FocusNorth America Q3 TiO2 prices erode on oversupply, imports

21 August 2012 23:00  [Source: ICIS news]

TiO2 is used in paintBy Larry Terry

HOUSTON (ICIS)--North American titanium dioxide (TiO2) contract values have fallen by 5-8 cents/lb ($110-176/tonne, €89-143/tonne) for the third quarter on soft demand and oversupply, but more weakness could come in September, market sources said on Tuesday.

The decline narrowed the previous range at its high end, moving the new domestic range to $1.95-2.04/lb, as assessed by ICIS. The price drop is the first in the North American TiO2 market in more than five years.

Producers have been silent amid the downward price pressure, but several buyers suggested prices could weaken further before the third quarter ends, citing the expectation of more ilmenite ore capacity, market instability and confusion linked to high inventories and deeper price cuts for imported material.

North American buyers said domestic price cuts ranged from a low of 3-5 cents/lb to highs of 10 cents/lb, but that most reductions hovered at 5-8 cents/lb. Some buyers that were offered reductions of 10 cents/lb saw that amount reduced to 8 cents/lb as producers passed along small freight-cost hikes.

Asian material has been heard 10-15 cents/lb lower than some discounted chloride-based material produced in North America.

The rate of TiO2 imports from Asia has increased as demand there and in Europe has been dismal.

Most North American TiO2 producers employ the chloride route, which uses chlorine to ­extract pigment from ilmenite, rutile or titanium slag. Much of European and Asian production is based on the sulphate process, which uses sulphuric acid.

North American price-hike initiatives before the end of the year were unlikely, buyers said, but such efforts would mostly be attempts to halt more price decline in the fourth quarter.

We do expect more erosion in TiO2 pricing in September or October,” a buyer said. “I don’t expect to see any price hikes stick any time soon,” the buyer added. “This includes 2013.”

“People are letting their inventories deplete and are not buying because of the likelihood of future price weakness,” another buyer said.

Most buyers were hesitant to predict demand levels for next year’s paint and coatings season, but one architectural coatings maker said paint price increases stemming from higher TiO2 costs would push its full-year revenues up by about 20% compared with 2011.

The architectural coatings maker added, however, that full-year demand would likely be assessed up by only mid single-digit percentages. Going forward, the buyer added, “we’re hoping to use about 20% Asian material.”

That doesn’t bode well in the near term for domestic TiO2 suppliers already facing excess inventory.

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

($1 = €0.81)

By: Larry Terry
1 713 525 2653

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