Asia’s titanium dioxide (TiO2) second quarter contract discussions will likely take the cue from recent gains in China’s export prices for spot cargoes.
Discussions are currently in the early stages, with some contract buyers having received higher offers from major producers. The offers were up by $100-150/tonne from the first quarter.
TiO2 Q1 contracts were assessed by ICIS at $2,650-2,800/tonne CFR (cost and freight) Asia.
Spot prices of Chinese TiO2 exports have risen recently, with producers targeting higher prices on an FOB (free on board) basis due to exchange rate-related fluctuations.
A much stronger yuan (CNY) against the US dollar has resulted in reduced netback for Chinese TiO2 exports compared with domestic sales.
Spot TiO2 prices for Chinese exports on 15 March were at $2,250-2,400/tonne FOB China, up by around 3.3% since early February, according to ICIS data.
Renewed optimism early in March over US-China trade negotiations helped support sentiment and stimulate buying appetite.
This followed higher offers that emerged post-Lunar New Year holiday in February as players stepped back into the spot market in order to replenish stocks.
At the beginning of 2019, Chinese traders and distributors had kept their inventories low in order to cut their losses, as spot prices had been on a steady downtrend since the second half of 2018.
“International suppliers will be looking to hike Q2 offers in order to maintain premiums over Chinese exports,” a Chinese TiO2 producer said.
Some Asian buyers were wary, with some seeking to wrap up discussion for Q2 contracts as soon as possible, on concerns that Chinese spot prices may rise further.These buyers were targeting to finalise Q2 contract disucssions by early April.
In southeast Asia, demand in the paints and coatings sector should begin to increase in March and April, with one buyer already noting signs of an uptick.
However, general elections taking place in Thailand on 24 March and Indonesia on 17 April may potentially delay the expected upswing in demand.
In India, demand does not seasonally pick up until July. Thus, buy-side resistance was noticeably stronger compared with other markets in Asia.
“June typically marks the start of the rainy season in India and downstream demand will be rather subdued in the near term,” said a TiO2 buyer in the paints and coatings sector in India.
“So there are no strong demand fundamentals to support any form of price increase here,” it added.