AFPM ’19: North America TiO2 market may see stronger H2

HOUSTON (ICIS)–North America titanium dioxide (TiO2) demand and pricing power will gain momentum in the second half after a slow start this year.

Heading into this year’s International Petrochemical Conference (IPC), separate Q2 price-increase initiatives had not gained traction.

Neither Venator’s proposed 7 cents/lb ($154/tonne) contract increase, effective 1 February, nor importer Lomon Billions’ proposed 5 cent/lb increase, effective 12 February, were expected to be broadly implemented by their respective May dates, which allows for 90-day price protection afforded to most domestic contract customers.

But buyers have conceded sellers might see some pricing power by June or July if weather improves and coatings demand continues to improve even moderately.

Already, December 2018 to February 2019 was the wettest US winter on record, according to the National Oceanic and Atmospheric Administration (NOAA), and more rain is on the way.

Although some Q2 price weakness has been heard, if domestic pigment prices hold steady again for the second quarter, it would be the fourth consecutive rollover for the North America TiO2 contract.

No Q3 price-increase initiatives are on the table for the third quarter, but TiO2 producer Kronos is seeking a 3-cent/lb increase, effective 1 March. The proposed increase would take effect either late in the second quarter or early in the third quarter.

While H1 2019 TiO2 price weakness is not expected – partly due to a structurally short market – conditions have been soft enough to ease supply pressure that prevailed from mid-2016 through mid-2018.

During that period, domestic TiO2 prices escalated for eight consecutive quarters but have been flat since Q3 2018.

Although North America H2 pricing remains unclear, some incremental capacity expansion is underway, which buyers and sellers said will be needed in order for supply to keep up with demand.

Domestic TiO2 demand typically tracks GDP rates, and the global market, while not currently supply stressed, has seen periods of intense tightness.

In the paper market, China remains a major pigment supplier, and is still discounting material to US customers to offset tariffs.

Projected year-on-year US coatings demand remains modestly higher in the low single-digit percentages among a couple of paint makers.

Tronox said recently that it expects to complete the acquisition of Cristal’s TiO2 business by 1 April, and a review of documents submitted to the US Federal Trade Commission (FTC) documents by Tronox and other parties appeared to be still under way.

Tronox has not responded to requests for comment on the merger effort, and the FTC said it could not comment on matters in litigation.

The Q1 2019 domestic TiO2 price is in a range of $1.59-1.67/tonne FD (free delivered), as assessed by ICIS.

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.

Hosted by the American Fuel & Petrochemical Manufacturers (AFPM), the IPC takes place on 24-25 March in San Antonio, Texas.

Focus article by Larry Terry