TiO2 price set to fall by 15% in 2012 despite tightness – ING

18 November 2011 12:51  [Source: ICIS news]

LONDON (ICIS)--The titanium dioxide (TiO2) price rally seen in 2011 is likely to be followed by a 15% price fall next year, Netherlands-based bank ING said on Friday.

TiO2 sales will be highly vulnerable to the expected global economic slowdown of 2012 and despite the severe tightness seen in supplies this year, prices will decline, according to a forecast by ING analyst Adam Milewicz.

“Following the rally in 2011, we see some signs of weakening tightness in the titanium dioxide market," Milewicz said in an analysis. "In Europe, titanium dioxide buyers are trying to resist fourth-quarter product hikes. Simultaneously, Chinese producers are lowering prices on an expected construction demand slowdown in the fourth quarter of 2011.”

The TiO2 price climbed from €1,584/tonne ($2,141/tonne) in 2007 to €1,639/tonne in 2010, ING figures show. This year it is expected to hit €2,205/tonne, but next year it would probably fall to around €1,874/tonne, the bank added.

A section of the ING analysis looked at how Polish TiO2 and compound fertilizers producer Zaklady Chemiczne Police (ZChP) could be the “principal victim” in the Polish chemical sector of the bear cycle expected to hit producers.

ZChP should be anticipating market difficulties, “given that its product portfolio [complex fertilizers and TiO2] is highly vulnerable to a cyclical downturn” and that the main consumer of its TiO2 – the construction sector – is closely tied to GDP growth, Milewicz said.

Approximately 13% of ZChP's revenues came from TiO2 sales, he noted, adding that in 2012 ZChP should anticipate a 10% year-on-year decline in both its TiO2 and complex fertilizer sales volumes.

($1 = €0.74)

By: Will Conroy
+44 20 8652 3214

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