Tronox Anticipates Recovery as Titanium Dioxide Prices Edge Upwards in February, Boosting Profitability

Hamburg (Germany): Since the beginning of the year 2024, the prices of Titanium Dioxide have been continuously rising in the regional markets. China, USA and other major countries have witnessed improvement in Titanium Dioxide prices in the past few months and same trend was observed in February 2024.  The rising prices of upstream Titanium Ore amidst the lower operating rates in the previous quarters have been fueling market concerns. According to data from the ChemAnalyst database, the prices of Titanium Dioxide in Germany saw an increase of around USD 40 per ton on a Free on Board (FOB) basis in February.

According to market sources, John Romano, co-CEO of the US-based Titanium Dioxide producer Tronox, has indicated that they expect Titanium Dioxide prices to reverse their downward trend and begin improving after the first quarter. In Q4 2023, Titanium Dioxide prices plummeted by 6% year-on-year and were down 1% sequentially from Q3. Romano stated during Tronox’s Q4 2023 earnings call that while prices in the first quarter of 2024 would still be relatively flat compared with Q4 2023, he suspects that as they start to move out of the first quarter, there will be pricing opportunities across all regions.

Additionally, he added that they are hopeful to see some sort of price movement as they move into Q2. Tronox’s Titanium Dioxide business is at the forefront of recovery, and they have already begun to see a pick-up in demand for Titanium Dioxide that is more positive than usual for this time of year. Romano noted that sales in January were robust, and Tronox is observing ongoing improvement in market conditions for February and March order books. The improvement is across all end markets, including coatings, paper, plastics, and specialties.

Furthermore, Tronox is ramping up operations from historic lows in Q1, incurring significant costs in 2023 due to low utilization rates amid soft market demand. With demand now strengthening, the company expects its Titanium Dioxide volumes to surge by 12-16% in Q1 from Q4 2023. This increase will enhance the earnings margin, which is projected to return to the "normal" low-to-mid-20% range in the second half of 2024, even without substantial price changes. Romano highlighted that price presents an opportunity, and normalizing plant operations will significantly drive Tronox's profitability.

Based on the pricing insights provided by ChemAnalyst, it is anticipated that the prices of Titanium Dioxide could gain additional momentum as the first quarter of 2024 progresses. Inquiries from the downstream Paints and Coatings sector are also anticipated to be improved across the regional markets as peak demand season in Q2 and Q3 2024 is likely to catapult the consumption rates.