International Titanium Dioxide Will Gradually Recover

- Aug 20, 2019-

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

Vergnano said: "The titanium dioxide market has already bottomed out, and we have begun to see a recovery in the market. In the past, the market bottoming usually triggered a strong rebound, but at the moment I think the market recovery will be relatively stable, and Not a dramatic V-shaped trend like the last two cycles."

As the weak macroeconomic conditions put pressure on demand, it is expected that the recovery of the current cycle of titanium dioxide will be slower. Vergnano said: "I don't think the current global macroeconomic situation will make everyone have the confidence to buy. Therefore, the purchase may be more gradual than the past cycle."

In the second quarter of this year, the sales volume of the company's titanium dioxide business unit fell sharply by 33% year-on-year, while prices were flat. The division’s second-quarter sales revenue fell 34% year-on-year to $567 million, while EBITDA fell 57% to $127 million.

The decline in sales was due to the decline in overall market demand and the decline in market share caused by the company's Ti-Pure Value Stabilisation (TVS) strategy. Vergnano said: "When this strategy is adopted, our market share will suffer a certain degree of loss, which may be slightly higher than we expected. The reason is that these contracts adopting this strategy are very suitable for our coating customers, but may not be very good. Suitable for plastic and laminate customers. We are working hard to adjust to meet the future needs of plastic and laminate customers."

Customers in the plastics and laminates industry have more customers than the coatings industry, but these customers require smaller amounts of titanium dioxide. Vergnano said: "Many customers have become accustomed to the ups and downs of the ethylene cycle. Therefore, from this perspective, these long-term contracts are not entirely suitable for them."

According to reports, by the end of 2020, the company's sales of titanium dioxide on the company's Flex online portal will account for 20% to 30% of the company's total sales of titanium dioxide.

Vergnano said: "There are hundreds of customers on our portal. In the past few weeks, the business volume has increased significantly. We are very satisfied with this event, and now we can see how many people have come, what they are looking for and what they are buying. We can also test the product and see what people are interested in.” On Chemo's Flex portal, customers can purchase titanium dioxide products with a specific delivery time at a fixed price without a contract. Vergnano said that although the company hopes that most of the titanium dioxide will be sold under its price-stable AVA contract, we also see the benefits of the Flex portal's sales of 20% to 30%.