TiO2’s time to transform

By Simon Moores
Published: Monday, 22 June 2009

As a severe demand slump takes hold and cuts ensue, the titanium dioxide industry is being forced into a fundamental location shift towards the East. With many plants and some producers sinking, and feedstock supply concerning those that survive, 2009 is shaping to be a pivotal year for the pigment sector

The titanium dioxide (TiO2) industry simply cannot win. In the times of high demand in 2008 the sector was struggling with high input costs, causing low profitability. With the onset of the global recession the situation has worsened.

The response, however, been ruthless with the top pigment producers announcing significant cuts and indefinite closures of European and US plants, both chloride and sulphate route.

At present, the world’s total TiO2 pigment capacity stands at 5.625m. tpa of which 45% is produced through the older sulphate processing route and 55% through the chloride process.

The closure of chloride plants not only bucks the industry movement towards this technology but, more significantly, it again questions the sustainability of Western plants’ costs.

DuPont outlines market situation

DuPont, the world’s leading TiO2 pigment producer with a capacity of 1.17m. tpa, has urged the industry to “go where the growth is” if it is to have a profitable future.

Richard Olson, vice president of DuPont Titanium Technologies also believes that the industry has been set back “five to ten years” owing to the “absolutely shocking” speed of the economic recession.

“On October 24th 2008 our world began to fall apart,” explained Olson, “by early November 2008 we changed our operating procedures.”

TiO2 demand is driven by paint applications in the construction and the auto industries, equating to 60-64% market share. These two sectors are among the highest profile casualties of the recession and TiO2 has consequently suffered.

DuPont estimated that pigment demand from auto manufacturers was down by 12%, while construction had decreased its need for TiO2 by 8%.

Demand from plastics, which is pigments’ second biggest consumer accounting for 24-26%, dropped by 8%, while durable goods plummeted by 10%.

The paper and pulp market, which was suffering in North America even before the global downturn, also slumped by 8%. Paper and pulp applications account for 12-15% of market demand.

The cumulative effect of this on the TiO2 industry has been one of the worst in living memory for producers.

DuPont’s reaction

Operated through subsidiary, DuPont Titanium Technologies, the group produces TiO2 solely via the chloride process and is pushing ahead with a new 200,000 tpa pigment plant in Shandong province, China in an attempt to increase its foothold in the Chinese market and have a physical presence there. Once established, the plant will be the largest in China.

One of the central issues to the Dongying plant, in the north of the province, is that DuPont want to use upgraded ilmenite as feed for the chloride facility, a move which will produce more waste than a rutile feed.

The group plans to dispose of the waste product via deep well injection, something the Chinese authorities are unsure of and unwilling to issue the necessary permits, causing a number of delays since the initiative was announced in 2005.

DuPont, which is one of the world’s biggest chemical groups, has not revealed specific details on its 1.17m. tpa TiO2 business, Olson did say, however, that the group has made a number of pigment cutbacks.

It has slashed 4,500 jobs across the group – as one of the world’s largest chemicals producer – in the past six months in reaction to the downturn.

The company is acutely aware of a demand shift that is trending from the North America and European markets to Asia and the implications this has on costs. Close to 5% of DuPont’s total costs were from freight rates, this figure rose to as high as 20% during 2008.

“This gets expensive when you are shipping feedstock from Australia [to North America] and shipping TiO2 product back,” said Olson. The Chinese plant addresses many of these cost problems.

DuPont also operates the world’s two largest TiO2 plants at New Johnsonville (400,000 tpa) and DeLisle (340,000 tpa) both in the USA. The Dongying, China plants in Asia follows the mid-1990s 100,000 tpa Kuan Yin plant investment in Taiwan – which is incidentally under expansion to 150,000 tpa.

The 190,000 tpa Edge Moor plant in the USA supplies the North America market with paper grade pigment. Owing to the serious slump that the paper market is experiencing at present, the plant is not expected to be operating at anywhere near capacity – actual production is estimated at 100,000 tpa.

Paper market conditions have also hit a number of other mineral suppliers to the sector, particularly kaolin (See IM December ’08, p.11: Kaolin cut-backs in the Americas).

