Sometime last week the Sichuan Lomon Corporation announced that it had raised the price of its titanium dioxide products by 3%. This has led to chemical industry leaders to wondering if the price had at last reached the bottom and was now moving up.

As Sichuan Lomon is one of the largest rutile titanium dioxide pigment suppliers in China, its actions are closely followed by industry experts, with many, like Yang Xun, a titanium dioxide analyst with the Chinese commodity information provider 100ppi.com, believing that other producers will follow suit over the coming weeks.

For many price hikes would bring much relief after prices fell considerably throughout the second half of 2015.

It is thought that the chemical price increases were a result of falling production, as many of the larger industry players are running at 50% of capacity in an attempt to lower inventories. Other producers were using the fall in demand as opportunity to update plant machinery and carry out maintenance.

Whilst the Xinhua Finance Agency reports that, “Sichuan Lomon is expected to see a fall in output in January.” The agency also cites further realignments in the TiO2 market as, “At present, the [price] divergence between high-quality producers and the tier-3 and tier-4 producers has been obvious. The high-quality producers have seen tight sourcing of supplies causing pressure on production, while the tier-3 and tier-4 producers have continued to find it hard to sell.”

Whatever the reason for the price rise, it is feared that the 3% rise may only be a temporary measure, as there is still speculation that overall demand will continue to drop as the Chinese stock market and housing bubble continues to create uncertainty.

Furthermore, it is not yet known how global markets will react. Will other TiO2 producers raise their prices? Has the market finally reached the bottom?