare earth element side is quite topical right now. I mean you guys have a huge, huge exposure to heavy minerals mining. I mean, if I have my numbers correct, I mean, you guys are producing as much as 3.7 million tons of heavy minerals. In light of what we just saw from MP Materials, the Department of Defense coming in, in Australia, and I understand your exposure in South Africa as well as Australia. But even in Australia, I mean, the government is sort of collaborating with Iluka. I mean, are you having discussions with local governments, maybe other sort of metals and mining companies, processors and the like to maybe sort of accelerate the growth of that sort of product area?

Yes. Thanks, Hassan. And the answer is yes on all of those. So we spent a lot of time in multiple jurisdictions around looking and trying to come up with opportunities where we could get funding. So U.S., Saudi Arabia, Brazil, Australia, those are all works in progress, and we continue to collaborate with others that are in that space. One of the advantages we have in our rare earth base is that we also have heavies and heavies are some of the shortfall in some of these other opportunities that are out there. There was a lot -- you can read a lot into MP, but that was a great opportunity for them. And what I can tell you is that we're working with lots of different governments and companies to try to figure out how we optimize and accelerate, how we might benefit from that. And as I mentioned, there's an element of that work that has to do with some of the sales that are happening in the fourth quarter.

Our next question comes from John McNulty from BMO Capital Markets.

Can you hear me?

Yes, we can hear you. Thank you.

John, perfect. I just wanted to dig in. So I guess we've seen a bunch of capacity closures this year, including your own Botlek. We saw some last year. We saw China. It looks like it dialed back a decent amount of production. And by our count, it's around 6% of nameplate capacity. And yet, if anything, it seems like the environment has gotten worse. So are we getting closer to that tipping point where the supply has been dialed back enough where the supply-demand can start to tighten at this point? Are there other factors that we should be considering? I understand the demand environment is not robust by any means, but it doesn't seem like it's contracted by as much as maybe supply has. So I guess, can you help us just to think about the cycle and where we are and maybe some of the puts and takes around that?

Yes. Thanks, John. It's a great question. And look, I mean, at the end of the day, the cycle has been longer than any other one that I've experienced. And I do believe that we're hedging towards the cycle going the other direction. To your point on production, since 2023, there's been 750,000 tons of capacity taken out. That's a share of some of that's in Japan, some of it was in Taiwan, some of it was in Europe, some of it was in China as recently as in the last 2 weeks. There's been 2 Chinese companies that have announced 280,000 ton lines that are coming down. So when you think about recovery, clearly, when -- the recovery may not look like the last recovery, but there is less capacity there. And I would say that there are probably other capacity announcements that are still hanging out there that haven't happened yet. And I probably don't need to go into a lot of detail. You can imagine where that might be with some companies that have been trying to restructure for a while. So I do believe that the market is going to recover. It's a matter of when, not if. And we are putting our business in a place where we feel we'll be able to weather that period of time, whether it's 3 months or another 8 months so that we can come out of the other side a stronger competitor.

Got it. Okay. No, that's helpful. And then I guess with the dialing back or the closure of Botlek, I guess you guys had been about -- when fully running had been about 85% vertically integrated. I assume this pushes you closer to fully integrated. Is that where you want to be? Or would you consider possibly cleaving off a piece of the mining business? Is that something that would be even remotely palatable to you to kind of maybe change that internal balance? I guess how should we be thinking about that longer term?

Yes. So that's a great question as well. And we're not 100% vertically integrated. There is still a need for some feedstock. And in this particular space, we're paring back on that because we pulled back production. But in the long term, we'll continue to look at what that right balance is. And we don't want to be long on feedstock for sure, and there's a right balance to strike there. And as we've said on the last call, we're going to continue to look at our asset footprint and try to make sure that we're rightsized so that, that balance can continue to give us that advantage that we've referenced before, $300 to $400 a ton from buying feedstock on the open market.

Our next question comes from [ Olivia Key ] at Bank of America Merrill Lynch.

This is Roger on for Olivia. I had 2 questions. Regarding the $50 million inventory financing facilities, and I suspect we'll see more in the queue. But can you give us a heads up on what the rate and maturity of that facility is? And will that facility be on or off balance sheet, meaning you're going to -- if on balance sheet, the inventory stays on balance sheet, and we'll see in the debt stack any drawings amount under that facility?

Yes. Thanks, Roger, for the question. Obviously, it added a significant amount of liquidity in this month for us at $50 million. It is not recorded as debt on our balance sheet, but we will be recording it in the other liabilities section of it. And we do have a very competitive rate just given the level of inventory, the security that they have backing it. And it is a short-term facility that's renewable every several months.

Several months, facility. Okay, but renewable. Second question is, so how would you compare your volumes down 11% year-over- year and flat pricing? And Chemours on their pre-release said that their TiO2 sales were up high single digits. I suspect you've thought about that. I wonder if you might share any thoughts you had.

Yes. So look, if you look over time, there's a lot of fluctuations in market share. And I would just say that the guide that we had for the second quarter initially was to be up mid- to high single digits, and we were down. And I'll go back to the comments that I made before in North America, that was largely driven by a muted coating season. Our volumes were up, but they weren't up as what normally what they would have been. In Europe, our volumes were -- Europe, Middle East and Africa, they were down, and part of that had to do with the market actually just not being as robust as we thought it was. We weren't planning it for it to be stronger, but it was actually weaker than we expected it to be. And there was competitive activity over there, where, as I mentioned, we were raising prices and we had some competitors that were losing prices, and we picked -- we lost a little volume there. Asia Pacific, our volumes were up largely tied to what we were going to see in India, as I mentioned before, with some growth in that area. And Latin America, although flat, we were projecting that to be up, and there was some market share shift in that area as well. So when I mentioned our strategy from a commercial perspective, moving into the balance of the year, it's to maintain and/or grow share targeted regions. And the targeted regions for growth are largely in India, and our objective is to maintain our share at normalized rates throughout the year. So I can't speak too much to Chemours on what they announced back in June. And -- but generically, I know what's happening in the market with competition. And in the regions that I mentioned, there's -- the competition is elevated.

