Argex Titanium Inc. ARGEF

Pricing Brightens for Paint Makers

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The Wall Street Journal
https://online.wsj.com/article/SB10001424052748703907004576279163486885284.html

April 23, 2011
Pricing Brightens for Paint Makers
By JAMES R. HAGERTY

Justin time for the spring house-painting season, paint prices are heading higher, another example of rising commodity prices rippling through to consumers' pocketbooks

Voracious demand from China, India and other emerging markets is boosting prices for titanium dioxide, a keyingredient in paint, just as it has for oil, copper, iron ore and fertilizer. As raw-material prices rise, manufacturers are trying topass the added cost through to consumers, stoking inflation fears.

Retail paint prices are rising as makers pass along higher input costs.
."Wedo have pricing power," AkzoNobel NV finance chief Keith Nichols told reporters Thursday in presenting first-quarter results for the world's biggest maker of paint by sales, with such brands as Glidden, Dulux and Sikkens.

Executives from two big U.S.-based paint makers,Sherwin-Williams Co. and PPG Industries Inc., also warned thatraw-material costs could push up prices for paints and coatings used forcars, ships and myriad other items.

Sherwin-Williams raised prices in its paint stores three times last year, by a total of more than 16%. House painter Aaron Obringer, who owns Precision Brush Painting in Pittsburgh, said he now pays around $25 for a gallon of basic flat interior paint, up from $20 a year or two ago. "It's like out of control," he said, adding that paint-store employees blamed"something going on in China."

Prices of titanium dioxide—used in plastics, paper, toothpaste and sunscreen as well as in paint—have surged to between $1.15 and $1.30 a pound from around 90 to 95 cents in mid-2009, according to TZ Minerals International, a consulting firm based in Perth, Australia. Eric Bender, a senior consultant at TZMI,said titanium dioxide prices are likely to jump another 10% to 20% by year end and more than 10% in 2012.

Mining companies haven't invested heavily in production of titanium ore in recent years, and some chemical companies have closed or idled plants that turn the ore into titanium dioxide. It will take a few years for the industry to gear up to meet demand, Mr. Bender said. The biggest sources of the ore are in South Africa, Australia and North America.

Without titanium dioxide, paint colors would be less bright and painters would need to apply more coats. But paint makers say they are experimenting with cheaper grades of titanium dioxide and with technologies allowing them to use less of that ingredient.

Rising prices are good for DuPont Co., the world's largest maker of titanium dioxide. On Thursday, DuPont said pretax operating profit for its performance chemicals unit, whose major products include titanium dioxide, more than doubled to $394 million in the first quarter.Ellen Kullman, DuPont's chief executive, cautioned in a call with analysts that titanium dioxide is "a classic commodity chemical that ...goes up and down."

With prices on the rise for a wide range of commodities, one risk is that central bankers around the world will have to jack up interest rates and slow economic growth if rapid inflation spreads to too many products. The U.S. consumer-price index in March was up 2.7% from a year earlier, the biggest rise since December 2009.