The significant year-over-year price decline in titanium dioxide (TiO2) has prompted revisions in management strategies and a re-evaluation of management teams’ willingness to be exposed to the boom-and-bust cycle that has occurred twice over the past several years, according to Fitch Ratings. Paint demand driven by the recent housing recovery in the U.S. had led to increased TiO2 demand, but with the housing crash TiO2 demand bottomed. TiO2 recovered quickly after a brief shakeout period, and Chinese demand and prices hit record highs last year before demand cratered in the second half of 2012. TiO2 volumes have increased year over year, but prices have lagged.
TiO2 prices are depressed, but prices are cyclical and recovery is reportedly expected, with more robust global economic growth.
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