 TiO2 industry profit (indexed to 1H05)
 
 Source: Cristal Global


Cristal: “TiO2 under duress”

“The business is going through a big correction at present”, explained John Hall, vice president –commercial of the world’s second largest pigment producer, Cristal Global.

Demand from all markets was described by the company as “steadily improving, but not fantastic”.

Hall explained to IM that “the entire TiO2 industry is under duress” after years of undervaluation of the product (see TiO2 price revolution panel).

Cristal (The National Titanium Dioxide Company Ltd of Saudi Arabia) became the world’s no.2 producer in 2007 when it purchased the TiO2 assets of Millennium Inorganic Chemicals Inc. boosting its capacity from 100,000 tpa to 691,000 tpa in one deal. The new unit is now called Cristal Global.

The group has made the most significant cost cutting steps in response to the global downturn, indefinitely slashing 105,000 tpa of TiO2 production power from its assets in addition to cutting around 20-30,000 tpa TiO2 through the temporary closure of the Stallingborough, UK plant.

The cuts at the Saudi Arabia headquartered group equate to 11% from its TiO2 annual capacity. Cristal Global revealed to IM that it has “permanently” closed its 65,000 tpa Le Havre sulphate plant in France and its 50,000 tpa Baltimore, USA chloride facility – both suffering the fate of high operating costs through energy, raw materials and personnel.

The group had also idled its third largest plant in Stallingborough, UK at the beginning of this year taking from the market an estimated 20-30,000 tpa TiO2. The 150,000 tpa TiO2 chloride facility only returned to production at the beginning of June, when it was “nearing full capacity” (see IM Online News, 3 June 2009: Cristal UK TiO2 plant returns).

To compensate for the lost production at Le Havre and Baltimore, Cristal Global has expanded the capacity of its Yanbu chloride plant in Saudi Arabia from 100,000 tpa to an official capacity of 150,000 but it is believed the plant can produce up to 180,000 tpa. Not only are operating costs significantly lower, Saudi Arabia has a readily available, lower cost supply of chlorine

Certainly a challenge at the Yanbu plant is expected to be the increase tonnages of caustic soda by-product. For every 1 tonne of chlorine, 1.1 tonnes of caustic soda is produced on average.

Australia’s chloride route TiO2 producers, for example, use the local alumina industry to offload the caustic soda – one of the key input materials for aluminium production; this is not entirely the case in Saudi Arabia.

Cristal/Bemax: rare upstream integration

A lot has been made of Cristal Global’s purchase of Australian feedstock producer Bemax Resources Ltd, and rightly so. It made Artikol’s (UK pigment consultants) list of recent significant events that have shaped the TiO2 landscape, and the purchase is still the subject of a litigation involving DuPont (see IM November ’08, p.20, DuPont sues Bemax over TiO2 contracts).

Despite the obvious synergies, upstream integration involving feedstock and pigment producers is rare. Industry examples include: DuPont’s small minsands mine in Florida, Tronox Inc.’s joint-venture (j-v) pigment plant with South African minsands producer Exxaro Resources Ltd, and Kronos Worldwide Inc.’s ilmenite mine in Norway.

The fundamentally different businesses – mining/geology and chemicals – together have their own financial constraints and economical challenges. The minsands sector has historically complained about being at the mercy of the pigment producers keeping raw material prices low.

The pigment sector, on the other hand, has claimed that it is being squeezed by its raw material suppliers – minsands miners – and customers, namely the paint producers (see IM September ’08, p.51, “Zircon: Milling it or milking it” for further discussion on this).

When Cristal Global purchased Bemax, one of DuPont’s major feedstock suppliers questions were raised: is this to secure supply for the newly acquired TiO2 plants from Millennium Chemical? Or, is this to restrict its main competitor’s supply lines?

The answer is probably both (see “Feedstock supply queries” for a feedstock discussion).

Kronos: “demand uncertain”

“Further shutdowns or closures in the industry are possible... even with these reductions in industry capacity, capacity utilisations rates by us and our competitors are expected to be lower in 2009 as compared with 2008,” explained USA based Kronos Worldwide Inc.

The world’s no. 4 pigment producer has the ability to produce 573,000 tpa all grades of pigment but conceded that it is only expected to produce 532,000 tpa in 2009. It is yet to make any plant closures.

