End User Focus: Welding boosts rutile prices

By Alex Feytis
Published: Tuesday, 20 March 2012

Minsands focus could turn to welding as global demand increases for the sector


The welding industry consumes a large amount
of industrial minerals, including rutile


The welding industry, which consumes a large range of industrial minerals including titanium dioxide (TiO2) minerals (rutile, ilmenite), bauxite, calcite, quartz, magnesite and mica, (see table), has been growing during the last few years thanks to increasing demand from applications such as construction, shipbuilding, pipelines, and offshore platforms and boosting mineral consumption.

The welding industry has a “very good potential” for raw material consumption such as TiO2 minerals, a leading rutile producer confirmed to IM.

Based in Turkey, Gedik Welding Inc. is among the world’s top welding producers, manufacturing about 90,000 tpa of covered welding electrodes, gas metal arc, and flux cored welding wires. Established in 1963, the company is also the only producer in Turkey of welding fluxes for the submerged arc welding process with about 5,000 tpa. Gedik consumes about 12,000 tpa of raw materials including TiO2, quartz, magnetite and fluorspar to manufacture its welding products.

Gedik’s general manager Edip Saracoglu told IM that 2011 was a very fruitful year for both domestic and export markets.

“Since the last couple of years, the welding market has been rather dynamic with respect to automation of many conventional industrial activities and new investments for manufacturing industries in Turkey,” Saracoglu explained.

“Last year was a good year for us and we are expecting that the market will somehow be narrower in 2012,” he added.

The uncertainty of the global economy, weakened by the European debt crisis, the slowdown in China and the recent downgrade of US debt, remains a source of concern for the industry, which has been suffering since mid-2011. As a result, the forecast for 2012 is at present “very conservative”, particularly in Europe, according to an international trading company supplying raw materials to the welding industry. A source from a leading European welding producer confirmed to IM a slowdown in Europe in 2010 notably in the UK. But the market got back on track in 2011, even increasing by 2-3% during Q1 2012.

However, the general uncertainty has also pushed welding manufacturers to “explore new markets and concentrate on certain markets which are important strategically”. Therefore Gedik - which exports to more than 70 countries all around the world - reports that it managed to increase its export share about 40% “in spite of that”.

Growing economies in South East Asia, the Middle East and Latin America remain with no surprise to be driving the end markets for the welding industry.

“We are seeing the strongest demand from China, Korea and Japan mainly driven by the shipbuilding sector,” a leading TiO2 minerals producer said to IM, adding that there is also “good growth in Latin America, the Middle East and India in the construction sector”.

Europe and the US remain the “high quality markets” while the emerging BRIC (Brazil, Russia, India, China) countries “are less worried about quality” and and focus more on prices. According to a raw material trader, these countries generally tend to use more Rutile 92 and Hyti 90 than Europe and the USA using grades at 95% TiO2.

“These BRIC countries have taken a large part of the export from Europe and the US but mainly to supply the local market,” a source commented, pointing out that although the big welding groups - ESAB, Bšhler Welding Group, Air Liquide SA, and Lincoln Electric - have production sites worldwide, the local internal specifications are different. A top minsands producer confirmed to IM that Brazil is “a very good market” for the welding industry, thanks to the upcoming FIFA World Cup in 2014 and the 2016 Olympic Games in Rio de Janeiro which are boosting infrastructure development in the country.

Shipbuilding is one of the key areas for welding products and technologies. “The sector is however knowingly not performing very well due to global competitive and market conditions,” Saracoglu from Gedik said.

Despite this situation, the welding company has increased its market share both in domestic and foreign markets during the last few years beyond its targets by “analysing the local and global conditions with respect to strategic technological, sectorial and market developments”.

“[These kinds of analyses] are essential, since welding sector produces ‘complementary’ or ‘enabling products’ for various industries and hence its performance is strongly dependent on the good or poor performance of other key manufacturing industrial sectors,” Saracoglu explained.

As an international trader underlined to IM, the welding industry is rather conservative and it is very difficult to discuss technical developments. “Every producer seems to have its own ‘magic’ formulations,” the trader commented.

Recently, the industry has been moving away from traditional welding electrodes towards the new flux-cored wire technology, which necessitates a shift towards higher grades of titanium minerals being used ie. natural rutile as opposed to ilmenite and slag.

“Demand in the welding sector is increasing and also there is a move toward higher quality TiO2 minerals,” a leading minsands producer reported to IM.

Another source confirmed the trend which will have an impact on the minerals consumption although the reason for using minsands - chemically inert and favourable melting point - will remain. “However, traditional welding electrodes are expected to remain necessary for certain welding jobs,” the source underlined.





Rutile potential

Among the main industrial minerals used, rutile and other higher grade titanium dioxide products are some of the most important constituents of welding flux, responsible primarily for slag forming properties. There is no alternative raw material to replace these products in welding applications.

Minsands products such as zircon sand, zircon flour, rutile sand, rutile flour and ilmenite are used in the welding industry as they are chemically inert and have a high melting point. The requirements of the slag are to shape the molten weld pool, hold the pool in place during positional welding and protect it from atmospheric contamination, while being readily removable and preferably self-detaching. As such, titanium dioxide is used extensively in ship building and other fabrication applications which employ welding.

In rutile welding, about 35% in weight of the coating is TiO2, according to Turkey-based welding consumable manufacturer Arctech Welding and Machining Ltd, as TiO2 facilitates arc ignition and makes it possible to work with a soft arc and reduces spatter.

“Recently we have seen a greater interest in the use of ilmenite. This is most probably driven by the availability and pricing issues for rutile although ilmenite is now following the same trend upwards,” a trader reported to IM.

