Europe TiO2 demand to improve on restocking, Brexit preparations

Author: Heidi Finch


LONDON (ICIS)--European titanium dioxide (TiO2) demand in September is likely to be determined by restocking and Brexit preparations in a fragile economic climate.

Typically, demand improves in September as the downstream paints and plastics sectors serving the construction industry pick up speed after the summer holidays, provided weather conditions are favourable.

Demand will improve in September month on month due to refilling of inventories after the summer holidays, but a weaker economic climate could offset some of the improvement.

Activity from the main downstream paints sector has been poorer than expected over recent months as both economic and weather factors were not favourable.

The downstream plastics sector has also been forced to cancel some volumes as weak economic conditions stifle buying activity.

The Brexit deadline at the end of October could lead to some pre-buying in the UK in order to build stocks, although that will be dependent on storage capacity.

As the deadline approaches, players in the UK and the EU will be preparing in September and October for a potential no-deal Brexit.

However, while higher demand is likely,  any stock-building is likely to be cautious and tempered by the soft economic climate and the approaching low season.

In the first quarter of 2019, intensive stockpiling took place ahead of the previous Brexit deadline, planned for 31 March, especially as it coincided with preparations for the peak season.

The new Brexit deadline on 31 October comes at the onset of low season, which could moderate any stock-building actions.

The market is well covered despite some supply limitations for chloride-based TiO2.

Europe TiO2 third-quarter contract prices were settled at €2.55-2.75/kg FD (free delivered) NWE (northwest Europe (NWE), a rollover from the second quarter.

Sufficient supply facilitated price stability, despite some differences and higher costs being weighed against muted demand.

Due to some supply constraints in certain downstream sectors, some players agreed higher prices for the third quarter, compared to the second, especially for chloride-based plastics or certain printing ink grades because of supply constraints.

Exchange rate factors also led to some price firming in the UK for chloride- and sulphate-based paints grade TiO2, as sterling pound lost ground against other major currencies over the last months.

However, this was not indicative of a general trend for standard paints grade TiO2 in mainland Europe.

Pictured: A construction site in Germany; a post-summer pick-up in activity is likely to increase TiO2 demand
Picture source: Jochen Tack/imageBROKER/Shutterstock

Focus article by Heidi Finch