28 December 2012 17:00 [Source: ICIS news]
HOUSTON (ICIS)--North America titanium dioxide (Ti02) market conditions will remain soft early in the year, exerting downward pressure on pricing during the first two quarters, sources said.
Supply is likely to be especially loose in the first and second quarters, buyers said, as the domestic Ti02 market emerges from its typical end-of-year slump.
“I think buyers will continue to hold off on purchases and continue to let their Ti02 and finished goods inventory go lower,” a buyer said. “I do not think the recovery will have any steam until late in the third quarter.”
That is when pricing movement is most likely to occur, an architectural coatings maker suggested, and that will be contingent upon the economy.
“I think the earliest increase would be in July 1, and if the world economy doesn’t improve, it may take longer,” the buyer said.
Buyers and at least once producer concede that customers will have the upper hand as the year begins, but they part company there.
A buyer insisted that customers will have a clear advantage until after the third quarter begins, but a producer said supply will begin to tighten as early as the second quarter.
Demand could improve by as much as 5% by spring because of housing market improvement and higher consumer spending, “which will have a positive influence on other, related industries, such as plastics,” a seller said. “Replenishment of inventories of pigment and also finished goods… will trigger the first wave of demand.”
That will spur price-hike efforts of as much as 7-10% in the second or third quarters, the producer said.
Reasons supporting a buy-side advantage in the coming year include the growing interest in Chinese material, which most buyers contend has gained a foothold, albeit a relatively small one.
Upstream considerations also will weigh heavily on the market next year.
In 2012, ore pricing exerted strong upward pressure on Ti02 prices, but buyers are less sympathetic now.
“I think the Ti02 manufacturers will need to have serious talks with the ore producers,” a buyer said. “They need to work together, or there will be huge (cost) battles between them, and both will lose.”
Producers are doing that.
Ore prices will decrease from their "unbearable" levels in 2012, a TiO2 producer said. But the improvement of pigment prices in 2013 will not have a material impact on ore prices.
However, ore prices will strengthen again in the second half of the year, pressuring pigment pricing upward late in the coming year, the producer said.
Architectural buyers want to see pigment prices weaken again in the first quarter of 2013, but producers’ strong resistance to that is expected to hold pricing stable for the near term.
Sources in the plastics compounding sector of the TiO2 market said they anticipate mostly flat demand in the 2013, with their pricing likely to follow that trend, also remaining largely stable.
In contrast, compounders said demand in 2012 was stronger in the first half of the year but tapered off in the second half.
One buyer in the plastics-compounding market said its suppliers will certainly attempt increases in 2013, but that it expects little or no success on that front, especially early in the year.
North American TiO2 producers include Tronox, DuPont, Cristal, Kronos and Huntsman.
For more on TiO2, visit the ICIS Plants & Projects database
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