Proposed TiO2 hikes are unprecedented - US buyers

04 September 2008 23:22  [Source: ICIS news]

By Larry Terry

HOUSTON (ICIS news)--Producers announced a spate of North American price hikes for titanium dioxide (TiO2), effective immediately, an unprecedented move given the existing initiatives and surcharges, US buyers said on Thursday.

The proposed hikes would raise North American prices by 8 cents/lb ($176/tonne, €121/tonne).

One customer in the architectural-coatings sector said the initiatives were "ridiculous this time of year" in view of falling crude oil and natural gas prices.

That they were proffered without typical price protection of 30-90 days by most major US pigment makers, and on top of existing September and October initiatives, made them all the more unpalatable, the buyer said.

"I haven't seen that kind of thing in TiO2 since the 1980s, when there were some supply shortages," said the buyer, who was already anticipating the implementation of surcharges and negotiating a 3-7 cent/lb price increase from one of its suppliers, effective on 1 October.

Sellers said energy-related costs continued to outpace their margin-recovery efforts, and that strong demand from Asia, Latin America and Europe has tightened supply despite continued weak demand from the US housing market.

"We won't be able to pass along these cost increases until the first of next year," the buyer said. It gained from its customers some of the latest 3 cent/lb increase in July, but 20-30% increases in its costs, including freight, colourants and pigments, will force the company to ride through the winter "on a lot less margin" than last year, the customer said.

With an active hurricane season underway in the Gulf coast, weather has further hampered an already weak US architectural-coatings market, buyers said.

Producers that announced 8 cent/lb hikes for North America included DuPont for 2 September, Tronox and Kronos for 3 September and Cristal Global for 4 September. Huntsman had previously announced an increase of 5 cents/lb for North American product, effective on 1 September.

Cristal also announced hikes of $300/tonne for the Asia Pacific region, except for hikes of $150/tonne in Australia and yen (Y) 43/kg (40 cents/kg) in Japan. Each was to be effective on 1 October.

North American contract prices range from 101-111 cents/lb, according to data from global chemical market intelligence service ICIS pricing.

($1 = €0.69 = Y108.21)

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