AFPM ’14: N America TiO2 price hike efforts expected to heighten

30 March 2014 14:00 Source:ICIS News

HOUSTON (ICIS)--Price-hike momentum in the North American titanium dioxide (TiO2) market was said likely to increase in the next few weeks, but buyers heading into this year’s International Petrochemical Conference (IPC) say gains are unlikely any time soon.

So far, the only formally announced near-term effort has come from Kronos, which said it will pursue its Q4 price-hike efforts - considered extinct by most buyers - and push for an 8 cent/lb ($176/tonne) increase, effective on 1 March.

If successful, that increase would be implemented on June 1.

Other price-increase intentions have been heard in the market, but they have not been made publically available. Two producers said this week their customers have been notified of suppliers’ pricing intentions.

Ample pigment inventories and incremental demand improvement argued for weakness during the first quarter, which some sources reported, but there was not a consensus that market pricing fell broadly.

Domestic TiO2 contract prices for Q1 are in a range of 1.50-1.65/lb, as assessed by ICIS.

Some sources have asserted that recent price initiatives were designed mostly to prevent price erosion. Buyer appeared more amenable to possible price gains later in the third quarter or early in the fourth quarter, if economically warranted.

But while demand has been described as steady and gradually improving, it is not nearly as seasonally strong as participants hoped it would be this near to the spring coatings season. Further delays are expected despite marginally positive signs from housing.

While harsh winter weather, especially in the northeast US, can take some of the responsibility for the slow build in paint demand, sources said, one participant blamed sentiment as much as anything else. With some segments of the economy still tentative, worries about a poor economy tend to be self-fulfilling, the buyer said.

Downstream signals are somewhat mixed.

In spite of some recent positive housing numbers, US sales of new single-family homes fell by 3.3% in February from January, the Commerce Department recently reported.

Last month’s selling pace also was 1.1% below activity seen in February 2013. The recent decline partly offset a sharp 9.6% gain recorded in January, which had ended two months of declines, including a 7% drop in December.

Major North American TiO2 producers include Tronox, DuPont, Cristal, Kronos and Huntsman.

Hosted by the American Fuel & Petrochemical Manufacturers (AFPM), the IPC takes place 30 March-1 April in San Antonio, Texas.

By Larry Terry