The pigments supply-demand rollercoaster of the last three
years shows few signs of slowing down. In wide-ranging markets
from construction to plastics, and automobiles to ceramics,
pigment producers throughout the world are waiting with baited
breath for their respective governments fiscal
Several resulting factors of the
global financial crisis have impacted demand for inorganic
pigments, particularly a dearth of new construction projects
and a significant drop in automobile sales. While both markets
consume vast amounts of paint, the stagnation of construction
markets has resulted in knock-on negative effects for ceramics,
paper and roofing materials, while the decline in automobile
markets has also hit plastics producers.
All pigment markets, and
primarily the construction related ones, are still suffering
from the economic downturn, Tom Henderson, EVP sales and
marketing for pigments group Prince Minerals, told
IM. There are modest signs of recovery
but it is fragile and seasonal at best.
Prince Minerals, formed in 2003 by
Palladium Equity Partners from its acquisition of The Prince
Manufacturing Co., is a leading supplier of colorants and
additives to the brick, ceramic, and glass industries.
The companys 2009 purchase of
UK-based Castle Colours Ltd strengthened its supply of pigments
for European brick and tile markets, just as the recession hit
construction markets. Although the sector has picked up in 2010
it still remains behind 2007-8 levels.
Construction collapses in the west...
The latest statistics from the US Census Bureau highlight just
how far the construction market has declined in the USA. During
the first 10 months of 2010 construction spending amounted to
$684.7bn, 11.2% below the same period in 2009 Ð itself a
In October 2010 construction
spending was estimated at a seasonally adjusted annual rate of
$802.3bn, 0.7% above Septembers spending but still 9.3%
below October 2009 levels. Private construction accounted for
$481.8bn while public construction reached $320.5bn.
The situation in Europe mirrored
that of the USA, although a stabilisation looks likely in 2011.
Euro area (EA16) construction fell 2.1% month-on-month in
September 2010 while EU27 seasonally-adjusted output declined
Annual comparisons for available
Member States showed construction fell in ten and rose in four.
In 2010 Spain remained a high-profile casualty of the
construction market collapse, decreasing 37.3% between
September 2009 and 2010. Other poor performers were Slovenia
(-18.5%) and Romania (-14.2%). Meanwhile, the highest increases
were recorded in Poland (+13.4%), Sweden and the UK (both
Demand for construction
focused pigments is behind 2007-8 levels, but demand in 2010 is
ahead of 2009 levels, which is encouraging, commented
We expect that 2011 will be
slightly better than 2010 but still below peak demand
experienced prior to the economic downturn. We believe that the
construction markets will rebound by 2012-13, he
...but rises in the east
Unsurprisingly construction markets in China showed solid
growth last year. The National Bureau of Statistics of China
reported January to November 2010 real estate investment at RMB
4,269.7bn ($641bn), and sales of commercial buildings as RMB
4,230bn ($635bn) Ð year-on-year increases of 36.5% and
Pigment producers in countries such
as the USA are now focusing on Asia for new demand, reflected
by an expected record year in the USA for TiO2
exports in 2010 with the figure standing at 363,000 tonnes in
The pigments market is
prosperous at present; the demand is a little bit higher than
the supply which solved the problem of stocks caused by the
previous economic crisis, Gao Fu Jun, general manager of
Chinas Yipin pigments, told IM.
With the recovery of the
economy there is a big demand for pigments especially from the
emerging countries and regions such as China, India, Brazil and
Africa that will bring the opportunity for the pigments
market, he added.
Asias insatiable demand for
pigments such as TiO2, combined with an overall
dearth of investment in pigment capacity over the last five
years, has resulted in tight supply conditions for white
pigment feedstock minerals ilmenite and rutile. Australian
minsands producer Iluka Resources has warned of an impending
supply shortage - as soon as 2015.
Asia has also offered opportunities
for coloured pigments such as iron oxide. Spanish iron oxide
producer, Promindsa, has significantly increased its sales to
the region over the last five years.
These countries - Russia,
China, Brazil and the USA - with an interesting, high rate
of growth and geopolitical influence, help us to get a strong
position in specific regions, Promindsa president,
Fernando Prada, told IM.
