TiO2 sellers achieve Q4 price hikes in Asia

21 October 2008 05:15  [Source: ICIS news]

SINGAPORE (ICIS news)--Major titanium dioxide (TiO2) producers have achieved part of their proposed price hikes in Asia despite resistance from customers concerned about the current global economic slowdown, industry sources said on Tuesday.

 

Asian buyers have since agreed to hikes of around $120/tonne to $190/tonne for fourth quarter supplies, industry sources said, in response to $200/tonne increases in offers from producers such as Ishihara Sangyo Kaisha (ISK) and Dupont Titanium Technologies, which cited rising energy and raw material costs as the main impetus for the hikes.  

 

“I think customers understand the need for price increases. In the past year TiO2 prices have been largely flat even though oil prices have been surging,” said one producer who said it had successfully implemented price increases for most of its customers, effective October 1.

 

Crude oil prices have increased by around 50% from January to July this year while Asian TiO2 spot prices have increased by just over 10% over the same period, according to global chemical market intelligence service ICIS pricing.

 

This disparity, due to a traditional time lag between the TiO2 and crude oil markets, had slashed the margins of TiO2 producers as a result.

 

The latest price hikes were still not enough to cover the rise in production costs but buyers concerned about the impact of a global economic downturn were unwilling to accept further increases, producers said.

 

“We are in fact still negotiating with many of our customers on the degree of the price increase. They are very cautious about their business prospects and some of them still have volumes left over from earlier contracts,” said another TiO2 producer who said it had implemented price increases of around $150/tonne for 40% of its customers, effective October 1.

 

TiO2 demand from the coatings industry has remained steady in face of the ongoing financial turmoil although demand from the plastic segment has softened in recent weeks, a producer said. Despite the economic concerns, industry sources expect all customers to eventually accept some degree of price increases as supplies in Asia remained tight.

 

“It is true that buyers are concerned about a possible global recession. But we have also seen suppliers struggling under difficult conditions. Buyers and sellers will have to meet somewhere in-between,” a TiO2 distributor said.

 

For more on TiO2 visit ICIS chemical intelligence

 

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By: Ng Hun Wei
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