OUTLOOK ’19: North America TiO2 market to stay tight amid potential structural changes

HOUSTON (ICIS)–First-quarter 2019 price sentiment in the North America titanium dioxide (TiO2) markets ranges from flat to moderately stronger on anticipated resurgent demand from paint makers and other coatings producers, but supply will continue to lag demand.

Demand is expected to strengthen within the first quarter of 2019 as paint blending begins to ratchet up.

And heightened demand next spring – some of it pent up, stemming from wildfires in California and several hurricanes in 2018 – is likely, especially with expectations of a mild winter.

The National Oceanic and Atmospheric Administration’s (NOAA) Climate-Prediction Center had forecast above-average winter temperatures through February across the northern and western US, Alaska and Hawaii.

While the pigment will see buying interest escalate especially from the architectural coatings markets during the second quarter, volume-growth projections for 2019 from a couple of paint and coatings makers are moderate.

On the pricing front, some first-quarter increase initiatives are being discussed, but there was not widespread support for price gains.

Venator announced late in 2018 its intent to raise prices by 5 cents/lb ($110/tonne), effective 1 October. And a Kronos customer said the producer is seeking increases of 5-7 cents/lb, effective 1 January.

With 90-day price protection for most contract customers, those price-hike initiatives, if successful, would be implemented on or after 1 January or 1 April.

Also looming in 2019, as it did in 2018, is US producer Tronox’s proposed acquisition of Saudi Arabia-based Cristal.

Tronox will continue its pursuit of Cristal despite a December 2018 ruling by the Federal Trade Commission (FTC) that reinforces the agency’s contention that the merger would violate antitrust laws by substantially reducing domestic competition in the chloride-based TiO2 market.

In the most recent in a string of court and administrative actions, Tronox had filed a motion with the FTC seeking permission to present the proposed sale of Cristal’s Ashtabula, Ohio, complex and all of its associated assets to INEOS as a way to alleviate FTC antitrust concerns.

Tronox has argued that the Cristal acquisition would allow the combined company to produce even more TiO2, making more pigment available to customers globally.

Market participants and observers have tended to agree.

“I see no reason for (the FTC) not to bless the deal with INEOS,” a major pigment buyer said.

Early on, initial plans by Tronox to sell Cristal’s Ashtabula assets to another company met with positive responses from industry analysts who suggested a year ago that the Tronox-Cristal merger would likely be approved.

Tronox said it will continue to work on a remedy with the FTC.

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

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