Prada believes the future of the
pigment industry will be closely related to the progress of the
global economy and, specifically, Chinese-European
relations - such as production, supply and cost-quality
Princes Henderson, meanwhile,
noted that while emerging markets have increased their pigment
consumption, they still remain much smaller volume markets
compared to established sectors. We expect traditional
markets will rebound based on regional GDP growth
patterns, he forecast.
The effect of construction activity on paint markets is
undisputed. 2009 production figures in the USA show
manufacturers shipments to both the domestic and export
markets fell by 12%, following an 11% fall in 2008. They went
below the 4bn litre mark for the first time since 1991.
OEM coatings (including paints for
vehicles, furniture, domestic appliances, cans and other types
of packaging) reached a peak of 1.86bn litres in 2001 and then
fell back by more than 40% to 1.08bn litres in 2009, severely
affecting demand for a number of pigments.
But higher demand is expected
within the next few years as construction (particularly
housing) markets improve. World demand for architectural paint
is forecast to rise 3.6% pa through to 2013, totalling 22.8m.
tonnes, US consultancy Freedonia forecasts.
Growing urban populations and
better standards of living in emerging economies are expected
to put pressure on existing housing stock. Gains in Asia are
predicted to come primarily from Chinese and Indian markets,
increasing market share in the Asia Pacific region to 35%.
In North America, meanwhile, it is
expected that the housing market will provide opportunities for
paint sales through new construction projects and home
repainting. But Western Europes share of the global
architectural paint market is forecast to decline as the region
experiences lower construction volumes and mortgage sector
The overall trend is clear,
however: paint consumption will continue to grow so long as a
desire for certain standards of living remains.
The paints market will
continuously grow as demand for high standards of life will
grow, and paint is a part of this high standard. Pigments are
just a compulsory part of the paints, Joelle Briot,
president of French minerals processor CMMP, told
Pigments have a relationship
with local traditions of building and decoration. This will
change progressively as our world is more and more
global with international trading, communication,
and fashion, she added.
Growing urban populations and higher living standards also
drive demand for automobile consumption, itself a large end
market for pigment-heavy paints and plastics.
In 2009, only four of the
worlds top 15 auto-producing countries posted annual
growth figures: China (+48.3%), India (+12.9%), Iran (+9.5%)
and the Czech Republic (+3.0%). Total world production of
automobiles declined 12.8% to 61,714,689 units, with the
largest producers being China, Japan, the USA and Germany.
According to statistics released by
the International Organization of Motor Vehicle Manufacturers
(OICA), China is by far the largest auto producer, accounting
for 13,790,994 units in 2009, followed by Japan with 7,934,516
units. Motor vehicle manufacturing is being increasingly
dominated by Asia, as domestic populations increase their
wealth - notably China and India.
Meanwhile, western auto producers
have struggled to maintain numbers despite fiscal stimulus aid
packages in countries such as the UK and USA.
Although the numbers have declined
for automotive production, the US plastics industry has shown
more promise. In 2009 the countrys plastics manufacturers
spent $7.8bn on capital expenditures and the value of goods
shipped was $327bn.
According to data from the Plastics
Industry Trade Association, US exports increased 32.6% between
January and July 2010, while imports increased 21.4% from the
same period in 2009. The industrys trade surplus
continued to grow substantially Ð as of July 2010 it
reached $10bn, surpassing the 2009 year-to-date surplus of
However, competition from China
remains one of the main concerns for the US industry,
particularly in the plastic products segment of the market,
which continues to grow and accounts for a significant portion
of the trade deficit in processed products.
Despite competition, the US
plastics industry has offered signs of hope for pigment
producers, with an increased market share of total US
TiO2 consumption from 20% in 1999 to 25% in 2009.
But the production of TiO2-containing plastics, such
as white goods, has grown at a much slower pace in the past
decade compared with the 1980s and 1990s.
The main markets for pigment minerals all face uncertain
futures. While it can be reasonably assumed that large
mineral-consuming industries like automobiles, construction,
ceramics, paint and plastics will always be required, the
financial health of major producing countries will determine
how quickly demand recovers - and where. In terms of
individual companies, it is a matter of fighting to stay
competitive during these uncertain times.
For Promindsas president,
pricing policy is one of the most important issues in a
companys strategy. To supply a product to a
specific country is not only a matter of price or quality, but
also a matter of culture - for example China, Prada
Prada believes companies need to
adopt the glocal way of conducting business -
thinking globally, but acting locally.
