Lackluster Offtakes from the Terminal Market Slows Down the European Titanium Dioxide Market

Hamburg (Germany): For the past two weeks, the prices of Titanium Dioxide have continuously dropped in the European market. Decreasing interest from the downstream paints and coatings sector is impacting the market outlook for Titanium Dioxide. Persistent inflation and high-cost inventories are squeezing the profit margins of Titanium Dioxide manufacturers.

The ChemAnalyst Database has shown that the prices of Titanium Dioxide have plummeted by approximately USD 40 per ton in the German market in the week ending June 7th. Titanium Dioxide prices in Germany have stayed on the lower end amid weak market conditions. Trade activity was moderate, with a sufficient supply of raw materials available domestically. The construction sector demand remained subdued, although support from input material costs was minimal. Industry participants noted that manufacturing units were operating at a lower rate, as demand from downstream industries remained softer.

Regarding energy inputs, crude oil prices found some support in May in anticipation of the OPEC+ meeting in June. Nonetheless, persistent global economic uncertainty, particularly in China, along with record-high production in the US, continues to exert pressure on the market. According to market sources, the Titanium Dioxide plant of INEOS at Ashtabula, Ohio, has undergone force majeure in the first week of June 2024.

On the other hand, in May, China's Titanium Dioxide production experienced mixed trends. The industry's shift into its off-season slowed shipment rates, resulting in heightened inventory pressures. Some producers have initiated maintenance to address these pressures and manage costs. Production increases were driven by two main factors: the resumption of operations halted for environmental reasons and the addition of new capacity. Downstream procurement slowed as buyers adopted a cautious "buying on the rise and not on the fall" approach, leading to significant stockpiles for major producers. In the short term, existing orders are keeping prices stable, but the growing inventory is forcing producers to consider price concessions. Additionally, high raw material costs are prompting some to undertake maintenance to ease inventory burdens. Overall, while current orders maintain price stability, the cautious downstream market and rising inventory levels are creating challenges for Titanium Dioxide producers.

According to the pricing intelligence of ChemAnalyst, the prices of Titanium Dioxide might continue their bearish trajectory in the European market at the end of the second quarter of 2024. Despite the interest rate cuts implemented by the European Central Bank in early June, the subdued demand from the downstream construction sector is likely to weigh upon the market fundamentals of Titanium Dioxide in the forthcoming weeks.