Asia TiO2 weighed down by escalating trade tensions
Titanium dioxide (TiO2) prices in Asia are expected to remain weighed down by heightened trade tensions between the US and China.
The ongoing China-US trade war has dented consumer sentiment in China, at a time when the seasonal lull for TiO2 pigments has already taken a toll.
The US hiked tariffs on $200bn worth of Chinese goods, including TiO2, to 25% from 10% effective 10 May, even as negotiations for a trade deal continues.
China, in response, announced intentions to hike tariffs on $60bn worth of US exports to China on 1 June, with the duty on TiO2 expected to rise by 10%.
Based on ICIS Supply and Demand data, China’s first-quarter 2019 imports of US-origin TiO2 pigments slumped year on year.
Similarly, China’s exports of TiO2 to the US have shrunk, with China diverting some volumes to Asian markets instead.
Some buyers in southeast Asia and India are drawn to Chinese exports due to their cost-competitiveness.
With no clear resolution in sight on the US-China trade tensions, players have turned cautious, with market sentiment downbeat.
Chinese demand is expected to remain weak during the summer months of June-August.
In India, demand from the key paints and coatings sector is likely to taper down in June, with the onset of the monsoon season.
In southeast Asia, June is shaping up to be a month of quiet trade due to an upcoming regional holiday.
Most countries in the region will celebrate Eid ul-Fitr, which marks the end of the Muslim fasting month of Ramadan.
Ample supply could exert further downward pressure on TiO2 prices in Asia.
The strength of the US dollar against the Chinese yuan is expected to provide incentive for Chinese TiO2 producers to push exports, as opposed to selling in the domestic market.
A weak currency makes a country’s export more competitive.
Spot TiO2 prices for Chinese exports on 24 May were last assessed at $2,250-2,350/tonne FOB China, according to ICIS data.