Prices for the white pigment titanium dioxide will continue to increase through the fall, padding profits at the Wilmington-based DuPont Co., Jefferies & Co. analyst Laurence Alexander wrote in a note to clients this morning.

Titanium dixode – known as Ti02, its chemical formula – is a powder used to whiten paint, paper and coatings used on plastics. DuPont is the world’s leading producer of the chemical, which it makes for the paper industry at its Edge Moor plant north of Wilmington. Some 300 people are employed at the plant.

Alexander said in his note this morning that Ti02 prices are rising 15 cents per pound this month, and will rise another 25 to 35 cents on October 1. “This sets the stage for industry benchmark gross margins near 40% in 4Q11: potential upside to earnings for” DuPont and a competitor, Huntsman Corp. Alexander has a “buy” rating on DuPont’s stock.

Prices for Ti02 have been rising for months, with demand surging as global economies mounting a recovery from the financial slump. The pigment is used in paint for cars and houses, as well as coatings for consumer products, so it can be a good economic benchmark.

During the recession, makers of Ti02 tightened supply and were unable to keep pace with demand during the recovery, which led to higher prices. DuPont is capitalizing on the situation by sinking more than $500 million into a Ti02 production expansion. Most of the money will go to build a new line at the company’s Mexican production facility, but the company intends to expand production at Edge Moor and may add a few workers locally.