Demand for Chinese titanium dioxide (TiO2) has waned in light of the ongoing US-China trade war, adding pressure on export prices.

According to market players’ feedback, the US was historically the second largest export market for Chinese TiO2 materials, with the bulk of these pigments being chloride-based.

In the latest escalation of the trade war, the US will raise the tariff rate on the products covered, including TiO2, to 25% by 1 January 2019.

“Demand for TiO2 Chinese exports has been effectively wiped out. The bulk of Chinese suppliers have started looking elsewhere to export to,” a Chinese supplier said.

As Chinese producers continue to search for alternative outlets for their exports, some compromise on price levels have been necessary in order to offload volumes. As a result, TiO2 export prices from China have declined in recent weeks.

Spot prices of Chinese TiO2 exports were last assessed at $2,350-2,450/tonne FOB (free on board) China on 26 October, lower from the preceding week.

Chinese export prices have been on a general downtrend since May this year because of tepid demand in the domestic market. Import demand has also been underwhelming.

Apart from subdued buying interest as a direct result of the trade war, the sharp depreciation in the Chinese yuan against the US dollar has also negatively affected buying sentiment.

Buyers in China were expecting lower prices as they were aware that Chinese suppliers were making better margins by pushing volumes to the export market, rather than selling domestically.

While there were initial worries that Chinese TiO2 supply may lengthen with the relaxation of China’s winter anti-pollution measures to boost economic growth, market players based in China have brushed off these concerns.

“The environmental checks are still ongoing, and still seem as stringent as before. The main reason why Chinese export prices have been declining still boils down to weak demand – not so much lengthening supply,” the same supplier noted.

However, the outlook for the fourth quarter remains bleak, with demand expected to wane even more in the weeks ahead.

Buying appetite, especially in the paint and coatings sector, typically tapers off towards the year-end as the seasonal winter lull approaches.

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