There has also been industry speculation that the four plants in west Europe (two in Germany, one in Norway, one in Belgium) were all operating at low production levels. The facilities are a combination of chloride and sulphate route (see Producers table).

In 2008, Kronos produced 514,000 tpa TiO2 and sold 418,000 tpa. Its production represented an increase of 2,000 tonnes on 2007 despite the end of year demand slump. For 2008, it operated at 97% capacity, this year is expected to be significantly lower, possibly between 70-80%.

The company expects the slump in industry demand to have a downward effect on prices, which questions whether the recent bout of increases will stick (see TiO2 price revolution panel).

Kronos said: “Once the economic climate improves and demand increases, the expected reduction in capacity through plant shutdowns should have a favourable impact on production capacity utilisation, selling prices and profitability.

“However the volatility of the near term economic environment makes it difficult to forecast the future demand,” added the company.

Kronos produces over 40 grades for the paints, paper and plastics industries in rutile form (from the chloride route) and anatase form (from the sulphate route). Kronos has managed to up its capacity over the last ten years by 30% through debottlenecking programmes.

See “Feedstock concerns, Kronos’ supply” for future details on Kronos Worldwide.

Tronox’s next Chapter

The past year for Tronox Inc., the 535,000 tpa TiO2 producer, has been about chasing ghosts of the past.

When Tronox was spun off from chemicals group, Kerr-McGee Corp. three years ago it agreed to take responsibility for a number of legacy environmental cases together with a $100m. pot to fund it.

Tronox, however, has struggled, like many in the industry, to turn a decent profit and declared Chapter 11 bankruptcy at the beginning of the year (see IM February ’09, p.20: Tronox goes bankrupt).

This was only the start of developments as Tronox then pursued its former parent and the group that owns it, Anadarko Petroleum Corp, saying it left the pigment player “doomed to fail” (see IM June ’09, p.18: Bankrupt Tronox sues former owner).

Tronox explained it was “grossly undercapitalised” with the $100m. pay-off it received from the Master Separation Agreement (MSA) to handle any outstanding environmental claims and that it was left without key cash generating assets.

The latest twist came when the US government publically expressed its backing for Tronox through the US Attorney General and the US Environmental Protection Agency.

Tronox’s director of investor relations, Robert Gibney, told IM: “We very much welcome the US government intervention in the case.”

“We have been in close discussions with US Government officials on this case and they have been very co-operative in helping support our efforts,” Gibney added.

Through IM Anadarko responded: “We believe the claims are without merit. Tronox’s bankruptcy is directly linked to the collapse of the housing, construction and automobile industries, which are the primary purchasers of its white pigment. “

(see p.21 for the full story and Anadarko’s full response).

Huntsman litigation

Huntsman Corp., one of the largest chemicals producers in the USA, initiated a major shake up of its business at the beginning of the year slashing 1,175 of its workforce and plants directly impacting its 630,000 tpa TiO2 businesses.

In January and February of this year Huntsman closed its oldest pigment plant, the 40,000 tpa facility in Grimsby, UK.

The sulphate plant was established in 1949 with a 10,000 tpa capacity and in its 1970s heyday was producing 100,000 tpa, before production was scaled back to 90,000 tpa in the 1990s and to 40,000 tpa in 2004.

Huntsman received a welcome $1,000m, boost at the beginning of 2009 after the US authorities ordered Hexion Specialty Chemicals Inc. to pay the sum for backing out of a merger (see IM February ’09, p.20: Huntsman sets sights on banks).

Hexion tried to backtrack on a $10,600m. merger deal with Huntsman at the end of 2008 using the global financial crash as a reason saying that the new unit would be insolvent.

The saga continues as Huntsman is also claiming damages against the banks funding the deal, Credit Suisse and Deutsche Bank, who backed Hexion in the dispute. The trial began last month.

Peter R. Huntsman, president and chief executive officer at Huntsman, said: “We begin 2009 with cash in the bank and the objective of bringing Credit Suisse and Deutsche Bank to justice for the harm they have caused.”

Ukraine gas crisis

A gas crisis in Ukraine has battered its TiO2 industry.

