markets feature | Titanium dioxide
Figure 1: Growth of China’s plastics production
ahead, some rationalisation is expected in Europe and China, as well as some consolidation in both pigment and feedstock parts of the value chain. The past 12 months can be summed up as: things aren’t great, but they aren’t getting any worse. Market participants are predicting a long bottom and slow recovery into 2015.
Demand side view The TiO2
market is still recovering from a weak 2012
caused by pricing volatilities that triggered cut-backs, substitution and a build-up of stocks across each of the major centres in Europe, East Asia, and North America. Global economic growth, estimated at 3.6% for the year by the International Monetary Fund, has accelerated from the 3% in 2013 and is expected to remain at a stable trajectory, barring any major disruptive events. North America’s recovery continues, with a buoyant
Q2 GDP refl ected in the balance sheets of major construction materials corporations. The USA remains the world’s most dynamic economy and this is being exemplifi ed in its pioneering of shale gas, which allows lower energy costs (a critical need for powder coatings applicators); the restructuring of the automobile industry and the most widespread distribution of civilian high-tech industries in the world. Europe remains a bigger question. Over 2013, a resurgent equities market has taken the pressure off Eurozone debt. But 2014 has seen some- thing of a reversal of these gains. At the time of writing, Italy was entering a triple-dip recession. If this is met with quantitative easing from the Euro- pean Central Bank (contingent on hard-to-push reforms), Italy will continue to be able to borrow but it raises questions about the health of the other southern European econo- mies and ultimately demand, which will now most likely fall in Europe.
32 PIPE & PROFILE EXTRUSION | January/February 2015
In Asia, China’s real estate prices are undergoing a
correction. Structural fl aws that impeded the develop- ment of alternative asset classes drove a multi-year real estate pricing boom resulting in an oversupply of high-end apartments. As long as prices remain high, construction and sales will remain weak. But there is actually a housing shortage in China. At the right price point, the market will come back. The problem is stickiness: real estate prices are going to take longer to fall than they did to rise. In the short term however, there will be a tough
market for formulated products. TZMI tracks plastic products production in China. The accompanying Figure 1 shows year-on-year declines in plastics since mid-2012. Many of the TiO2
sellers we regularly speak
to point to ongoing weaknesses in the plastics market. In summary, we are seeing a stabilising of TiO2
supply, which will most likely lead to very modest price growth. Plentiful feedstocks and an expansion of supply from China will be prominent features of the market, going forward. TiO2
remains a buyer’s market for the
time being. However, before rushing to negotiate a long-term offtake contract, readers may wish to consider the market’s downstream vulnerabilities. The USA’s resurgence is a positive piece of news, but the topping out of China’s growth and the continued Eurozone crisis are contributing to growing uncertain- ties. Should the world’s TiO2 producers be using them, gross world product fi gures are not correlating with the facts on the ground for the industry.
More information
Ed Barlow is country manager of TZMI Management Consulting (Shanghai). TZMI recently published its TiO2 Pigment Annual Review 2014. More details at
http://bit.ly/TZMI2014.
www.tzmi.com
www.pipeandprofi
le.com
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