Europe TiO2 ample supply, slower demand weigh on sentiment

LONDON (ICIS)–The European titanium dioxide (TiO2) market’s sentiment may continue weakening in the first quarter if current ample supply and lower demand persist.

Underlying demand is soft on the back of seasonal patterns, although some sources, more pessimistic, argued demand has fallen below expectations.

Downstream sectors slow down at this time of the year, while de-stocking activity on the back of year-end working capital considerations also come to the fore.

On top of this, there is some expectation that prices could come off further in the first quarter of 2019, which is also likely to be limiting buying activity this quarter.

Aside from this, demand from the downstream paper laminate sector is being affected by supply difficulties for raw materials due to low water levels on the River Rhine.

In addition, the fragile economic climate is also likely to be weighing on sentiment to some extent.

“Demand is lower than same period last year. It is a mixture of all, [with the] economic situation not as good as last year,” said a TiO2 buyer from the downstream plastics sector.

“I think purchasers are destocking, expecting prices to come down further. I am expecting a decrease in Q1.”

Sources have mentioned production adjustments by certain TiO2 suppliers to counter any supply length, but other players are still keen to move volumes.

Market players also said that preparations for Brexit are well underway, with stocks built and volumes moved into or out of the UK, depending on requirements and trade flows.

Q1 2019
Buyers have said that the downward price trend is likely to continue into the first quarter if supply remains abundant and demand remains seasonally reduced.

Equally, if volumes ex-China remain available and competitively priced in Europe, prices are likely to remain under pressure.

Other sources, however, have said that good availability could be weighed by some production cuts, potentially keeping prices stable or at very moderate decreases.

Aside from quarterly contracts, rollovers are also likely in the first quarter of 2019, such as for producer Chemours’ so-called value stabilisation contracts.

European TiO2 fourth-quarter contract prices were assessed at €2.65-2.94/kilogram (kg) FD (free delivered) NWE (northwest Europe), down by €0.10-0.15/kg from the previous quarter.

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

Picture source: Michaela Begsteiger/imageBROKER/REX/Shutterstock

Focus article by Heidi Finch