Ukraine, which has a capacity of 165,000 tpa from two producers, is struggling to handle the fall-out from the global economic crisis and has not been able to pay its gas suppliers, Russia.

In response, OAO Gazprom – the Russian supplier – has significantly cut natural gas deliveries to Ukraine.

Ukraine’s largest TiO2 producer, JSC Krymskyi Titan has been hit the hardest with production “significantly down”. The 90,000 tpa Armyansk located sulphate plant cannot fully change to alternative fuel sources because only one of its boilers is suited to handle multiple fuels, leaving future production to the fate of a successful settlement between the governments.

Krymskyi Titan would not make any additional comments at the time of press.

The company operates two sulphate production lines of 40,000 tpa TiO2 capacity. The lines, Titan 1 and Titan 2, are located in the Crimea peninsular close to the border with the Kherson region. Both are thought to be idled until Ukraine gas supplier NJSC Naftogaz can re-establish consistent supply with Gazprom.

Static Japanese industry

In 2008, Japan’s TiO2 output decreased by 9% on 2007 to 224,503 tonnes with delivered pigment dropping 11% to 218,371 tonnes.

The Japanese market has been hit hard by the downturn in demand. Estimations are that it has slumped by around 30% on 2008, compounded by the slow recovery of Japan’s economy.

Leading Japanese producer, Ishihara Sangyo Kaisha Ltd (ISK), closed its 155,000 tpa Yokkaichi plant at the end of 2008 as part of a scheduled shutdown; it is now back in production. ISK also operates a 54,000 tpa chloride plant in Jurong on the outskirts of Singapore.

“TiO2 demand in Japan has significantly declined since November 2008” explained Teruaki Matsue, general marketing manager of ISK to IM, “we estimate that in 1Q 2009 it might be down by more than 30% as compared with 1Q 2008.”

The country’s other major producers are Sakai Chemical Industry Co. Ltd which has the capacity to produce 60,000 tpa from its Onahama plant, and Tayca Corp. which operates a 60,000 tpa sulphate TiO2 facility in Okayama, south Japan. All three producers bring Japan’s installed pigment capacity to 329-331,000 tpa.

Despite being in Asia, Japan is in a similar situation to European and North American pigment producers, suffering from high manufacturing costs resulting in many new domestic projects becoming unviable, a situation compounded by strict environmental regulations.

ISK believes demand is beginning to creep up. April and May 2009 have been the most positive months of the year so far, but it is still only “slightly better” than the first three months of 2009.

Ominously, Matsue concluded: “We have not seen any significant signs of recovery yet in Japan”.

The best chance for Japanese producers’ future stability is to “go where the growth is” as mentioned by DuPont or at least where production costs are cheaper. Japan will also need to aim its pigment at Chinese or Indian growth markets to stay competitive; certainly it has the advantage of location.

Is Japan’s clout waning?

There is a feeling in the industry that Japan has not fulfilled its pigment potential over the last 15 years. TiO2 production and consumption has remained flat since 1990 – around the 300,000 tpa mark – while other Asia-Pacific economies have boomed (see accompanying graphs).

“Clearly both in terms of pigment production and consumption Japan has been left behind by the strong growth of neighbouring economies” explained Australian TiO2 pigment and feedstock consultants, TZMI.

Japan has struggled to compete with new lower cost Chinese pigment on the market, despite being of lower quality. In addition, TZMI calculated that Japanese pigment was “above the industry weighted average on a cost basis.”

Speaking to IM, ISK explained: “We believe that the TiO2 demand in Japan has been flat or has slightly declined in the last 10-15 years besides the very recent significant decline from the globally depressed economy.”

“The main reason might be the shift of production from Japan to other countries for end-use industries. However, we believe that the advantages still remain in Japan for high-tech or sophisticated products and that TiO2 demand in Japan will remain at the same level for a long time as long as Japan leads the development of such products,” Matsue added.

 Japan v. Asia Pacific TiO2 production 1990 to 2008
 
 Source: TZMI, Japanese Titanium Dioxide Manufacturing Association
 Japan v. Asia Pacific TiO2 consumption 1990 to 2008
 
 Source: TZMI, Japanese Titanium Dioxide Manufacturing Association

China begins rebound, inventories short

Developments in China are showing the first signs of a global recovery in the TiO2 sector.