I do believe there is only
one way: thinking about R&D in a global economy,
Prada commented. In my opinion there are no promising
markets, but promising services in different markets - the
product variety offered, customization, trust, lead times,
Princes Henderson offered
similar views. The opportunities are to find raw
materials that perform well in pigment applications, but offer
a degree of separation from global demand pressure.
Stronger than expected demand
for steelmaking raw materials has resulted in higher
costs, he explained.
Meanwhile, environmental concerns
continue to affect some pigment products. Although chromium
oxide and cadmium have traditionally faced closer environmental
inspection, this awareness is spreading to all aspects of the
The main challenge and
opportunity is the worldwide growing green demand of the
pigments market, said CMMPs Briot. By chance
most minerals are non-toxic and exempted of REACH
CMMP processes a number of pigments
and coating minerals including chromite, micaceous iron oxide,
and biotite and muscovite micas. The main challenge the company
sees in the future is the growing awareness of environmental
issues, particularly in Europe.
Briot is concerned that individual
countries have established their own standards for labelling
products as eco-friendly, creating in Europe a jungle of
We hope that the green market
will be more organised in a few years, Briot
One particularly bright opportunity
is the paper market, especially in Asia. Here, paper pigment
minerals - such as ground calcium carbonate and
kaolin - are experiencing strong demand at present.
Global production of paper and
board (P&B) totalled 391m. tonnes in 2008 with Asia
accounting for 39% of this. Four countries - USA, China,
Japan and Germany - accounted for 55% of global production
with the top ten countries accounting for 72%.
China is now the worlds
largest producer of paper and board (P&B) with an estimated
90m. tonnes produced in 2009 compared to 78m. tonnes in 2008.
It is estimated that 2010 figures were as high as 98m.
tpa - a sharp rise from the 20m. tpa in 1995.
In China pigment loading is much
higher than elsewhere in the world. Pigment loadings of 40-50%
are now common and some of the newest mills will handle
loadings of up to 55%.
Ground calcium carbonate (GCC) is
the countrys main paper pigment utilised as filler,
pre-coating and coating pigment. In China, there are abundant
sources of high quality marble near to the main papermaking
areas, and a lack of suitable coating kaolin deposits. US
kaolin producers, in particular, have found a new opening for
their products as the countrys own paper industry has
reduced kaolin consumption in favour of GCC.
Global financial considerations
Pigment market recovery may be expected, but where and how fast
are two unknowns - both to be determined by global
financial policies. All eyes were on the USA in the last
quarter of 2010 as market participants waited to see if the US
Federal Reserve would launch a second round of quantitative
easing (nicknamed QE2) in efforts to shore up the domestic
In November the Federal Reserve
announced it would buy $600bn of longer-term Treasury
securities by the middle of 2011, stating it would adjust
the programme as needed to best foster maximum employment and
The Financial Times
reported the launch of the new QE2 to be one of the most
significant decisions the Federal Reserve had made for years,
allowing the USA to boost its economy by driving down long-term
interest rates when short-term rates were already at zero. The
market reaction to QE2 should start to become evident in H1
In Asia, the economic situation
over the last few months has cooled. China, the worlds
largest producer and consumer of industrial minerals, continued
to slow its economy to resist overheating, with the state
raising the reserve requirements for six banks which would
drain cash from the economy.
Contrary to the US, the Chinese
want to remove easy credit for business to avoid creating a
bubble which may burst later, and China is making banks keep
hold of cash instead of lending.
Despite attempts to prevent
overheating, in December 2010 Chinas inflation hit
5.1% - much higher than interest rates targeted by the
government. While negative for China, the rates could result in
the government allowing the renminbi to appreciate Ð a
definite positive for other countries.
Europe was leading the charge for
recovery at the end of Q3 2010 with increases in manufacturing
and construction stronger than expected. The European
Commission (EC), in its autumn forecast released in November
2010, projected that the EU economy would continue its slow
recovery but with uneven progress. The EC predicts GDP to grow
1.75% in 2010-2011 and by around 2% in 2012.
Amid a softening global
environment and the onset of fiscal consolidation, activity is
expected to moderate towards the end of  and in 2011, but
to pick up again in 2012 on the back of strengthening private
demand, the EC said.
Should the EU and USAs economies mirror their 2011
forecasts, the opportunities in the western and eastern
hemispheres are likely to be promising for pigment producers.
