N America TiO2 buyers take 3 cents/lb increase

26 June 2008 22:54  [Source: ICIS news]

HOUSTON (ICIS news)--North American titanium dioxide (TiO2) prices moved up by 3 cents/lb ($66/tonne, €42/tonne) this week for the first time since February as buyers conceded some ground to sellers due to sustained high energy and transportation costs, markets sources said on Thursday.

The broad buy-side consensus was that most sellers have gained 2-3 cents/lb of the proposed 10-11 cents/lb in price increases announced since late May. Surcharges have also been implemented by most producers since June.

In at least one case, a seller agreed to extensive price protection - a rarity in an environment of highly volatile energy and feedstock prices.

TiO2 buyers in all segments of the market acknowledged upstream pressures faced by suppliers, but they continued to resist full increases, citing ongoing sluggish demand for architectural coatings and their own reluctance to pass along increases to their customers.

"We'll try to pass on the costs, but I'm afraid we'll lose customers," one coatings supplier said.

Sellers countered that they have run the risk of losing market share ever since the recent groundswell of sell-side support for price hikes began in June.

Another TiO2 buyer acknowledged relentless price pressure from producers, but said he would push back as long as possible.

"We're cutting costs everywhere we can to keep our painters happy," he said. He added, however, that some pass-along costs are inevitable.

He said the surcharges and price-increase announcements have had a bandwagon effect, emboldening producers to redouble their efforts to push price hikes through.

Most previous price efforts over the past 12 months had languished until the recent spate of initiatives.

The market's last price increase was for 3 cents/lb in February. Some buyers said it was from a July 2007 initiative, while others said it was from an initiative the following October.

Although one supplier said the latest price gain is part of 6 cent/lb proposals from October, buyers differ with that view.

"The old price letters are no longer relevant," a customer said. "Every [price gain] is from right now."

Since February, US contract prices for TiO2 have remained flat at 98-108 cents/lb, according to global chemical market intelligence service ICIS pricing.

The industry's latest increases were announced this week by Kronos and Tronox.

On Tuesday, Kronos announced a surcharge of $75/tonne (€48/tonne) for 15 July, and a price increase of $100/tonne for 1 August in Asia, Latin America, the Middle East and Africa. It also announced a surcharge of €40/tonne ($63/tonne) for 15 July, and a price increase of €50/tonne for 1 August in Europe, including Eastern Europe.

On Wednesday, Kronos announced its North American initiative - a 3 cent/lb surcharge for 15 July, and a 6 cent/lb price increase for 1 July.

Tronox announced a 6 cent/lb increase for TiO2 sold in North America, effective 1 July, a $150/tonne increase for 15 July for its TiO2 sold in the Asia-Pacific region and a $200/tonne increase for its product sold in Eastern Europe, Africa and the Middle East, effective 1 August.

All major North American producers have said their announced surcharges and price increases in recent weeks - and those lingering from fourth-quarter 2007 and first-quarter 2008 are needed to offset escalating energy, freight and raw materials costs.

Other US TiO2 producers include DuPont, Cristal Global - Millennium Inorganic Chemicals and Huntsman.

($1 = €0.64)

For more on TiO2, visit ICIS chemical intelligence
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By: Larry Terry
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