Gan Wang, sales and procurement general manager of leading Chinese TiO2 producer, Sichuan Lomon Corp. explained to IM: “Chinese market demand has recovered rapidly since March, all the big producers in China now face an inventory shortage.”

Despite serious signs of recovery in China, the market is still significantly down on last year.

“It is [difficult to put an exact percentage figure on the overall] demand fall [compared with 2008] at this moment, but the main driver is the cooling down of domestic real estate market,” explained Wang.

Operations at Lomon’s 80,000 tpa Mianzhu plant in Sichuan, China have been below capacity for the past six months. Wang also explained that despite the performance of TiO2 pricing in the last six months (either remaining static or falling), the drop in raw material costs has impacted favourably on Lomon’s financials.

Total Chinese TiO2 production equates to that of DuPont’s, around 1.15m. tpa from over 70 producers. The vast majority is through the sulphate route as many producers do not have access to chloride technology, but this will change once DuPont establishes its 200,000 tpa chloride plant in Shandong.

From West to East

When the significantly smaller production power that was Cristal purchased the world’s second largest TiO2 producer, Millennium Inorganic Chemicals Inc. in 2007, a production shift towards the Middle East and Asia was undoubtedly underway.

As demand began to creep downwards in the established economies of Europe and North America, the opposite was occurring in the East namely the Middle East, India and China.

When viewing the world’s top five producers – which hold over 70% of the TiO2 market share – four are headquartered in the USA, but the majority of the plants are not.

DuPont has six plants producing an estimated 1.17m. tpa TiO2, but only half of these are in the USA, two are in Mexico, one in Taiwan and the group is striving to bring its new 200,000 tpa plant in Dongying, Shandong province – this will be the largest in China on completion.

Cristal also has a wide spread of plants across the world – 8 plants across 8 counties – and following the closure of its 50,000 tpa Baltimore facility, only one in the USA. To compensate, it has expanded its Yanbu, Saudi Arabia operation by 50,000 tpa to 150,000 tpa TiO2.

The group is yet to have a facility in Asia and has focused until now on expanding its Middle Eastern capacity – a move into Asia is inevitable. At present its 85,000 tpa chloride plant in Kemerton, Australia supplies Asia based customers.

US based Huntsman operates the highest number of pigment plants in Europe and part-owns the Lake Charles plant in the US with Kronos; unsurprising for assets that used to belong to UK chemicals group, ICI.

There is no evidence from Huntsman that it is to about to make any significant investments in Asia, but the closure of its Grimsby, UK plant owing to high operating costs is a sign of the times that Western pigment plants are becoming less and less economically viable – particularly those in Europe.

It was only in 2002 when Huntsman invested £58m. in the new 150,000 tpa chloride plant in Greatham, UK. It is now the group’s largest plant in terms of capacity, but is it beginning to regret such a move in light of today’s climate?

Kronos has very similar plant locations to Huntsman and only one in the USA – the Lake Charles j-v with Huntsman, but has no presence in Asia or the Middle East.

Likewise, Tronox has assets located the USA (including one of the world’s biggest plants at Hamilton) and in Europe, but none in key growth areas. The company itself, however, is officially bankrupt and being drowned by historical environmental litigation cases. It is not long expected before its assets are put up for sale and it is understood many of the leading producers, including Cristal Global are interested.

Kronos is also thought to have made an offer to the German government to take control of the Uerdingen plant in Germany, which was rejected.

One sure trend is that the world’s top two producers are leading pigment production into the Middle East and Asia.

Richard Olsen, vice president of DuPont Titanium Technologies has called the industry to “go where the growth is”, while John Hall of Cristal Global told IM: “demand is shifting from west to east, of demand goes that way production is expected to follow.”

In the past, pigment producers have sagely ventured into Asia. Despite exhibiting slower growth than Asian economies there is still significant demand from the USA which should not be underestimated or overlooked.

Feedstock focus: supply concern

A feedstock shortage could be on the horizon. TZMI expects it to arrive by 2012 and the present day performance of a host of operations suggest that it could arrive earlier.

“The reality is that the potential shortage of both feedstocks is just as serious for the mid-term of the industry as the global economic crisis is to the industry in 2009,” explained TZMI.