Now it is a matter of wait and see.
Inorganic pigments at a glance
White pigment minerals
used on its own or in combination with halogens in halogenated
compounds for fire retardant applications in plastics,
adhesives, textiles, rubber and paint. The tinting strength of
antimony oxide generates a whitening effect in filled products,
dependent on average particle size. It may also be used with
anatase-based TiO2 to modify the chalking
used in combination with zinc sulphide to produce lithopone
Ð the main source of white pigment prior to the
introduction of TiO2. The world market, at 400,000
tonnes in the 1950s, has declined to less than 200,000 tonnes
today. In more advanced markets, lithopone still finds minor
use in micronized form as a speciality additive in inks, paint
ground and precipitated calcium carbonate grades (GCC and PCC)
are excellent pigments for paper applications, where
TiO2 has traditionally been ineffective. In the
papermaking process, the small particle size of TiO2
pigment means that it tends to be drained with the water, and,
even with the help of retention aids, 5-10% of the pigment can
still be lost.
Papermakers have increased their
consumption of GCC and PCC as cheap and effective alternative
white pigments because of their good brightness, opacifying,
dispersion and light scattering properties. Main producers for
paper pigments are Imerys and Omya.
and calcined kaolins are also used as a white coating agent in
papermaking, but over the last 30 years kaolin has started to
lose its market share to GCC and PCC with the now widespread
use of alkaline paper mills.
the undisputed leader in the white pigment market, imparting
whiteness, brightness and opacity to paints, plastics and
paper. TiO2 can be produced via the chloride route
using rutile, or the sulphate route using ilmenite. Due to
being chemically inert, resistant to UV degradation, and
thermally stable over a wide range of temperatures,
TiO2 has the additional advantage of providing
excellent colour retention to the products in which it is used,
even in extreme conditions. Main producers are DuPont, Cristal
Global, Kronos Worldwide and Huntsman.
Zinc oxide: a
basic white pigment which reacts with acidic resins to form
soaps that have increased reinforcing power but cause
brittleness in external surfaces. At high loadings of over 30%
by weight, zinc oxide acts as a fungicide.
Non-white pigment minerals
Carbon black: traditionally used as a reinforcing
agent in tyres, today the uses have expanded to include
pigmentation, ultraviolet (UV) stabilisation and conductive
agents for a number of coating applications including
automotive (primer basecoats and clearcoats), marine, aerospace
and industrial coatings.
dichromate is the most economical form of chromium and the
starting point for a number of dyes, paints and pigments. It
can be treated via sulphuric acid, carbon dioxide or
electrolysis to produce sodium dichromate, which itself is
feedstock for compounds including the pigment chromium oxide.
Main producers are Elementis and Lanxess.
Iron oxide: around
2% of production is used for iron oxide pigments from either
natural (NIO) or synthetic (SIO) sources - SIO being the
main pigment, with close to 90% of the market. NIO is usually
derived from haematite and magnetite, while SIO is manufactured
by chemical processes such as thermal decomposition of iron
salts or iron compounds, precipitation of iron salts, and
vapour synthesis. Biggest producer is Lanxess.
oxide (MIO) is a unique form of NIO that has a
distinct physical form and properties, which means it is often
treated as a separate market. A type of haematite, MIO is dark
grey to black with finer grades having a red tint. MIO is
inert, non-toxic, non-oxidising, non-corrosive, and
non-flammable. It is an excellent anticorrosion agent used in
speciality coatings for structural steel works, such as
bridges, pipelines and offshore oil rigs. Largest producer is
Austrias Kartner Montanindustrie with 90% of the
commercial mica-based pigment is muscovite (white) mica.
Micronized grades are normally used to produce a nacreous
effect pigment. The minerals particle shape is key to the
pigments appearance, with aspect ratio determined by PSD
of the mica platelets. Mica pigment market accounts for about
20,000 tpa of production.
pigment for which the only natural source is lapis lazuli, a
gemstone formed from metamorphosed limestone. For industrial
use, lazulite is produced synthetically by world leaders
Holliday Pigments Ltd in the UK and France. Used mainly in high
value applications such as cosmetics, plastics, paints and
Other pigments: cadmium, manganese, mixed
metal oxides, rare earths, and zircon.
