01 February 2008 01:55 [Source: ICIS news]
HOUSTON (ICIS news)--Ample supply and generally weak demand were stiffening the resolve of US titanium dioxide (TiO2) buyers to resist price hikes, but some partial increases were getting through, market sources said on Thursday.
Some buyers have accepted increases, typically of 3 cents/lb ($66/tonne). That represents around half of the 6 cents/lb hikes proposed in October for the first quarter by all the major producers.
North American TiO2 was assessed at 95-105 cents/lb on 25 January, according to data from global chemical market intelligence service ICIS pricing.
Another round of 6 cents/lb price initiatives was launched by producers in January.
But one buyer speculated that given prevailing market conditions, the new initiative was simply an effort to prevent prices from slipping.
The producers were seeking to restore margins after the sharp increase in input costs in the last quarter of 2007.
But there was little room to pass increases on in a weak demand environment, buyers said.
Declining production rates for chlorine, which is used to make Ti02 pigment, supported the scenario of weakening downstream demand, one market participant noted.
Demand, which is especially weak in the architectural coatings sector, is not expected to pick up until late this year or early next, according to industry forecasts and sources on both sides of the market.
Furthermore, the Federal Reserve Board cited a deepening of the housing contraction in North America as one of the reasons it cut its key federal funds interest rate on Wednesday by 50 basis points to 3%, a three-year low.
A buy-side source said the plastics compounding market was also softening.
The source acknowledged the fibres market was showing relative stability, but not enough to prompt more acceptance of TiO2 price increases.
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