FocusTiO2 price hikes a tough sell - US buyers

14 June 2007 00:26  [Source: ICIS news]

By David Barry

 

HOUSTON (ICIS news)--Attempts to hike TiO2 pigments on 1 July were unlikely to succeed because of continued softness in demand for architectural coatings, buyers in the US coatings industry said on Wednesday.

 

“Our business is not awful but is certainly softer than we had hoped,” one source in the coatings industry noted.

 

There was no impetus for a dramatic improvement in coatings demand over the next six months, the source said.

 

Slow housing sales in particular were dragging on paint and TiO2 demand. April existing home sales were almost 11% below year-earlier levels, according to the National Association of Realtor’s latest estimates.

 

“Most people paint their house when they sell or buy a house, and that market has gone down the tubes,” a TiO2 buyer for a major paint company said.

 

The architectural coatings industry and the upstream TiO2 producers typically see a pickup in demand ahead of the spring and summer painting season.

 

But one TiO2 buyer in the eastern US said the seasonal pickup in paint demand had only appeared at the end of May - about two months later than usual - and the demand surge was not as strong as in previous years.

 

Coatings producers were closely managing inventories and manufacturing on a “just-in-time” basis, the source said.

 

TiO2 buyers did recognise, however, that TiO2 producers moved with unusual haste to announce their own price increase initiatives once the leading announcement was made.

 

On 4 June, DuPont, the largest global producer, announced 5 cents/lb ($110/tonne) increases on all grades of TiO2 pigment sold in North America and $100/tonne increases for Latin America, to take effect on 1 July.

 

Kronos and Cristal announced similar initiatives on 8 June, and Tronox and Huntsman made announcements on 11 June.

 

A TiO2 producer said it was almost unprecedented that so many producers would announce price increases within such a short period of time.

 

The industry, facing high fixed costs and declining prices in some regions, was in desperate need of improving profitability, the producer noted.

 

At least one buyer agreed that this was the case. “When the average selling price [for TiO2 pigment] goes much below a buck, their profitability goes out the window,” he said.

 

North American TiO2 market prices for full-truckload deliveries of rutile pigment were in a range of $0.95-1.04/lb, according to global chemical market intelligence service ICIS pricing.

By: David Barry
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