Not enough new feedstock projects are coming online and little exploration is occurring in comparison to the anticipated industry demand.

Iluka is leading the way with new projects in the Murray Basin and Eucla Basin which are just taking off (see IM June ’08, Strandlines, p.21), but other projects are much further behind.

News also emerged in June that BHP Billiton is officially exiting its Corridor Sands project in Mozambique. The mining giant rubber stamped the decision after deferring the project for a number of years (see IM Strandlines p.18).

As the months and years go by with little action, increasing emphasis is being placed on Rio Tinto’s huge new 750,000 tpa Madagascar ilmenite mine which feeds its QIT ilmenite slag operation in Quebec.

DuPont had secured a long term supply deal with the new Bemax source in Australia, this was understood to include: an offtake deal for all its leucoxene production from the Ginkgo Mine and the proposed Snapper mine through to 2016; 25,000 tpa ilmenite from the Murray Basin operations to 2011; and a rutile agreement (see IM November ’08, p.20, DuPont sues Bemax over TiO2 contracts).

All this changed, however, when Bemax was purchased by Cristal. Soon after the takeover was completed, Bemax declared to DuPont that it was “not able to fulfil all of its obligations”.

As a result DuPont issued Bemax with a lawsuit over “breach of contract”; the case continues.

DuPont uses a wide variety of feed for its chloride plants including: titanium slag from Exarro Resources Plc and Richards Bay Minerals (RBM) in South Africa, minsands from its own mine in Florida, rutile from Iluka Resources Plc in Australia, and upgraded ilmenite from Kenmare Resources Plc’s mine in Mozambique.

Natural rutile producer, Titanium Resources Group (TRG) – which is down to 50% operating rates owing to the collapse of its primary rutile dredge (D2) last year – has sold all of its rutile concentrate for 2009 and 2010. The company is not expecting the return of D2 for at least two years, while a third smaller dredge could bring 60,000 tpa rutile production within a year.

TRG has sold none of its new production to DuPont. DuPont was one of the Sierra Leone miner’s major customers in 2008 but, due to the contracted allocation of the reduced output, they were unable to commit any tonnage to the US company.

In a more short term blow, Rio’s QIT ilmenite slag operation is being shut down this summer owing to slack customer demand. Long term supply is all but secure from QIT.

QIT told IM a “major shut down of operations has never happened in the past 60 years” and that the decision will take 17% or 170,00 tpa away from 2009’s total output. It expects total cuts this year to equate to 25%, >250,000 tpa ilmenite slag.

Pigment producers’ future reliance on a few sources is a dangerous game to play. DuPont, for example, is extremely versatile in the types of feedstock it can use owing to operating 100% chloride plants.

This may be the path the TiO2 industry will have to take, and the feedstock outlook could force it towards adopting the chloride process at a faster rate.

A changing landscape

There are a number of challenges for the TiO2 industry, but in essence it all boils down to one word: profitability.

The industry is working in unison to up prices as one method to correct the situation, but significant operating changes must be made to see any real difference.

Many of the Western sulphate plants with capacities under 100,000 tpa are expected to go first, with the leading players consolidating their production in the west into the most successful plants, such as DuPont’s New Johnsonville and DeLisle facilities in the USA.

There could be a situation where a crop of “super plants” occur in the USA and Europe, while the move the Middle East and Asia is inevitable.

The question remains whether the leading producers will opt to join the Chinese sulphate route boom or follow the trend towards chloride plants and introduce them to Asia.

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TiO2 at a glance

World production capacity: 5.635m. tpa

Demand in 2008: 6.174.9m. tpa

Demand in 2009: ~ 4m.tpa*

The world’s top seven producers hold 69% of capacity, the top five hold 62.5% Markets: Pigment (paint, paper platics)

* in anticipation of the continuing Chinese upturn and elements of recovery in the West.

