China TiO2 export prices may surge further on tight supply

10 April 2017 04:55 Source:ICIS News

Paints 10 April 2017

SINGAPORE (ICIS)--China’s titanium dioxide (TiO2) export prices may continue to increase in the near term, after surging by more than 30% over a four-month period, due to persistent tightness in supply, market players said on Monday.

Domestic production is being curtailed by stricter environmental regulations enforced by the Chinese government this year, with small-to-medium scale producers facing the brunt of the impact.

Some producers have shut operations for an extended period of time across the Lunar New Year holidays (27 January to 2 February in China), while most others have been operating at reduced run rates.

Consequently, supply of China-origin TiO2 spot cargoes remains critically short, with a number of producers also facing a backlog of orders.

Producers with limited spot volumes available had raised offers on a weekly basis throughout the first quarter of 2017.

On 7 April, spot prices of China-origin TiO2 were assessed at $2,800-2,850/tonne FOB (free on board) China, up by a hefty $675/tonne FOB China from 2 December, according to ICIS data.

Some buyers, which were previously buying Chinese cargoes on a regular basis, have since approached other international suppliers for spot cargoes.

“Spot prices from the Chinese producers have been on the rise for several consecutive weeks now, and have exceeded spot prices from other international producers," an Indian-based buyer said.

"Hence, we will likely be sticking to contractual volumes from our other international suppliers for now, until spot prices of Chinese exports have cooled off,” the buyer said.

However, not all international producers expect to have additional cargoes for spot sales after meeting requirements for second-quarter volumes from their regular customers.

“Some of our irregular buyers who usually buy Chinese exports have approached us enquiring on additional volumes lately, but we don’t have sufficient volumes to supply them either,” a regional producer said.

Most market players expect the tight supply of Chinese cargoes to remain for most of the second quarter.

Buyers were bracing for a three-digit increase in contract prices for second quarter negotiations.

First-quarter TiO2 contract prices were assessed at $2,400-2,520/tonne CFR Asia, up by $120-125/tonne from the previous quarter, according to ICIS.

Focus article by Leanne Tan

Asia Tio2 10 April 2017

Picture (top): Titanium dioxide (TiO2) is used in paints. (Source: Monkey Business Images/REX/Shutterstock)

By Leanne Tan