Europe TiO2 price uptrend could continue into Q4 as supply remains tight

LONDON (ICIS)–The European titanium dioxide (TiO2) market remains tight, with little to no relief despite the holidays, and the current market expectation is that the upward price momentum is likely to continue into the fourth quarter if the tightness remains, market players said.

Players said that European TiO2 availability remains largely challenging, with talk of suppliers being sold out and not able to supply in some cases.

One buyer said that the situation was becoming more difficult in some cases, stating that it was experiencing several delays and that it had no option but to source some volumes from outside the region, in order to cover the shortfall from one of its suppliers in Europe.

“In the end we have the quantity, but we have to fight a lot,” the buyer said.

Another customer, however, said it was not experiencing any supply problems, but it said it was aware of the persistent tightness in the market.

Demand remains solid, with little to no sign of any summer lull in activity in most cases.  

Some players suggest that the market tightness in Europe is likely to persist into the fourth quarter, despite the traditionally low season for the main sectors, because there is some expectation that buyers will continue to purchase volumes. This is amid ongoing concerns on the buy-side about security of supply and the need to rebuild stocks, where possible.

One buyer said that while there is typically a drive to reduce stocks at year-end for working capital reasons, it considers re-building stocks, where possible to be the main priority this year.

While official price announcements for the fourth quarter were not yet available, there is some early market talk that TiO2 prices in Europe may continue to move up into the fourth quarter, if supply remains tight.

European TiO2 contract price discussions for the fourth quarter have not yet started, although there are some preliminary indications of plus €100-300/tonne being talked for the fourth quarter, although these have not been officially confirmed.  

Some buyers expect that the extent of any upward price movement in the fourth quarter is likely to be less than has recently been the case.

The European TiO2 price hit the highest level in Q3 2017 since the quarterly contract price began in Q4 2013, following the implementation of sizeable price increases for Europe TiO2 contract prices for more than one year, which buyers have struggling to pass on to downstream.

One player, however, suggested that some recent price flexibility in China could provide European buyers with leverage in their discussions in the fourth quarter, although this remains to be seen.

While some European buyers have needed to look to Asia to obtain sufficient volumes to cover the deficit in Europe, some players are not convinced that the Chinese situation will have a significant bearing on European Q4 discussions, if supply in Europe remains tight and also because not everyone can accept Chinese product for specification reasons.

Also, there are some mixed opinions about the competitiveness of Chinese TiO2 prices relative to those in Europe. While some sources said that prices in China have become more competitive when compared to the first half of the year from an exchange rate and price perspective, others said that they do not see much difference, taking into account the duties and freight costs.

European TiO2 contract prices in the third quarter were assessed at €2.59-2.85/kilogram (KG) FD (Free Delivered) northwest Europe (NWE), which reflects an increase of €0.25-0.30/KG from the previous quarter.

Titanium dioxide (TiO2) is used as a white powder pigment in products such as paints, coatings, plastics, paper, inks, fibres, food and cosmetics.

Focus article by Heidi Finch