FocusTiO2 makers keen on price hikes in Asia on steep feedstocks

03 April 2012 07:46  [Source: ICIS news]

By Feliana Widjaja

TiO2 is widely used in paintsSINGAPORE (ICIS)--International titanium dioxide (TiO2) producers are aiming for another round of price hikes in the second quarter in Asia amid rising feedstock titanium ore prices that are showing no signs of abating, industry sources said on Tuesday.

DuPont and Cristal Global have announced price hikes of $200/tonne (€225/tonne) CFR (cost & freight) Asia while Kronos and Tronox are implementing $250/tonne price increases.

In addition, Huntsman and Ishihara Sangyo Kaisha (ISK) have declared a $300/tonne and $400/tonne price increment, respectively.

These price augmentations are effective from 1 April for the Asia-Pacific region.    

TiO2 prices were last assessed at $4,000-4,200/tonne CFR Asia on 30 March, hovering at this level since the beginning of the year, ICIS data shows.

Strong resistance from buyers has hampered producers’ intention to achieve the full price increase of $200-350/tonne that was initially announced in late 2011 for the Asia Pacific region, effective from 1 January 2012.

As a result, price rollovers were evident in first quarter settlements.

A number of TiO2 suppliers managed to achieve partial price increases but these were said to be incremental and they were staggered across the first quarter instead of being implemented in full at once.

Several buyers managed to achieve some price reductions in the first quarter of this year, especially those who had paid around the high end of the range in the fourth quarter of last year, sources said.

Demand in the first quarter was generally lacklustre, affected by the tightening of monetary policies in China as well as the uncertainties in the Eurozone.

“Demand is softer than normal because of the hangover of what happened in Q4. People are still concerned about the economic situation”, a US-based producer said.

Despite the lack of success in implementing the full price increase in the first quarter, suppliers are gearing up for another round of price hikes in the second quarter.

Producers said that price increases are necessary to offset the impact of soaring values of feedstock titanium and rutile, where in some cases, prices have gone up by 70-75% from the second half of 2011 to the first half of 2012.

“Actually, an increase of $200/tonne is too small to cope with raw material increases,” a Japan-based producer said.

Furthermore, producers are expecting demand to recover slowly, starting late in the first quarter or early in the second quarter when the paints and coatings season traditionally starts.

"TiO2 demand tends to follow gross domestic product (GDP) growth. Coupled with high raw material costs and the absence of significant new TiO2 capacities coming on-stream in the next two to three years, we expect the market to remain strong," another US-based TiO2 producer said.

TiO2 buyers are determined to put up stiff resistance to the latest round of price hikes.

Buyers contend that the price increases are not justified as the tight supply situation seen last year seemed to have eased this year amid slower demand which was a result of macroeconomic woes.

Furthermore, buyers are finding it tough to pass the additional costs on to their end-users, they said.

The ample availability of lower-priced cargoes from China is also making international cargoes less attractive for customers who can use cheaper China-origin materials for their lower-end products.

“There may be some price increase but not as high as producers’ expectations because of the supply from China,” a southeast Asian buyer said.

Although the TiO2 price rally seen in 2011 is unlikely to be repeated this year as demand will be vulnerable to the anticipated global economic slowdown, prices are likely to remain firm because of persistently high feedstock titanium ore prices, market sources said.

TiO2 prices surged by $1,200/tonne in 2011, a jump of around 40% from values at $2,800-3,000/tonne CFR Asia in early January 2011, according to ICIS data.

Cost of raw materials like TiO2 and others are expected to grow 5-10% this year, a US paints and coatings maker said.

($1 = €0.75)

Read John Richardson and Malini Hariharan’s blog – Asian Chemical Connections

By: Feliana Widjaja

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