HOUSTON (ICIS)--Fourth-quarter contracts for titanium dioxide (TiO2) in North America rolled over, a development anticipated by the industry because of softening demand and the absence of market-wide price-increase initiatives.
Along with a previous third-quarter rollover, second-half domestic pigment pricing momentum came to a full stop after eight consecutive quarterly price increases.
The latest rollover held domestic TiO2 in a range of $1.59-1.67/lb ($3,505-3,682/tonne) FD (free delivered), as assessed by ICIS.
Although waning year-end buying interest from the primary architectural coatings end market and other downstream sectors has slowed upward price pressure, TiO2 inventory will continue to broadly lag demand for the foreseeable future, helping limit potential price weakness.
So far, price-increase initiatives targeting implementation in the first quarter of 2019 include a 5-cent/lb proposal from Venator Materials, and a separate effort heard from Kronos.
Even as demand has continued to slow, October was stronger than usual this year, sources said, and partly attributable to demand stemming from storms and previous wildfires in 2018.
New wildfires in California this past week will contribute to heightened demand next spring. Three wildfires in that state were still underway late in the week, including one near Thousand Oaks that forced the evacuation of about 75,000 homes.
While some housing statistics are moving in different directions – US pending home sales up and US new home sales down – TiO2 suppliers and downstream markets were mostly bullish about near-term demand.
Major pigment producer Chemours, however, expects a TiO2 destocking trend through Q1 2019.
The company's volumes were up 8% last year, higher than GDP. Part of that stemmed from customers stocking up because of a rising-price trend, Chemours said.
Near-term, the domestic TiO2 landscape will include resurgent demand and pricing power early next year as the 2019 spring coatings season begins.
Additionally, further development and implementation of driver-assisted and self-driving technology will heighten demand and specifications for highway paint, potentially further stressing TiO2 availability.
The highway stripes will need to be wider so the autonomous vehicles can detect them. These wider stripes would require more paint and, hence, more pigment.
Also looming is the potential consummation of a long-proposed merger between pigment manufacturers Tronox and Cristal.
TiO2 is used in products such as paints and coatings – including glazes and enamels – plastics, paper, inks, fibres, foods, pharmaceuticals and cosmetics.
Major US TiO2 suppliers include Chemours, Cristal, Kronos, Tronox and Venator.
Focus article by Larry Terry