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Can producers push through TiO2 price hikes in 2018?

By William Clarke
Published: Friday, 22 December 2017

Both buyers and sellers are expecting producers to try to increase pigment prices next year, but some note that buffer stocks are more comfortable, which could limit increases.

here is consensus in the market that titanium dioxide producers will attempt to enact price increases when buyers return to the market next year.

But there is much more uncertainty in just how successful these attempts will be, with reports of rising stocks, and at least one major consolidation in the market now in question.

One buyer told Industrial Minerals that he expected the price he paid to rise by around 8-10% by the first quarter of 2018.

But a seller struck a more cautious tone, as he noted that end consumers are now well stocked. "Inventories are high… this could make it hard for [the producers] to raise prices."

And a salesperson for a major TiO2 producer told Industrial Minerals in November that they were focusing on building up stock levels.

"We are supplying our contracted volumes… but if there are any cancelations, we are keeping it back," he said.

"We will not be selling any spare capacity on the spot market for the rest of the year."

If that process has also been successful, the TiO2 market could find itself with a buffer of stocks in the hands of both consumers and sellers, hardly a conducive market to force through price rises. 

Another major question for markets will be the scale of the winter shutdown in Panzihua, China. Many manufacturers are reported to have reopened after only a brief pause, but local regulators stand ready to enforce air quality regulations, meaning that the pace of winter production will be hard to predict.

paint, Tio2 

Another question mark in the market is whether producers will be able to consolidate as rapidly as they wish.

Tronox is in the process of taking buying rival pigment producer Cristal in a move that would produce the world’s largest titanium dioxide company.

The potential issue with the takeover is that it will give the newly enlarged Tronox a commanding market share, particularly in chloride-route TiO2 produced in the west.

Tronox maintains that it will have a strong incentive to increase production once the sale has gone through, but this argument has not yet convinced regulators in the European Union and the United States, with concerns that the company could instead limit supply to drive up prices.

One potential remedy, which could be demanded by regulators in either jurisdiction, would be to sell off some of the new company’s chloride capacity to a third party, in a move that would lessen their potential stranglehold on markets. 

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