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Chemical players have shown unbelievable resilience to the economic gloom. But if you still think the chemical business is boring, here's one company you should check out.

Rockwood Holdings' (NYSE: ROC  ) third-quarter bottom line has surged a spectacular 87%. Its stock was also recently upgraded by JPMorgan to overweight. Wouldn't you like to know what's working for the company?

Tidbit of numbers
In spite of higher input costs, rising volumes and prices in all segments drove Rockwood's top line up by 17.4% from a year ago to $940.9 million. Higher prices, especially those of titanium dioxide (TiO2) and lithium, significantly contributed to the revenues. TiO2 segment sales were up 31%, while high lithium volumes and process drove specialty segment revenues up 17.4%.

Backed by strong top-line growth, Rockwood's net profits surged to a superb $75.9 million from $40.5 million a year ago.

For a change, it's not just TiO2
When I see specialty chemical companies, I can't help but think of TiO2 because this pigment has been the biggest reason behind the solid recent performances of most companies including biggies like DuPont (NYSE: DD  ) . But you'll be surprised to know that in spite of being a TiO2 producer, that's not where Rockwood's real focus is.

Rockwood has clearly stated it is already sold out on TiO2 and sees no production or volume growth for it, although prices can rise further by 8% in the forthcoming quarter. So then, where is Rockwood focusing?

The lithium advantage
The bulk of Rockwood's investment is going into its lithium business. The company is building new plants in North Carolina and Germany to meet the growing demand for lithium.

Such investments make a lot of sense, given the huge potential lithium has. It is a lightweight metal that can store huge amounts of energy, and lithium-ion batteries have wide usage. From all the handheld devices and gadgets we love, to those electric cars that never fail to catch our attention, these batteries are everywhere.

With more Volts and Leafs rolling out, and companies like Tesla Motors (Nasdaq: TSLA  )  foraying deeper into the electric car arena, Rockwood has a lot of opportunities.

Demand for lithium is thus growing. The largest lithium producer, Sociedad Quimica y Minera (NYSE: SQM  ) , for instance, is witnessing higher demand. Its sales volumes rose 19% in the first half of 2011 and are expected to grow further.

Moreover, supply seems constrained in the lithium market. This along with higher demand has also led to price hikes. FMC (NYSE: FMC  ) announced lithium price hikes some months back, and so did Rockwood, which expects most of high price benefits to come about next year.

All this provides us a clue of how valuable lithium can prove for Rockwood in the future.

The Foolish bottom line
Rockwood's other segments, including ceramics, are also doing extremely well. Such a diverse portfolio, strong product demand, and lithium advantage -- all these should bode well for the company going forward.

Rockwood has also bagged a respected four-star ranking from our Fool CAPS community. Get started on CAPS, it's 100% free, and make sure you add Rockwood to your watchlist to stay updated on all its news and analysis.

Neha Chamaria does not own shares of any of the companies mentioned in this article. The Motley Fool owns shares of Rockwood Holdings. Motley Fool newsletter services have recommended buying shares of Chemical & Mining of Chile. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

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