FocusEurope TiO2 players fear demand will remain flat until 2H 2012

16 February 2012 16:42  [Source: ICIS news]

By Amandeep Parmar

LONDON (ICIS)--A delayed coatings season in Europe could mean titanium dioxide (TiO2 ) prices remain flat until the second half of the year, market sources said on Thursday.

The downstream paints and coatings segments usually see a pick up in demand around March/April when the weather warms around Europe, and TiO2 prices tend to rise accordingly.

However, a combination of macroeconomic uncertainty and high stock levels lead several players to think this tendency may not be as pronounced this year.  

TiO2 buyers and sellers agree that buying interest has already not been as good as normal this year – around 10-15% down on 2011 levels – because of a cautious sentiment amid the eurozone debt crisis.

TiO2 suppliers are therefore well stocked with material at the moment, so there is no danger of the market becoming tight any time soon, sources said.

Buyers added that end-users in the paints industry have plenty or inventory left over from 2011, as demand during the second half of the year was much slower than expected.

What this means for TiO2 prices in 2012 is still up for debate. Some buyers say that prices should remain stable until availability becomes an issue around June or July.

However, other customers say values should still increase in the second quarter, although not quite by the €0.20/kg ($0.26/kg) seen at the same time last year.

“We don’t expect a different trend to last year. It may be at a lower level, but the same trend,” said one buyer.

Producers are especially adamant prices need to rise quickly considering how much raw materials costs have been soaring. Upstream ilmenite and rutile prices jumped up to 75% from the second half of 2011 to the first half of 2012.

So far producers have indicated they will be looking for increases of around €0.20-0.30/kg for second quarter contracts, from the €3.00-3.40/kg FD (free delivered) NWE (northwest Europe) in the first quarter.

However, one manufacturer said that while it is confident of a demand recovery in the second half of the year, buying interest in the second quarter may not be strong enough to support these price rises.

“There is not enough tension in the system so we may face resistance from customers on price increases,” the producer said.

($1 = €0.77)

By: Amandeep Parmar
+44 208 652 3214

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