US TiO2 price initiative seen as effort to halt price softness

07 March 2014 23:34 Source:ICIS News

HOUSTON (ICIS)--Amid a growing consensus that Q1 North American titanium dioxide (TiO2) contract prices were weakening, a producer has announced its intent to increase its contract price by 8 cents/lb ($176/tonne) effective 1 March, sources said on Friday.

In a letter to customers, Kronos offered no rationale for its new initiative and added that it planned to “complete” by 1 April the implementation of a 5 cent/lb increase it proposed for last October.

Most sources said that effort and others like it had long ago withered, and most expressed shock at news of the new effort, characterising the new announcement as merely an effort to stem further price decline.

“Ludicrous,” one buyer said of the latest price-hike effort.

Another customer said he “didn’t get overly concerned, because I view it as more of an attempt to stabilise prices and prevent further erosion.”

Oversupply, soft demand, negligible to non-existent delivery lead times and lengthening inventories continue to fuel talk of current price weakness and a lack of pricing power for pigment producers at least until the third quarter.

The current contract range for North American TiO2 for Q4 2013 is $1.50-1.65/lb, as assessed by ICIS.

Housing and other architectural paint applications are the largest end-markets for TiO2.

But despite talk in construction markets that the 2014 spring coatings season will be delayed by consistently harsh winter weather that has diminished demand, there was a glimmer of positive downstream news.

US pending home sales were essentially flat in January from December, according to the National Association of Realtors (NAR) this week, ending a seven-month decline in the key housing indicator.

January’s pending home sales index (PHSI) edged up by 0.1% to a reading of 95 compared with the upwardly revised December measure of 94.9. The NAR attributed the ongoing poor performance to persistently harsh weather in much of the US, which has also been blamed for sharp declines in new home construction and existing home sales in January.

Other major North American producers include Tronox, DuPont, Cristal and Huntsman.

By Larry Terry