(Idea) A Supply-Led Titanium Dioxide Recovery Cannot Survive A Demand-Led Recession
Editor’s Note: HFI Portfolio has already sold long positions in Kronos, Tronox, and Chemours.
By: Jon Costello
I made the bull case for Kronos Worldwide (KRO), Tronox Holdings (TROX), and The Chemours Company (CC) in November 2025 and reiterated it in a February 2026 chemicals piece. That thesis was right in terms of price action, as the names rallied. However, the macro conditions that underpinned it no longer exist. It is therefore time to take heed of the risks these producers face, and trim or sell titanium dioxide positions.
The Original Bullish Setup
The original thesis published in November was premised on cyclical supply-side developments. Roughly 1.1 million metric tons of global titanium dioxide capacity had been curtailed in the 10-million-ton market. Anti-dumping regimes in the U.S., the European Union, Brazil, and Saudi Arabia were removing approximately 800,000 tons of low-cost Chinese supply from the system. Venator’s insolvency helped clear the inventory overhang and left the industry with a “Big Four” oligopoly. Customer flight to scale was driving paint and coatings buyers toward Kronos, Tronox, and Chemours.
The demand assumption on which the thesis was based was for a constructive outlook for U.S. consumer spending, the primary driver of the U.S economy. The One Big Beautiful Bill Act was set to add as much as $100 billion to refunds in the 2026 tax season, with the average filer receiving $300 to $1,000 more than in a typical year. Moreover, there didn’t appear to be any systemic economic issue on the horizon poised to cause an imminent or unusually severe recession.
The recovery thesis needed two things to play out. Supply had to stay disciplined, and demand had to hold. The supply side is still doing its job. But the demand side is no longer reliable.