Europe TiO2 enquiries rising, sentiment firm on Huntsman FM

LONDON (ICIS)–European titanium dioxide (TiO2) enquiries continue to rise in the trade sector, especially for certain specialties, and the price sentiment is firm amid a further crunch in supply following Huntsman’s force majeure on product from its Pori site in Finland, according to market players on Thursday.

A few traders said they were receiving additional enquiries, especially for specialties – such as printing inks grade TiO2 – which is believed to have been mainly affected by the Pori TiO2 plant fire last week, and the resulting force majeure declaration at the site.

“There is a large panic in the market, especially for specialties. It is very tight now [after the Pori fire], it was already tight before,” said one trader.

There were also signs of some additional demand for standard paints/coatings grade TiO2, according to a few buying and trading sources.  

One trader suggested that this was due to a combination of a further reduction in European supply in the aftermath of the Pori fire, along with some pre-buying ahead of proposed price rises for March and the second quarter.

A few buyers in the printing inks and paint sectors acknowledged that they were experiencing some difficulties in securing sufficient volumes amid already low stocks in the European TiO2 market.  

One buyer said it secured some volumes for standard paints grade TiO2 from its regular supplier, albeit in limited quantities, and had managed to cover some of its requirements from elsewhere during the first quarter. However, it said it remains to be seen whether it can cover volume requirements for the second quarter. 

Another buyer said it managed to obtain some domestic volumes for printing inks from its supplier in the short term following the Pori fire and the force majeure declaration.

However, the same customer said it is also looking outside of Europe to find alternative supply options, although it admitted that this is proving challenging because of limited availability in other regions.

The buyers said finding product is not the only difficulty in the aftermath of the Pori fire. They are also having to pay a premium in order to secure material from elsewhere. One said it was paying a sizeable premium over its fourth quarter 2016 price in order to secure volumes during the first quarter of 2017.

Other customers, who typically purchase specialty paper laminate, plastics or standard paints and coatings grade product said they have received their regular volumes without any problem, stating that they have not been directly affected by the Pori fire.

However, one of the buyers is mindful that the market is likely to tighten further in the coming months if the Pori plant outage continues over a longer period – especially if it coincides with a seasonal pick-up in demand for certain main end sectors. At the time of writing, there had been no direct official comment on the duration of the outage or the progress of repairs.

Both buyers and selling sources acknowledged that the tendency is firm for spot and contract pricing over the next few months – particularly in light of separate announcements from a few producers of €200/tonne and €235/tonne in Europe with effect from 1 March or 1 April, depending on supplier and contract validity.

These price increase announcements come immediately after the Pori incident which has further exacerbated tightness in the European TiO2 market.

This in combination with the lack of competitive imports from Asia and producers’ underlying margin requirements amid higher upstream feedstock costs are likely to push prices up during the first and/or second quarter, depending on agreement validity, said some players.

One reseller said it had already agreed some of its second quarter volumes with an increase of €50/tonne from its supplier and its customers. However, it acknowledged that it had reached these agreements prior to Huntsman’s force majeure declaration on product.

Other players said they have yet to start price discussions for the second quarter or were currently in talks about spot, but were reluctant to comment on actual price levels.

Focus article by Heidi Finch

(Picture source: Stock Connection/REX/Shutterstock)