The international market for titanium dioxide has bottomed out in the second quarter, but the future recovery will be gradual, Chemus CEO Mark Vergnano said recently.

Vergnano said: "The titanium dioxide market feels like it has bottomed out and we have started to see a recovery in the market. "In the past, the bottom of the market has usually been followed by a strong rally, but at this point I think the recovery will be smooth, rather than the dramatic V-shaped pattern of the last two cycles," Vergnano said.

The recovery of the titanium dioxide market is expected to be more gradual this cycle as weak macroeconomic conditions weigh on demand. "I don't think the current global macroeconomic situation is going to give everyone confidence to buy," Vergnano said. So buying is likely to be more gradual than in past cycles, "Vergnano said.

In the second quarter of this year, Chemus Corp's titanium dioxide business unit saw a sharp 33 percent year-on-year drop in sales volume, while prices remained flat. Sales at the unit fell 34 per cent year-on-year to $567m in the second quarter, while earnings before interest, tax, depreciation and amortisation fell 57 per cent to $127m.

The lower sales volume was both due to lower overall demand in the market as well as a decline in market share resulting from the company's adoption of the Ti-Pure Value Stabilisation (TVS) strategy of Chun Tai. Vergnano said: "In pursuing this strategy, we will see a certain level of market share loss, which is probably slightly higher than we expected. The reason for this is that these contracts with this strategy are very well suited to our coatings customers, but may not be as well suited to our plastics and laminate customers. We are trying to adapt to meet the future needs of our plastics and laminate customers."

There are more customers in the plastics and laminate industry than in the coatings industry, but the amount of titanium dioxide required by these customers is smaller. "A lot of customers are used to the ups and downs of the ethylene cycle," Vergnano said. So from that perspective, these long-term contracts are not exactly for them."

The number of titanium dioxide sales on the company's Chuntai Flex online portal will account for 20 to 30 percent of the company's total titanium dioxide sales by the end of 2020, according to the company.

Vergnano said :" We have hundreds of customers on our portal and in the past few weeks, the volume of business has increased significantly. We are very happy with the campaign and can now see how many times someone has come, what they are looking for and what they are buying. We can also experiment with products and see what people are interested in." On Chemus' Flex portal, customers can buy titanium dioxide products for a specific delivery time at a fixed price without a contract. Vergnano says that while the company expects most titanium dioxide to be sold under its price-stable Guaranteed Value Agreement (AVA) contracts, we also see the benefit of a 20 to 30 percent sales volume on the Flex portal.

Plastic Industry Video