Chemical profile: Asia TiO2

22 March 2013 09:22  [Source: ICB]

Titanium dioxide (TiO2) is mainly used as a white powder pigment because of its brightness and high refractive index. It is used in paints and coatings, including glazes and enamels, plastics, paper, inks, fibres, foods, pharmaceuticals and cosmetics.

As TiO2 is resistant to discolouration under ultraviolet light, it is often used in plastics and sunscreens. Another growing outlet is in photo catalysts, where it is used in applications such as light-emitting diodes, liquid crystal displays and electrodes for plasma displays.

The TiO2 market in Asia has been oversupplied since 2012 because of capacity expansions in the major China market and weak demand from downstream sectors.

China's total import volume for 2012 is estimated to be around 160,340 tonnes, down by about 30% from 228,600 tonnes in 2011. The decrease in import volume is attributed to capacity expansions in the country, which provided competitively priced local product for Chinese buyers to purchase instead.

From March 2012, prices in Asia plunged by approximately 28% year on year, according to ICIS data. Regional suppliers are trying to implement price hikes for the second quarter of 2013 but buyers are resistant. Demand for TiO2 in Asia was said to be slow as a result of the weak global economic situation.

Market sentiment in Asia's TiO2 market is expected to remain bearish in the near term, market participants said. Domestic prices in the major China market are softening as local producers lower their offers amid inventory pressures. This was despite the typical seasonal demand peak period in downstream paints and coatings industry in March and April.

Asian TiO2 prices in the second quarter of 2013 are expected to be largely stable, according to most market participants. Some regional producers have announced price increases for the next quarter because of squeezed margins.

However, some sellers concede it may be difficult to raise prices given the slow demand and lower prices in China's domestic market. Competitively priced Chinese exports to other Asian regions are likely to weigh down on TiO2 prices.

Buying ideas are mostly at a rollover or a slight decrease from previous deals. Some buyers felt that TiO2 prices may have bottomed out following declines in TiO2 prices since the second quarter of the previous year.

In March 2013, Asian TiO2 prices are assessed at $2,700-3,150/tonne (€2,100-2,320/tonne) CFR Asia. China-origin material was available at $2,450-2,650/tonne CFR Asia.

TiO2 is produced from either ilmenite, rutile or titanium slag. Titanium pigment is extracted by using either sulphuric acid (sulphate process) or chlorine (chloride route). The sulphate process employs simpler technology than the chloride route and can use lower-grade, cheaper ores. However, it generally has higher production costs and with acid treatment is more expensive to build than a chloride plant. But the latter may require the construction of a chlor-alkali unit.

The chloride route produces a purer product with a tighter range of particle size, but anatase pigments can only be produced by the sulphate route.

TiO2 prices in Asia have not increased since last year and prices may have finally hit the bottom, according to some market sources. Some sellers have already announced their intention of implementing price increments effective from the months of March and April.

Most sellers expect prices to recover in the near term, supported by improved demand in March and April from the paints and coatings sector. Meanwhile, some market participants remain pessimistic, believing the bleak outlook for China's TiO2 market may affect prices in other parts of Asia.

Prices in China's domestic market are likely to soften in the coming months because of inventory pressures faced by some local producers. Should prices in China's domestic market come down, regional sellers would have difficulty implementing price hikes for their exports into China, sources said.

In Japan, domestic prices are likely to remain relatively flat in coming months as demand is slow and buyers would not agree to price hikes, sources said. At the same time, local sellers are not willing to compromise on lower prices because of their already squeezed margins.

By: Christina Siantar
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