European TiO2 industry faces bleak short-term outlook

26 April 2013 17:23  [Source: ICIS news]

LONDON (ICIS)--Titanium dioxide (TiO2) demand in Europe is unlikely to improve much in May compared with April because of poor demand from the downstream construction and automotive industries, sources said on Friday.

Demand in May will be very similar to that in the previous four months, and even the arrival of warmer weather will help little as construction output across Europe has been declining in recent months as a result of the ongoing macroeconomic slowdown.

EU construction output fell by 0.4% in February this year compared with the previous month, data agency Eurostat said on 17 April. Construction output for the 17-member eurozone was also down by 0.8% month on month in February, Eurostat added.

TiO2 is used for paints, plastics and a number of other materials consumed by the construction and automotive industries.

As a result of the unusually slow start to the season and weak demand, producers have so far been unable to implement their targeted increases of €0.20-0.25/kg ($0.26-0.32/kg) for April and the third quarter. In fact, some buyers have achieved small reductions for the second quarter. Second quarter TiO2 prices are at €2.35-2.50/kg free delivered (FD) northwest Europe (NWE).

There is little chance buyers will fill up inventories and stock large quantities of TiO2 in the near term because supply is long and they can find TiO2 at short notice. There was talk of some Chinese exporters offering longer term contracts, running up to six months at a cut-price, which buyers might take advantage of if European sellers insist on increasing prices during the third quarter.

($1 = €0.77)

Follow Janos Gal on Twitter @janosgalICIS

By: Janos Gal
+44 208 652 3214

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