Buyers see prices going up this year
By Staff -- Purchasing, 3/9/2000 2:00:00 AM
Prices for both rutile- and anatase-grade titanium dioxide (TiO(SUB 2)) are on the rise. Producer increases of 5¢/lb announced in October 1999, appear to have gone through in January 2000, and stronger-than-average demand for pigments has producers ready to announce more increases. Buyers are preparing for higher prices in 2000.
Several factors are contributing to the increasing demand. Strong global demand for pigments and the recovery of the Asian economies have boosted demand for titanium dioxide in the U.S. Also, producers are running at or near capacity. Most producers report capacity utilization rates in the mid-90% range.
"Pricing for titanium dioxide fell in the first quarter of 1999 despite producer price-hike announcements in January," according to Jim Fisher, president of chemical industry research firm, IBMA, located in Princeton, N.J. "But by the end of the summer, demand strengthened due to better-than-expected recovery of the Asian markets and a strengthening European market," Fisher says.
In October, producers announced another 5¢/lb price increase for both rutile and anatase material. Fisher says that most of this increase (about 4¢/lb) actually went through.
"There has been a change in the overall pricing strategy of producers," Fisher says, adding that he believes that prices will not cycle as much in 2000 as they have in the past. Instead, he believes pricing will increase gradually, by about 3%-5%/yr in line with demand.
Rick Straightman, marketing manager for Du Pont's titanium pigments business, says that demand for product is strong now and will remain strong through the first half of the year. "We may see some minor abatement in the second half of the year, but we expect 2000 to be a strong year for rutile titanium dioxide," he says.
Currently, domestic prices of anatase-grade titanium dioxide average 95¢/lb for contracts and 96¢/lb for spot tags, according to the latest data from Purchasing's monthly survey of chemical buyers. These prices were up from 91¢/lb and 95¢/lb for contracts and spot tags respectively in the third quarter of 1999.
Buyers expect to see further price increases in the third quarter. Prices for anatase-grade titanium dioxide material should average about $1.02/lb for contracts and $1.05/lb for spot tags by the end of the year, according to buyers' data.
Rutile-grade titanium dioxide should see a similar pricing trend. Current average prices for rutile-grade material are $1.02/lb for contracts and $1.05/lb for spot tags. Buyers foresee continued price increases, which will boost the second-quarter price averages to $1.04/lb for contracts and $1.07/lb on the spot market. From there, buyers expect flattening prices, with possible upward pressure in the third and fourth quarters of this year. Buyers expect price levels to reach $1.05/lb for contracts and $1.08/lb for spot tags by the end of 2000.
"The price increase (announced in October) has not quite settled," says Bonnie Jones, director of purchasing at Kemlite Co., based in Channahon, Ill. "Producers are hopeful that the full 5¢/lb increase will stick, but they say they won't know for another month.
"Now is the time of year when producers usually increase their production of titanium dioxide in preparation for the spring construction season," adds Jones. "Housing starts are also up, which could be contributing to increasing prices. Producers may be trying to set their margins for the expected increase in demand," she says.
According to Jones, producers are claiming that supply currently is somewhat tight. But Jones says that some producers are encouraging customers to switch suppliers, which, Jones says, is an indication that there is material available in the marketplace.
Bob Grieser, purchasing manager at Weyerhaeuser Corp., based in Rothschild, Wis., says he expects a 5¢/lb increase for both grades of titanium dioxide to go through and be in place by July 2000. "The demand is there," Grieser says.
Jim Fisher sees the long-term growth forecast for titanium dioxide at about 2.5%/yr. "Most growth has come from the plastics market," Fisher says. "Plastics demand has grown about 2-4 percentage points higher than the underlying pigments market in the past year," he says.
Now, Fisher says that supply seems to be in line with the market. "There doesn't seem to be any supply shortages. Overall the market has stabilized, and no new capacity is scheduled to come online in 2000," Fisher says.
There are six major domestic producers of titanium dioxide. These include Du Pont, Millennium Chemical, Huntsman's Tioxide, Kronos, Kerr-McGee and Kemira.
Total domestic capacity is currently about 3.2 million tonnes/yr, up from only 1.4 million tonnes/yr of capacity a year ago, according to IBMA.
In supply news, Huntsman Tioxide plans to close its Tracy, Quebec, Canada pigments finishing plant by the end of June 2000. The company cites the need for more streamlined North American operations and distribution for the plant closure.
Kerr-McGee Corp., Oklahoma City, Okla., has reached an agreement with Kemira Oyj of Finland to acquire Kemira's titanium dioxide pigment operations in Savannah, Ga., and Botlek, The Netherlands, for $403 million.
The two Kemira plants have a combined capacity of 200,000 tonnes per year, which will increase Kerr-McGee's total titanium dioxide equity capacity by 60% to 535,000 tonnes/yr.
After the transaction, which is still subject to governmental approval, Kerr-McGee will rank as the world's third-largest supplier of TiO(SUB 2) pigment, producing about 605,000( tonnes/yr, according to the company.
Also, Kerr-McGee recently completed a 150,000-ton/yr capacity expansion at its Hamilton, Miss., titanium dioxide plant.
The pigments market accounts for the overwhelming majority of titanium dioxide demand. Within that market are paints, coatings, plastics, and pulp and paper products. Other end uses for titanium dioxide pigments include food products, cosmetics, inks and dyes, ceramics and fibers. Of these uses, paints is the largest market, comprising more than half of demand. Plastics and pulp and paper each account for almost 20% of TiO(SUB 2) demand in the U.S.
Huntsman makes bid for Tronox
08/31/2009Strong demand boosts prices
04/05/2000Rising prices will stabilize next year
11/04/1998
Now Playing: 