Frankfurt, Germany: The decline in demand from the downstream construction sector has amplified the market concerns about the input raw materials required, including Titanium Tetrachloride. Despite successive interest rate hikes, the still high inflation levels have been imposing downside risks on the price realizations of Titanium Tetrachloride. As per the observed market scenario, to push inflation in the Eurozone below its 2% target, the European Central Bank raised its key interest rate to 4%, an eighth hike, last week. Moreover, poor financing conditions have diminished the number of housing projects, leading to a deterioration in demand for Titanium Tetrachloride.

According to the Chief Executive of the German Property Federation (ZIA), the fresh increase in the key interest rate could bring new construction activities to a complete halt, prompting the manufacturers to limit the procurement of Titanium Tetrachloride. The financial results of the first quarter of 2023, released by one of the leading manufacturers of Titanium Tetrachloride, Tronox Ltd, revenue of $708 million has been generated, a decrease of 27% compared to the prior year amid tepid demand fundamentals.

Furthermore, in the domestic region of France, on the input energy front, the demand for Natural Gas has plummeted amidst the limited consumption from the major energy-intensive manufacturing sector. Furthermore, in May 2023, France witnessed a year-on-year decline in consumer price inflation to 5.1%, dropping from 5.9% in the previous month. This rate reached its lowest point since April 2022, indicating a possible slowdown in inflationary pressures in the second-largest economy of Europe. However, it remains significantly higher than the European Central Bank's target. The operating rate of the manufacturing firms was still under pressure as the demand from the downstream industries was still not fully recovered.

Moreover, the labor shortages have persisted as the Labor Union's strike against the government's proposed pension reforms did not vanish in the French market. However, with a slowdown in global trade, container volumes have increased across the major European ports. The ChemAnalyst database has shown that the prices of Titanium Tetrachloride were settled in the range of USD 2100-2300 per tonne in May 2023.

According to ChemAnalyst, the pricing dynamics of Titanium Tetrachloride are likely to witness an upward trend in the European market. Amid persistent inflationary pressures, the operating rates of manufacturing firms are likely to remain on the lower end, limiting the availability of the finished goods of Titanium Tetrachloride. In addition, the demand from the construction sector is not likely to contribute much to the market growth of Titanium Tetrachloride in the near term.