Iron oxide markets (1.5m. tonnes)*
*natural and synthetic
Source: Industrial Minerals
Chromium oxide markets (300,000 tonnes)
Source: Vincent Agnello, 2010
Selected pigment mineral supply highlights
||Aksu Diamas, Isparta, Turkey
||UK-based AMR is developing the Aksu Diamas project,
which comprises rare earths, TiO2 and zircon, through
subsidiary Madencilik Isletmeleri
the resource contains a 2bn tonne mineral suite, from
which AMR will extract 700m. tonnes of ore to produce
3.5m. tonnes TiO2 concentrate, among other minerals
in a three phase plan, AMR proposes to conduct 100 tph
hydromining during Q4 2010-2011, 400 tph dredge mining
2011-2012, and 400 tph dredge mining 2012-2013
||near Baie Comeau port, Quebec, Canada
||Canadian explorer Argex is planning construction of a
600,000 tpa ilmenite processing plant from its La Blache
development brought forward from 2013 to Q2 2012
initial production could be 30-50,000 tpa
Argex claims the ilmenite feedstock can be used by
chloride and sulphate route TiO2 producers
||Jiaozuo city, Henan, China
||planning to increase capacity by 50,000 tonnes to
200,000 tpa TiO2
also installing another 300,000 tpa sulphur-burning
facility to support expansion would make Henan the
countrys biggest producer and exporter of TiO2
||black and yellow iron oxide
||Krefeld-Uerdingen, Germany; Jinshan, China; Porto
||in Q4 2010 Lanxess completed a new 3m.
pre-filter unit at its Krefeld-Uerdingen iron oxide plant
as part of a global capacity expansion programme
Lanxess will invest a total of 20m. ($27m.) in
three sites to meet growing global demand for iron oxide
current capacity is 350,000 tpa at its operations in
Germany, China and Brazil, the largest of which is the
German plant, with a capacity of 280,000 tpa
this year Lanxess constructed a new black iron oxide
pigment plant in Jinshan with 10,000 tpa capacity, in
addition to existing yellow iron oxide pigment
||iron oxide, titanium dioxide
||Rockwood Pigments has developed the first range of
coloured pigments, Solarox, which have functional
properties that respond to sunlight enables surfaces to
self-clean, reduce air pollutants, and inhibit microbial
||Bantry, County Cork, Ireland
||looking to restart an historical barytes resource in
Ireland for filler sector
mineral processing testwork carried out by SGS Mineral
Services UK showed high grade concentrate could be
white and off-white pigment grades were tested by a
European barytes processor
Sunrise aims for modest-sized underground mining
operation feeding a low cost gravity separation plant,
producing high-value filler grades
||Srikakulam, Andhra Pradesh, India
||Started commercial production of Srikurmam minsands
deposit in June 2010
aiming to produce 200,000 ilmenite, 6,000 tpa rutile,
6,000 tpa zircon, 60,000 tpa garnet and 50,000 tpa
invested $54m. in the initial phase of the project, which
included a pilot plant, bulk samples, hydrology, social
and environmental studies, engineering and mining licence
agreements Plans to invest another $867m. until fiscal
2017-18 to expand the extraction areas, increase
processing capacity, upgrade technology and boost
Chromite: non-metallurgical grades are set to rise in
Q1 2011 but the volatility of the South African rand made
negotiations difficult. South African chrome ore producers saw
production costs double on the recent appreciation of the rand,
while transport and power costs also increased by 20 and 25%,
Chinese synthetic iron oxide pigment prices, both red and
brown, gained around $30/tonne in December 2010, taking brown
pigment prices to $1,030/tonne and red pigment prices to around
$980/tonne, both bagged FOB China.
One Chinese pigment producer told
IM: With the devaluation of many
currencies worldwide against US dollar, the prices are going to
rise. Being the leading country of production of pigments, the
prices of Chinese pigments will rise thanks to the appreciation
of RMB against USD.
Titanium dioxide: 2010 was a rebound year
for TiO2 pigment producers, as the market
fundamentals supported strong growth in output relative to 2009
after demand increased substantially. In early 2010 producers
were holding record low levels of inventories, so during the
year there was a need to produce more than demand in order to
restock to normal seasonal levels. But demand was more robust
than anticipated, and inventories levels remained lower than
Selected pigment and feedstock prices (2009-10)