09 September 2009 05:31 [Source: ICIS news]
By Ng Hun Wei
SINGAPORE (ICIS news)--Titanium dioxide (TiO2) producers are confident of achieving much of their proposed price hikes in Asia on the back of improved buying sentiment as well as slightly limited supply, traders and producers said on Wednesday.
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“The response from buyers is more positive this time around. Buyers are not surprised [by the announcement] as they have been expecting prices to go up in the fourth quarter,” a TiO2 producer said.
Some buyers had already accepted the full $150 increase, a producer said but this could not be confirmed. Other TiO2 suppliers said they were still negotiating the price increase with their customers. One producer, echoing the sentiment of its competitors, said it was confident of achieving, on average, at least 70-75% of the proposed hike.
“That is the direction prices are going at the moment. Prices of all other basic chemicals have gone up in recent months and TiO2 is no different,” the producer said.
Sellers’ confidence was high despite strong buying resistance against the 1 July price hikes. Buyers generally agreed that sentiment seemed to be improving and that a price hike was understandable.
However, buyers disagreed with the degree of the increase. “We respect the producers’ wish to increase prices but a $150/tonne increase is wishful thinking. 20-30% of that would be more reasonable,” said a major buyer in
With the global economy just climbing out of its worst recession in decades, buyers were cagey about their own business prospects and resisted the $50-100/tonne hike, effective 1 July, with varying degrees of success.
Producers admitted that negotiations were difficult and one buyer said it successfully fended off the proposed price initiative.
Buying sentiment has however turned for the better recently, producers said.
“No one expected the upswing to be this strong. I would say that the restocking activity (among TiO2 buyers) had probably ended and what we are seeing now is an actual increase in downstream consumption,” said a TiO2 producer.
Buyers agreed that TiO2 demand looked set to improve. Consumption of paint, of which TiO2 is a key ingredient, usually picks up before the year-end holiday season, they noted.
A slew of plant shutdowns and operating rate cuts also helped to exert upward pressure on prices, market players said. Producers could be expected to ramp up output in view of the improving demand but this would take time, industry sources said.
“It takes money to shut a plant and it takes money to restart it. It is not so easy to reverse gear,” said a TiO2 producer.
($1 = €0.69)
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