Europe TiO2 prices set to smash 10-year high on tight supply

17 June 2010 19:05  [Source: ICIS news]

LONDON (ICIS news)--The European titanium dioxide (TiO2) market is set to break record prices in the third quarter as availability becomes increasingly scarce, sources said on Thursday.

Values for European TiO2 are currently pegged at €2.25-2.42/kg ($2.78-2.99/kg) FD (free delivered) NWE (northwest Europe), according to ICIS.

However, observers reckoned that strong demand and ongoing plant outages would enable producers to implement the full extent of their proposed €0.15/kg price hikes on second-quarter values. This would take TiO2 numbers way above their previous peak of €2.25-2.45/kg FD NWE seen from October 2000 to April 2001.

Manufacturers said they had already achieved some or all of this increase as of 1 June, with any shortfall to be made up as of 1 July for quarterly agreements.

“Some are already charging €2.50 for truck and aiming for €3.50 before the year is out. I thought it was unrealistic at first but the market keeps getting worse. It might just be possible,” one trader said.

Several buyers were resigned to taking on the full cost hike, stating there was not enough volume in the market and stocks were running dangerously low.

One buyer said: “We don’t see an alternative.” A second added: “There is no way we can resist.”

The weak euro against the dollar was regarded as another major factor tightening the market, with suppliers from the US now withdrawing from Europe as they could find far greater returns at home and in Asia, where demand was also healthy.

“The big players prefer to sell overseas, serving the highest paying customers rather than honouring long-term relationships,” a distributor said.

Indeed, several customers feared there could be further hikes of €250-300/tonne before the year was out if things did not improve. Some stated that they just needed material and price was of secondary importance.

In contrast, a couple of buyers countered that much of the reported strong demand was overstated, as limited availability was causing many customers to make the same order with several suppliers.

This was resulting in “double counting”, which may not be sustainable when peak season ended in the downstream construction sector and downed plants came back on stream.

These consumers therefore felt that they may get away with €50-100/tonne increases in July and maybe see a reduction in August. But even with this best-case scenario, TiO2 would be more expensive than at any time on record.

“The market will change and when it does we will make them pay,” a buyer said.

($1 = €0.81)

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

By: Amandeep Parmar
+44 208 652 3214

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