 TiO2 processing routes
 
 Market share
 
 Global TiO2 production 2009
 
Producer, country* 2009 Capacity
('000 tpa) Plant Plant location (country) Plant operating level H1 2009 ('000 tpa) Status Process
DuPont, USA Mar-07 New Johnsonville USA 400 Active chloride
DeLisle USA 340 Active chloride
Edge Moor USA 190 Active est. 100,000 tpa chloride
Altamira Mexico 130 Active chloride
Kuan Yin Taiwan 110 Active - expansion to 150,000 tpa chloride
Dongying, Shandong China 200 Not yet active chloride
Cristal Global, Saudi Arabia 22-Nov Ashtabula (1 and 2) USA 216 Active chloride
Yanbu Saudi Arabia 150 - 180 Active chloride
Stallingborough UK 150 Active following recent idling chloride
Kemerton Australia 85 Active chloride
Le Havre France 65 CLOSED sulphate
Salvador Brazil 60 Active sulphate
Baltimore USA 50 CLOSED chloride
Thann France 30 Active sulphate
Huntsman, USA 630 Greatham, Hartlepool UK 150 Active chloride
Lake Charles USA (Kronos j-v) 150 Active chloride
Calais France 95 Active sulphate
Huelva Spain 80 Active sulphate
Teluk Kalung Malaysia 65 Active sulphate
Scarlino Italy 80 Active sulphate
Grimsby UK 40 CLOSED sulphate
Umbogintwini South Africa 25 Active sulphate
Kronos, USA 573 (532 forecast for '09) Leverkusen Germany 165/28 Active - lower than capacity chloride/sulphate
Lake Charles, Louisiana USA (Huntsman j-v) 150 Active chloride
Langerbrugge Belgium 78 Active - lower than apacity chloride
Varennes, Quebec Canada 78/18 Active chloride/suplhate
Nordenham Germany 60 Active - lower than capacity sulphate
Fredrikstad Norway 30 Active - lower than capacity sulphate
Tronox, USA 535 Hamilton USA 225 Active chloride
Kwinana W Australia
(Exxaro j-v) 110 Active- expansion to 150,000 tpa chloride
Uerdingen Germany 107 Active but bankrupt sulphate
Greatham UK 100 Active chloride
Botlek Netherlands 90 Active chloride
Savannah USA 16 Active- capcity reduced by 85% chloride
Sachtleben 230 (Kemira/Rockwood j-v) Pori Finland 130 Active with cuts sulphate
Duisberg Germany 100 Active sulphate
ISK, Japan 209 Yokkaichi Japan 85/75 Active chloride and sulphate
Jurong, Singapore  Malysia 54 Active choride
Kobe Japan 16 Active - supplying textiles industry sulphate
Shandong Dongjia (formerly Jinhong)        95 Zibo China 95 Active sulphate
Krymsky Titan 90 Titan 1, Crimea peninsula Ukraine 45 Idled - gas shortage sulphate
Titan 2, Crimea peninsula Ukraine 45 Idled - gas shortage sulphate
Sichuan Lomon 80 Mianzhu China 80 Active sulphate
Tengxian County producers 70 Shangdong                 China 70 Active sulphate
Henan Billions Chemical 60 Jiaozou, Henan China 60 Active sulphate
Sakai 60 Onahama Japan 60 Active sulphate
Tayca 60 Okayama Japan 60 Active sulphate
Cosmo 60 Onsan Korea 30 Active sulphate
Incheon Korea 30 Active sulphate
Cinkarna 56 Celje Slovenia 56 Active sulphate
Shangdong Wudi Seastar Coal 50 Huanghua, Heibei China 50 Active sulphate
Police 45 Police Poland 45 Active sulphate
CNNC Hua Yuan 41 LanZhou, China China 41 Active sulphate
Kerala Minerals 40 Quilon, Kerala India 40 Active chloride
JSC Sumykhimprom 40 Sumy Ukraine 40 Active sulphate
Jiangsu Titanium Dioxide 40 Jiangsu China 40 Active sulphate
Zhonghe Huayuan 40 Lanzhou China 40 Active sulphate
Precheza 35 Prerov Czech Republic 35 Active sulphate
Chongqing Titanium Industry 33 Chonqing city China 33 Active sulphate
Jinan Yuxing General Chemical 30 Jinan, Shandong China 30 Active sulphate
Guangxi Dahua Chemical 30 China 20-30 Active - restart in February 09 sulphate
Annada Titanium Dioxide 30 Tongling, Anhui China 30 Active sulphate
Panzhihua Taidu Chemical 20 Sichuan China 20 Active chloride
Titan Kogio 17 Ube Japan 16 Active sulphate
Travancore 16 Trivandrum India 16 Active sulphate
Jinzhou Titanium 15 Liaoning China 15 Active sulphate
Kilburn Chemicals 5 Tamil Nadu India 5 Active sulphate
Kolmak Chemicals 5 Kolkata, West Bengal India 5 Active sulphate
 N.B. Chinese producers in the table are highlighs, there are over 70 TiO2 producers in China.  One of the largest is Shandong Dongjia.

