FocusAsia TiO2 wide buy-sell gap stays; buyers expect lower prices

13 August 2012 07:24  [Source: ICIS news]

By Samuel Wong

SINGAPORE (ICIS)--Spot titanium dioxide (TiO2) values in Asia may be stuck at current range given a wide gap in selling and buying ideas, as producers factor in rising raw material costs while buyers insist on lower prices, market sources said on Monday.

The buy-sell gap in the Asian TiO2 market has doubled to $200/tonne (€162/tonne) since 13 July, with assessed prices hovering at $3,600-3,800/tonne CFR (cost and freight) Asia over the past five weeks, according to ICIS.

Buyers are posing a strong resistance to price hikes, citing continued weakness in demand. Some are holding off purchases, expecting TiO2 prices to fall, market sources said.

TiO2 producers, on the other hand, have to contend with high raw material costs, necessitating price hikes, but such move is being hampered by weak consumption, market sources said.

Producers had attempted to hike prices in the second quarter in Asia amid rising prices of feedstock titanium ore, but buyers resisted.

“We are continuing to seek for higher prices, but this is met by stiff resistance from buyers,” a northeast Asia-based producer said.

Buyers expect prices to fall because of the weak macroeconomic conditions.

TiO2 is mainly used in the coatings, plastics and decorative laminates industry.

Downstream demand is being hampered by the unstable global economic environment, amid the ongoing eurozone debt crisis, buyers said.

“There is no rush to procure cargoes now on ample inventory level, in addition to an uncertain market,” a southeast Asia-based buyer said.

Ample availability of Chinese-origin cargoes also makes cargoes from outside of Asia less attractive for buyers.

Offers of Chinese-origin rutile-grade TiO2 exports fell by $400/tonne from a week earlier to $2,700-2,900/tonne FOB (free on board) China on 10 August), according to ICIS.

The Chinese market is currently in oversupply of TiO2, with producers saddled with high inventory levels given weak domestic consumption of the material, industry players said.

A number of producers in the country are planning to cut operating rates at their plants in the near-term to relieve the situation, they added.

“Currently, there isn’t a need to purchase, as inventory level is sufficient,” a China-based buyer said.

“I might only look to buy at the end of August, but it also depends on the price level during that period,” he said, adding that prices are likely to decline in the near term.

Buyers in the region are resisting higher TiO2 prices, citing lower offers heard in the Chinese export front, said a northeast Asia-based producer.

US-based TiO2 major Huntsman said that global destocking of the material will continue well into the third quarter and exert near-term pressure on producer margins and pigment pricing.

($1 = €0.81)

Read John Richardson and Malini Hariharan’s blog – Asian Chemical Connections
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By: Samuel Wong

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