Rutile is produced worldwide and has almost double the TiO2 content at 92-95% but is less abundant than ilmenite. The biggest commercially active sources are in Australia and Sierra Leone. Leading producers of TiO2 minerals include: Iluka Resources Ltd (Australia), Exxaro Resources (South Africa), Rio Tinto Plc (Australia), Kenmare Resources Plc (Ireland/Mozambique), Bemax Resources Ltd (Australia), Consolidated Rutile Ltd (Australia) and Sierra Rutile Ltd (SRL, Sierra Leone).

The welding sector represents a 20-25% share of Iluka’s TiO2 products sales. In Sierra Leone, Sierra Rutile supplies about 12-15% of its rutile output to the welding sector. The company plans to produce about 80-85,000 tonnes in 2012 of which the 12-15% into welding will be maintained. “Similarly in 2013, this proportion will be maintained when we move up to approximately 130,000 tonnes,” Neil Gawthorpe, marketing director of Sierra Rutile, told IM.

Prices increase

The shift towards higher grades of titanium minerals used in the welding industry is expected to increase pressure on the already strained supply of high grade feedstocks. “Given that welding grade rutile is higher priced than pigment grade, we could see more feedstock producers aiming for the welding sector,” a leading mineral producer told IM.

The welding market has suffered from the recent price increases for raw materials, especially rutile. “Because of the poor availability of Rutile 95, many producers now change partly to Rutile 92 or even Hyti 90,” a trader explained to IM.

Welding manufacturer Gedik confirmed that unstable raw material prices and foreign exchange rates are big obstacles in the business. “We are trying not to reflect these changes to our prices,” Saracoglu from Gedik said.

As reported by IM, prices for rutile have been increasing dramatically during the last year for all grades. Rutile is sitting at a range of $1,990-2,050/tonne, for large volumes for pigment (FOB Australia, min 95% TiO2) and $2,480-2,700/tonne for bagged rutile of the same grade. This is well over double the price at the start of 2011.

In December 2011, Sierra Rutile announced that its average Q1 price would be $2,530/tonne with a high of $2,700/tonne for standard grade rutile, a 285% premium over the weighted average price of $658/tonne in 2011. In the meantime, Iluka said it would increase its prices for pigment grades by 80-85% for H1 2012 bringing the weighted average price of rutile in to $2,412-2,479/tonne, FOB Australia, from 1 January.

Sources from the industry confirmed to IM that welding grade rutile prices - higher than pigment grades - are also expected to increase steadily during 2012. Prices, reported at $3,000-3,100/tonne during Q1 2012, are expected to continue their rise to reach $3,300-3,500/tonne during Q2 and even $4,000+/tonne during H2.

Mineral producer Sierra Rutile confirmed the trend. “We expect that prices for our bulk rutile will increase every quarter for the foreseeable future and the welding grade premium will be maintained,” Gawthorpe told IM.

Although customers may raise concerns over the price increases, Gawthorpe believes that “there is plenty of room in the value chain to absorb these increases”.

According to a source from the industry, “the rising trend is expected to continue through 2013”.

Outlook

The welding industry is expected to grow during this year, pushed by a strong demand from Asia, the Middle East and Latin America. While a slowdown could affect the European market, North America is expected to remain stable.

The shipping sector - one of the main drivers for the welding industry - has been struggling recently, and recovery could take some time. “We hope that this sector will recover soon but now 2012 economic conditions are showing that this recovery may not come soon,” Saracoglu from Gedik believes.

The welding sector is expected to boost raw material consumption, although raw mineral prices remain a source of concern, particularly for rutile. “We expect 2012 to become a difficult year but mainly because of the supply and pricing issues for the raw materials,” said a source from a major trading company supplying minsands to the welding sector.

According to sources from the industry, welding grade rutile prices are likely to continue their progression and to reach $4,000+/tonne during H2 2012, with the increase expected to continue through 2013. As a result, feedstock producers could be tempted to develop their shares for the lucrative welding sector in the future.

Producers of TiO2 products remain confident. “We have been anticipating more growth than expected,” a leading minsands producer revealed to IM, belieiving that “the next two years will see the industry growing”.


Rutile welding

This electrode type is used for general purposes where good welding properties are required.

This is the universal electrode which may perform welding in every position, using direct (AC) or alternative (DC) current.

The main properties of rutile-type electrodes are suitable mechanical properties of weld metal, weld beam profile with good appearance due to slag properties, ability to perform welding in all positions, and easy slag removal.

Rutile electrodes can have different coating thicknesses.

The molten weld metal is carried into the work piece through the arc in the form of drops that become thinner as the coating becomes thick; the coating thickness positively affects the mechanical properties of the weld.

This type of coating forms a fast-freezing slag that completely covers the weld beam, it is rather thick and brownish black.

The properties of the slag depend on the amount and type of the substances that make up the coating.


Welding at a glance

- Welding is the joining of two or more materials through heat or heat and pressure, forming a bond between two pieces of metal;

- Production of welding consumables (excluding fluxes) in Europe and Turkey: ~ 600m tpa;

- Main producing countries of welding consumables in Europe: Germany, Italy, France, Hungary, Poland, Sweden, the Netherlands;

- Main consuming countries: Germany, Italy, France, Romania, Croatia, UK, the Netherlands;

¥ Leading producing European companies for welding consumables: Bšhler Welding, ESAB, Lincoln Europe, Air Liquide, Kobelco, ITW Welding Products Group (Elga), Gedik Welding (Turkey)



Source: European Welding Association (EAW)