*Country of HQ is noted when multiple international plants are owned

Comment:

TiO2 price revolution

“Its very simple”, explained John Hall, Cristal Global’s commercial vice president, “the entire industry is under duress”.

This is an industry-wide held view of the TiO2 industry from producers and independent analysts alike.  Making money in TiO2 has been the biggest challenge of the last two years – in simple terms the product was not selling for enough.

In times of high demand – pre-global economic crash which began in earnest on September 2008 – producers were struggling with the costs of raw materials, energy and sea freight.  Sales of pigment were as strong as ever, but owing to the input cost the profit margins were weak.

“The TiO2 price level has been unsustainable for a long time” explained Teruaki Matsue of Japanese producer ISK.  He told IM: “The major producers have all reported poor results for 4Q 2008 and 1Q 2009, consecutively, [this is why] the major producers are going into another round of price increase announcements recently despite of  supply/demand situation.”

After a six month hiatus, the world’s top five pigment producers recommenced price increases in May 2009 despite the dire demand situation. Kronos Worldwide sparked the industry into action by upping its prices by an average $100/tonne, DuPont, Cristal Global, Tronox and Huntsman all followed suit (see IM June ’09, Strandlines, p.20, Kronos sparks TiO2 price resurgence).

“60 year trough”

Following IM’s Industrial Minerals International Congress & Exhibition (IM19) in Athens, March 2008, where the pigment industry was severely scrutinised, somewhat of a price revolution ensued (Strandlines, p. 21, An end to cheap TiO2 ).

Soon after, the world’s top five producers all upped their prices at the same time, systematically increasing global pigment prices on a regular basis.

At the time Tronox explained to IM: “The TiO2 industry is experiencing an unprecedented 60-year trough and continues to face the challenges of increasing energy, process chemical and freight costs combined with pricing pressures.”  And this is pre-global recession.

It was only when the world’s economy began to take a turn for the worse were producers forced to freeze prices as demand evaporated.

As the TiO2 industry entered 2009, demand was severely depressed owing to new construction projects halting and car manufacturing hitting an all time low, the primary markets for the pigment.

By April and May when the industry began to show some signs of slow recovery, again the world’s leading producers wasted no time to begin price rises once again.

The underlining point is that the TiO2 industry is struggling to maintain reasonable manufacturing costs and demand is painfully low.  Producers have nothing to lose in raising their prices, and if they do so in unison it gives the industry a fighting chance.

The significant question remains: will price rises stick?

Reg Adams of UK pigment consultants, Artikol, is unsure: “Total world demand is 10% lower than last year.  It is going to be very difficult to raise prices against a background of falling consumption”.

 Global TiO2 pigment prices (average)
 

Focus on:
Kronos' feedstock supply

Kronos purchases its chloride grade titanium slag from Rio Tinto Iron and Titanium’s RBM joint-venture with BHP Billiton under a long term supply contract that runs until 2011.

TRG supplies it natural rutile product while its long term contract with Iluka Resources expires at the end of this year.

Kronos explained: “We expect the raw materials purchased under these contracts to meet our chloride process feedstock requirements over the next several years.”

The group’s sulphate feedstock is from its own ilmenite rock mine in Rogaland, Norway (operated through Titania AS) which provided the supply to its four European plants, and is expected to continue to do so for the “foreseeable future”.

Feed for its Canadian Varennes sulphate plant is supplied by Rio Tinto Plc’s QIT-Fer et Titane 1.1m. tpa ilmenite slag operation in Quebec; this contract expires at the end of 2009.  Norway based Tinfos Titan and Iron KS will also supply slag to Kronos until 2010.