SINGAPORE (ICIS)--Asia titanium dioxide (TiO2) prices, largely flat these days, are expected to have a moderate increase after business in the key Chinese market gains momentum following the end of Lunar New Year holidays, sources said.
The expected increase is also in line with some price hike buzz in the European market, sources added.
Price discussions in Asia during holiday in China were scant, while factory activities in the country were on hold as labour had gone home for the festivities, traders said.
Some buyers and traders were eyeing European market movement given the recent announcements by major producers, targeting €100-150/tonne higher prices from the first quarter, effective from 1 April 2015.
The price hike was an attempt to recover margins according to the announcements.
However, in the Asia Pacific region, major producers have yet to announce price changes for April, preferring to observe market movements, pending the returns of buyers, post holidays.
Stronger US dollars last week affected several southeast Asian countries including Japan and China and resulted in weighing down on import appetite, distributors said.
“Renminbi [Chinese yuan] fell to more than two years low this week, and buyers are staying put, especially since festive moods still lingers” a Chinese trader told ICIS last Friday.
Price sensitive Chinese buyers could be turning to more domestic cargoes seeing the cost-savings value and improved qualities of domestic TiO2 over the past two years, it added.
Over the past few months, Chinese cargoes were competitively priced, in an attempt to capture market share and improve credit flows ahead of the major festive period in mid-February.
Chinese origin cargoes were largely at $1,800-2,000/tonne FOB (freight on board) China, and at least $500/tonne more attractive than those originating from Europe, the US or Saudi Arabia, which was broadly discussed at $2,500-2,800/tonne CFR (cost & freight) Asia.
Sources said March cargoes from China are expected to be higher by $50-100/tonne, due to lower inventory, given a lower production rate during festive period.
Domestic prices are expected to see upward push of yuan (CNY) 200-300/tonne from the current average prices of CNY12,000/tonne from major producers.
“We can’t suffer any more losses, the prices have hit the floor,” one major Chinese producer said.
Stiff competition among sellers, given the imbalances of supply-demand fundamentals over the past three years, were stifling TiO2 prices, a major pigment used for paint and coating industry.
Consequently, market consolidations in the form of acquisition and plant closure were ongoing,with Huntsman closing down its 100,000 tonne/year plant in Calais, France as the latest casualty in TiO2 business.
Despite that, continuous expansion, particularly in China that accounts for nearly half of global demand in 2014 - forecasted at around 5.74m by industry experts - was filling up the minor upstream gap, sources asserted.
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By Alexis Gan