European TiO2 producers target another round of increases

10 May 2013 16:27  [Source: ICIS news]

LONDON (ICIS)--Titanium dioxide (TiO2) producer Kronos will target €0.20/kg ($0.26/kg) increases effective 1 June or as contract terms allow, a company source said on Friday.

This will affect all TiO2 products sold in western and eastern Europe and Turkey. It comes after Kronos's – and other producers' – most recent targeted increase, in March, could not be implemented because of resistance from buyers and tough competition in Europe.

"Effective 1 June, 2013, or as permitted by contracts, prices for all Kronos TiO2 products sold in western Europe and Turkey will be increased by a minimum of €200/tonne," a company statement said.

In the wake of disastrous Q1 earnings releases, the only way forward for the industry is to increase prices, producers said. This will have to be done sooner or later, they added, or production capacity will have to be reduced. 

Buyers were not surprised by the announcement because they are aware of the situation most producers are in. They do not think it is the right time to push for hikes as the global market is long and they can source much cheaper material from elsewhere.

"I bought 200 tonnes of TiO2 for June delivery at $2.50/tonne, inclusive of delivery and all transaction costs... if European sellers are very aggressive and are not going to lower prices, I will order more from Asia, where sellers are willing to sell at a low price," one paint producer said.

In contrast, a buyer in Germany has had to accept a rollover in the second quarter and is expecting a small increase in the third quarter because its supplier is unwilling to lower prices to match the competition. The buyer is locked into buying a fixed volume each month, but says that if it were not, it would look for a different supplier. 

In eastern Europe, the market is oversupplied, and there is plenty of material on offer from Asia, too. This has prompted a major decor paper producer to say it is unlikely that western European sellers will manage to raise prices. 

In Romania, demand has been subdued during the first half of May owing to several public holidays in the country. 

Inventory levels are said to be decreasing, but this was disputed by buyers, who believe producers are still long on TiO2 and that there is no danger of tightness any time soon in Europe. 

According to two producers this week, global inventory levels have fallen since the end of 2012, which has helped to reduce the length in the market. Earlier, stocks had been enough for about 100-120 days, up to three times higher than what is regarded as a normal level of 40 days.

($1 = €0.77) 

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By: Janos Gal
+44 208 652 3214



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