Huntsman targets global TiO2 hikes amid rising cost pressure

15 July 2009 18:26  [Source: ICIS news]

LONDON (ICIS news)--Major titanium dioxide (TiO2) producer Huntsman is targeting increases of €100/tonne ($139/tonne) for all grades of TiO2 sold in Europe, $0.03/lb for those sold in North America and $150/tonne for dollar-based markets, the company said on Wednesday.

The producer intended to implement all increases "on 1 August or as applicable contracts allow... and is in addition to all price increases previously announced in Europe, effective 1 July 2009," the statement said.

Although the reasons behind Huntsman’s plans to increase prices were unclear, many other producers in Europe said that cost pressure was making production almost unviable. 

“Unless prices increase, not all [European] TiO2 producers will survive this,” said a trader. “When feedstock and energy prices were increasing in the third quarter last year, TiO2 prices never reached the region of profitability. Producers are really feeling this now.”

The news came just days after key manufacturer Kronos also announced a $0.03/lb increase for consumers in the North American market, effective 1 August.

However, Huntsman is the first producer to target further hikes of €100/tonne in Europe, as most market sources reported that sellers were still struggling to push through their initial targets of €50/tonne for July business.

“We’ve had limited success in pushing the increases through,” said one European manufacturer. “In some cases we have managed to achieve €25-50/tonne or $50/tonne in the US but it has been a rollover for many customers.”

This was echoed by numerous European sellers who said that the average increase was €20-25/tonne in July. Most intended to pass through a further €20-25/tonne in August to achieve the full €50/tonne.

“Production has been cut and the market is becoming tight... June has been a good month and demand has been strong. We are concentrating on August now and feel that the limitations in availability will help us to gain the rest of the increase,” said a European producer.

While there was some expectation among buyers that prices could rise in September, the majority were adamant that July and August would remain stable.

“There is too much availability and no pressure on volumes. Sellers cannot expect to pass increases through in this market,” said a buyer.

Another consumer added: “We do not expect any major changes to prices for the rest of the year. Demand is still low and competition between suppliers to sell is still fierce, which makes for flexible pricing. [Demand] has improved but from a bad position – it’s not really positive news.”

However, several producers were quick to highlight that marginal price hikes in the TiO2 industry - which many consider to be a barometer for economic recovery due to paints and automotive coatings being end-users - were consistent with the widely held idea that the economy was still soft, but heading towards recovery.

($1 = €0.72)

For more on Huntsman and Kronos, visit ICIS plants and projects
For more on titanium dioxide visit ICIS chemical intelligence
To discuss issues facing the chemical industry go to ICIS connect

By: Stephanie Wilson
+44 20 8652 3214

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