Experts have warned that the price of titanium dioxide -a key ingredient in automobile paint production - will be subject to "rapid price escalation" during 2021 as demand outstrips supply.

Merchant Research and Consulting warned in a recent paper that supplies of the commodity have reached historically low levels and prices for the key commodity are expected to soar.

The analyst company noted that as the demand for cars and other consumer goods increases so does the demand for titanium dioxide. This means that the global titanium dioxide sector ended 2010 with prices "soaring through the market" and 2011 gains are reported to be significant as well.

The market research report, Titanium dioxide: 2011 World Market Outlook and Forecast, noted that current pricing expectations are founded on low inventory levels of pigment starting paint season and poor supply brought on by scarcity of investment for several years.

"Such tight conditions on titanium dioxide market would lead to rapid price escalation during 2012 and likely 2013. Over the next several years titanium dioxide producers and feedstock suppliers will escalate margins in 2011 thereby by much controlling the pricing balance in the value chain," the study stated.