OUTLOOK ’10: TiO2 expectations are weak for 2010 - buyers

28 December 2009 22:30  [Source: ICIS news]

HOUSTON (ICIS news)--Expectations for the 2010 North American titanium dioxide (TiO2) market are dim, according to buyers who say the depth of the recession will make recovery tedious in the important end markets of housing and automobile manufacturing.

Many TiO2 buyers remained pessimistic about 2010, predicting little or no spring coatings season or withholding comment until at least the latter portion of the first quarter, given the decline in architectural-coatings demand stemming from the US housing slump.

Although a mid 2009 resurgence in the automobile sector was prompted by the federal “cash-for-clunkers” incentive programme, some buyers predicted the demand bounce would not support auto sales going forward.

TiO2 producers, however, were broadly optimistic, saying supply and demand would continue to move toward parity heading into the new year and that prices would move up as a result.

Producers conceded that recovery would be slow, but were optimistic about the US spring coatings season.

Buyers, however, said recent price gains stemmed largely from seasonally low producer inventories and reduced supply from idled TiO2 plants.

“I don’t see any uptick in paint production until 2011,” said one paint manufacturer, asserting that demand for pigment will not be sufficient to balance near-term supply.

That comes despite reduced pigment supply, achieved by idling more than 400,000 tonnes of capacity and routing more product overseas in 2009.

The coatings maker said it could be more than a year before domestic TiO2 demand tightens supply of the pigment at current production levels.

While another paint maker said it had seen a recent uptick in industrial coatings demand, architectural coatings demand was predicted flat to weak in the near term.

A buyer said further price increases - 11 cents/lb remained in contention as 2009 came to a close -  were unlikely at least until well into the first quarter of 2010 due to flat demand in North America. Other buyers said it would take at least that long to assess overall 2010 demand.

One seller was even less optimistic, saying it could take all of 2010 and beyond for broad TiO2 demand to return to trend-line levels of 3%/year given the duration and severity of the global recession.

North American TiO2 prices as of Monday were 112-124 cents/lb ($2,469-2734/tonne, €1704-1886/tonne), according to global chemical market intelligence service ICIS pricing.

There was marginal optimism from the plastics-compounding sector. The seasonal shopping rush had sparked demand, but it was not widely viewed as sustainable.

Buyers and sellers did, however, express concern about supply availability in the event of a surge in demand or a significant unplanned outage.

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

($1 = €0.69)

For more on TiO2, visit ICIS chemicals intelligence
To discuss issues facing the chemical industry, go to ICIS connect

By: Larry Terry
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