Asia buyers may switch to non-China TiO2 after price surge

By: Leanne Tan | 30 May 2016

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SINGAPORE (ICIS)--Some buyers of titanium dioxide (TiO2) in southeast Asia and India may switch to non-Chinese origin cargoes, following the recent surge in China’s export prices, market sources said on Monday.

“The appeal of Chinese-origin cargoes is that they are cheaper in comparison to non-Chinese origin materials,” a southeast Asian buyer said.

“If the price gap between the two keeps narrowing, there won’t be much advantage in procuring Chinese cargoes anymore,” the buyer said.

Firmer TiO2 export offers emerged from China last week as domestic demand strengthened while availability of spot cargoes was tight. Chinese producers had offered rutile-grade TiO2 last week at $1,850-1,900/tonne FOB (free on board) China, up by an average of $90/tonne from the previous week. But actual cargoes exchanged hands at around $1,800/tonne FOB China and above in the week ended 27 May.

Over the same period, regional TiO2 prices were assessed steady at $2,100/tonne CFR (cost and freight) Asia. Prices have been stable since mid-April, according to ICIS data. Taiwan, Malaysia and India are among the other major TiO2 producers in Asia, with freight rates to their markets within the region at roughly $25-45/tonne.

In late 2015, the price spread averaged $550/tonne, with Chinese-origin cargoes at around $1,450/tonne FOB China and non-Chinese origin materials at $1,900-2,100/tonne CFR Asia.TiO2 supply has been tight in China as a number of domestic plants had reduced production in the first quarter of this year, when prices were low.

Some of these plants have since ramped up operating rates as prices started moving up in the second quarter, but supply levels usually take time to recover, market sources said. A recent pick-up in domestic demand has aggravated the tight supply situation in the country, they said. Meanwhile, supply of non-Chinese origin cargoes has been largely healthy, according to market sources.

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