[Operator Instructions] Our next question comes from Edward Brucker at Barclays.

First one, back on supply -- or some of the supply questions. With all the capacity reductions that we've seen that you've mentioned, would you say, broadly speaking, from an TiO perspective, that supply -- overall supply is closer to underlying demand right now? Or is it something we still need demand to improve in order to kind of fill that supply gap?

Yes. So the biggest, I'd say, variable in answering that question is China. So China continues to be weak. And our sales into China are not significant. We have a plant over there. So we have good visibility into that. But -- so I'd say if you think about the answer to that question globally, I think you're right. China has a big impact on that. So China has some headwinds with duty affected areas. We believe, based on information that I provided, there's 2 plants that have been announced that they're idling, 2 are closing. There's other assets, I think, production that's being adjusted accordingly. So I think the better answer is as that Chinese market recovers, and I can't tell you when that's going to happen, a lot of that volume is going to get sucked up. But again, there hasn't been a tremendous amount of capacity added, since '23, there's been about 740,000 tons that's come out of the market. And so I do think as the market recovers, even if it's not as robust of a recovery as it was historically, you're going to see a shift in supply-demand and price accordingly because where we are in price right now is not a sustainable place.

Got it. That's helpful. My second one, could you -- if you have it on hand, just give us your secured bond capacity or secured debt capacity? And then is there any thought to using secured bond or secured debt to boost liquidity?

I wasn't following your first question. Obviously, we can go out and raise the debt capital markets, we continue to monitor them in this environment to maintain financial flexibility. So we do look at the market and evaluate whether or not we do want to raise any additional debt in the markets. But at this point, we -- as I mentioned, we do have sufficient liquidity, particularly with the action that we took for this inventory raise, but we will monitor the market.

What was your first question again?

First question is just on how much secured debt capacity you have?

Okay. I think maybe we'll follow up with you after this call, if that's okay.

Yes, absolutely...

We have more than enough.

Our final question today comes from Vincent Andrews from Morgan Stanley.

This is Justin Pellegrino on for Vincent. Just curious if you could discuss the differences in markets that have announced duties, specifically between Europe and India. You're seeing the competitive pressure in Europe, but you're seeing strength in India. Is that -- there was product placed in Europe, but maybe not so much in India? Or are there differences in demand? And I was just hoping you could kind of discuss the differences that you're seeing in those duty markets.

Thanks, Justin. So in Europe, we saw a big bump up in our sales profile as a result of the duties. And we're still seeing that, but there has been an increased level of competitive activity as there are more suppliers that are feeding into that market. So we did see a decline in the second quarter, but we still -- there still are advantages attached to the duties that are in place in Europe, and we'll continue to benefit from that. In India specifically, one of the advantages that we have is that we ship into India from Australia. Australia has a free trade agreement. Everybody else that ships into India now, including China with a much higher duty, there's already a 10% duty. So we were positioned well in India to begin with. We have -- it's one -- it's the second largest market that we were selling into prior to the duties going into effect. It's been a strategic market for us for years. It's got a high growth rate, low capita per TiO2 -- low per capita TiO2 consumption. So there's lots of growth opportunity there. So -- and in Brazil, that's an opportunity that's 180,000 ton a year market. You had 100,000 tons of Chinese material going in there. The duties were in place until April 21st. Those provisional duties lapsed based on -- and we knew they were going to lapse because the investigation was going to last longer than 6 months and provisional duties can only be in place for 6 months. So I mentioned our sales in Latin America were flat Q1 to Q2. We would have expected those provisional duties to become permanent a little bit sooner than where they are. It looks like it's going to be more towards the end of the investigation period, which has a deadline at the end of the quarter -- end of the third quarter. So that's -- and the other area where we still have opportunity, but the Chinese have exploited that by continuing to ship in there while there's this gap between provisionals and final duties being implicated. And those are the 3 areas where duties are in place. And before they were in place, China was exporting about 300,000 tons into India, about 258,000 tons into the European market and 100,000 tons into Brazil. So that's the 600,000 tons that has become in play, not just for us, but for other competitors that are non- Chinese.

Okay. That makes sense. And then just one follow-up. You noted that you saw the bit of increased pressure in Europe in 2Q. Can you just give us an idea of what you're thinking about sequentially for Europe as it relates to demand for product as well as price just as those duties are still in play, given the increase we saw in Q1 then kind of followed by the decrease in Q2, what are you thinking of sequentially for Q3?

Yes. So we don't -- I'm not going to provide a guide on pricing by region, but I will say that factored into the guide for Q3, there's 2% to 3% move on price. On the downside, that's in the guide. When we start thinking about Europe in general, we're not seeing a tremendous amount of downward movement. It's more in line. It's a holiday season right now. So August is typically a low month, but we already know what happened in July and September is forecasted to move in the right zone. So we're not expecting a significant reduction. I did mention that we are going to focus on maintaining our market share. And also look at targeted areas for growth and the growth is probably more aligned to India and maintaining share would be everywhere else.

This concludes the Q&A and today's call. Thank you for joining, and have a great day.