OUTLOOK `14: North America TiO2 pricing power unlikely until H2

24 December 2013 15:00  [Source: ICIS news]

HOUSTON (ICIS)--North American TiO2 market supply will be plentiful heading into the new year, sources said, but although there is little talk of continued oversupply, pricing power is not expected to return to the market anytime soon.

Limited Q1 North American TiO2 price-hike endeavors of 5-6 cents/lb ($110-132/tonne) appear to have withered partly on a lack of market support, several sources said recently.

But ample supply amid soft conditions will persist awhile longer, despite more hopefulness about upcoming spring coatings season than participants expressed last year.

“Difficult” is the word one buyer used to describe the odds of price increases even by Q2, saying there is “plenty of supply – not a glut, but no shortage”.

“I see no problems with the TiO2 supply,” another buyer said, “and I believe that price increases will not happen until quarter three.”

Even, some said, if market growth tracks estimated 2014 GDP of 2.8%.

That would be a best-case scenario, some sources said, especially because the paper segment anticipates no growth in 2014, and the use of extenders and the adoption of TiO2 usage-reduction programs are in place, especially in the architectural coatings sector.

Another headwind to market vitality includes expansions and upgrades in Asia, which will increase supply available to US customers, who have become increasingly comfortable with the quality of imports over the last couple of years.

Market projections for 2014 are more optimistic than they were for 2013, however, and recent economic signposts seem to indicate that optimism is justified.

US new-home construction increased by nearly 23% in November from October, according to the US Department of Commerce, reflecting the strongest growth in housing development since the 2008-2009 recession.

However, it was driven primarily by a 26% surge in multi-unit apartment projects, while within the core market for housing construction – single-family homes – the rate of growth was slower but still strong at 20.8%.

Despite such statistics, many buyers are tempering their hopes.

“I see slow and steady growth,” a buyer said. “Nothing major until consumer confidence grows. I think the healthcare issues are dragging us down, and until we have some stability there, the economy may warm up, not heat up.”

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

North America TiO2 pricing power unlikely until H2


By: Larry Terry
1 713 525 2653



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