The TiO2 market has been making history in many ways since the pre-recession years ending in 2008. Prices climbed to two-decade highs by early 2012, only to fall to all-time lows by early 2016. TZMI believes the market has bottomed as of Q1 2016. From a demand perspective, early results are indicating an increase in demand in Q1 2016, with early estimates from Q2 2016 showing a continuing trend in the same direction. The relief could not come soon enough given historically low inflation-adjusted prices and negative margins for several producers.
For the last several years, demand has been a roller coaster ride for the TiO2 market, with re-stocking and de-stocking cycles throughout the value chain leading to huge swings in sales volume during each cycle. So, while it is true that during a long period of time that TiO2 tends to grow in line with global GDP, in a given year, the two may not appear correlated in any way. As noted in Figure 1, the average demand growth from 2010-2015 was 2.8%, which is generally in line with GDP; however, the average volatility is approximately 7% versus that average.