Europe TiO2 two-year run of price hikes ends as supply improves

LONDON (ICIS)–Greater import availability from China and signs of muted demand are pressuring European titanium dioxide (TiO2) prices lower for spot and third-quarter (Q3) contracts, putting an end to two years of price hikes.

– Buyers cautious on expectation of price decreases 

– Major producers report lower-than-expected sales volumes

– Paints, plastics demand lower due to stock build-up, weather events

Another factor contributing to TiO2 lower prices is fierce competition between western and eastern suppliers.

European TiO2 spot prices have been quoted at around the upper €2,000s/tonne for standard paints grade.

Sources have said traders are particularly keen to shift volume and sell off their higher priced stock amid a softer market sentiment.

“Spot prices are falling in Asia and Europe; demand is very bad, the order intake is slow,” said one reseller, adding that availability in the two regions is healthy.

For Q3 contracts, sources have said there would be double-digit decreases, particularly for standard grade TiO2.

Some sources also mentioned triple-digit drops, but these were not widely confirmed.

One buyer suggested that the sharp rise in imports from China in the first half of 2018 had “more than compensated” for the extended output disruption at Venator’s Pori, Finland plant.

The company’s CEO Simon Turner recently said that TiO2 long-term fundamentals “remain favourable and continue to support an elongated” cycle in the market.

Producer Chemours has said it would attempt to limit the volatility of its TiO2 earnings by reaching longer-term sales contracts with its customers, beyond the typical quarterly contract tradition.

However, there is no evidence that there has been any widespread acceptance of these longer-term contracts, according to sources.

European TiO2 prices moved up sharply since the second quarter of 2016, reaching a peak in the second quarter of this year. ICIS has been assessing quarterly contracts since the end of 2013.

European TiO2 contract prices in the second quarter were assessed at €2.85-3.10/kg FD (free delivered) NWE northwest Europe.

Demand fell short of high season expectations during the second quarter for some downstream paints and plastics players, attributed to recent weather-related factors and some stock build up from buyers.

Producers Venator and Kronos’ have reported reduced sales volumes during the second quarter on the back of lower-than-expected orders, improved customer inventory levels and lower product availability, among other factors.

Some sources said that activity in the third quarter is lower than expected for the time of the year, attributing it to the summer lull, a more cautious sentiment from buyers and, in general, a softer market environment.

Existing stocks that need to be used up and a reluctance to buy due to expectations of price falls also dampened activity.

A more cautious economic climate on the back of global trade tensions are likely to continue influencing buying sentiment, although some sources said these factors are not likely to impact the European TiO2 market in the near term.

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

Picture source: Jeff Blackler/REX/Shutterstock

Focus article by Heidi Finch