Ceramics: an urban landscape

By Kasia Patel
Published: Friday, 24 January 2014

Despite slow growth in traditional markets such as Europe, the ceramics industry is expected to be driven by urbanisation and a rebound in housing and construction in key markets such as China and the Middle East, creating opportunities for suppliers of ceramic minerals such as kaolin, zircon and feldspar.

The ceramics industry is seeing growth in developing countries where large increases in urban population and floor space mean that an increase in consumption of industrial minerals such as kaolin, zircon and feldspar are expected over the next decade.

According to figures from McKinsey Global Institute, urban areas are forecast to add an additional 85% of current total floor space, or an increase of more than 80,000km2, between 2010 and 2025. The majority of this growth is expected in developing economies such as China, India and Latin America.

Improvements in the construction sector and a booming hotel industry have also driven both consumption and production of ceramics up in the Middle East. These developing regions tend to favour tiles as a floor covering, for example in China around 75% of floor coverings are tiles, followed by Asia Pacific with just over 50%.

According to leading zircon producer Iluka, urbanisation is likely to remain a key driver of tile demand and ceramic minerals. Figures from Ceramic World Review indicate that the top 10 tile consuming regions in 2011 were countries that saw the largest growth in urban population.

In 2011, Brazil saw tile consumption go up by 45%, China by 50% and India by almost 60%. The largest changes in tile consumption were seen in Iran, Vietnam, Indonesia and Saudi Arabia; all experiencing increases of between 65 and 80%.

“Urbanisation is expected to be a key driver of tile, and hence, zircon demand. Higher urban living standards are linked to increased use of floor coverings in general, of which tiles are expected to form a large proportion,” Iluka said.

Other influencing factors for regional popularity of tiles include a cultural preference, for example the Middle East has historically favoured tile use, and choice of tiles for sanitary and cleaning purposes in warmer regions. The comparative cost and availability of tiles compared with other floor coverings has also been an influencing factor.

Traditionally, Europe has been the largest tile producing region with production taking place in Spain and Italy, although China has in recent years surpassed Europe, reflecting changes in consumption.

According to Roskill, China remains the largest sanitaryware producing country, accounting for 44% of production in 2012.

Of the 400m pieces produced, Europe accounted for 14% of production, South East Asia for 12%, North America for 10%, and the growing Middle East and North African region for 10%. South America accounted for 8% of global production in 2012.





Middle Eastern ceramic market

The Middle East represents a huge opportunity for ceramic mineral suppliers, particularly the whiteware ceramics industry, which includes tiles, sanitaryware and tableware, as the ceramics industry is growing in this market.

Iran is the leading tile producing country in the Middle East, with the Ceramic World Review estimating that of the 11.2bn m2 tiles produced globally in 2012, Iran accounted for 500m m2. This represents a 5.3% increase over 2011 production and put the country 4th in terms of global production.

The second largest producing country in 2012 in the Middle East was Turkey, the 9th largest producer worldwide, with 280m m2 produced, a 7.7% increase over 2011. This was followed by the UAE with 92m m2 and Saudi Arabia, which saw the biggest percentage increase year-on-year of 9%, with 85m m2 produced in 2012.

Despite the growth experienced by Saudi Arabia, the country is still the leading tile importer globally. Figures from Ceramic World Review, Roskill and the Saudi Ceramics Company, indicate that domestic production in Saudi Arabia represented just 45% of the tile market share in 2012. An additional 35% was imported from China, 13% from Spain and 7% from other countries.

According to Roskill, the rising consumption in the Middle East has been driven by an expanding hotel industry. Recovery in the construction sector has also led to an increase in consumption, with the Middle East and North Africa accounting for 10% of consumption globally. Saudi Arabia and Bahrain in particular have accounted for this trend as both countries focus on the building of affordable housing.

In response, regional tile production has increased over the past five years, resulting in the establishment of some of the world’s largest sanitaryware producers in the Middle East and North Africa, compared with just two small producers 20 years ago.

The region is also experiencing a move from stoneware to porcelain as the gap in middle ground prices has closed, though higher quality porcelain remains more expensive.





Kaolin and ceramic clays

Kaolin has a variety of properties such as natural whiteness, fine particle size, non-abrasiveness and chemical stability, which lends itself for use in a variety of ceramic applications such as tableware, sanitaryware, electrical porcelain, tiles, glazes, insulators and refractories.

In whiteware applications, kaolin helps with accurate control of moulding properties while adding fry and fired strength, as well as stability and a smooth surface finish. Its chemical inertness makes kaolin particularly suited as a porcelain electrical insulator.

Based on figures from Roskill’s 2013 kaolin report, global kaolin processing capacity for the last year was estimated at around 27m tonnes. In terms of regional production capacity, North America accounted for 40% of capacity, followed by Europe with 23% and Asia with 18%.

However, since the consolidation trend in the kaolin market, production from the US and UK has fallen from 2007 with Asia now the leading kaolin producer in the world. Chinese output for kaolin in 2011 is estimated at around 4m tonnes. A detailed market study identified 3m tonnes production, including both hydrous and calcined clay, of which the market split was dominated by ceramics (39%), paper (23%), paint (18%), plastics (5%) and others (15%).

USGS figures indicate that kaolin production from the US in 2012 amounted to 5.9m tonnes, Uzbekistan produced 5.5m tonnes, Germany 4.5m tonnes, Czech Republic 3.6m tonnes, Brazil 2.25m tonnes, with 8.3m tonnes produced by other countries including China.

Industry figures also reflect the growing tile industry in the Middle East, with kaolin production increasing from just over 1.5m tonnes in 2005, to around 2.4m tonnes in 2012. Iran led production with 1.5m tonnes, followed by Turkey and Jordan.





Kaolin consumption

Of the 27.5m tonnes of clay bought or sold in the US in 2012, end market uses varied between clay type. In ball clays, 38% were used for floor and wall tiles, 20% in sanitaryware and 42% for other uses, while 50% of kaolin produced was used in the paper industry and 50% other end uses.

Consumption of kaolin is led by Asia, accounting for 36% of demand, Europe for 30% and North America for 24% in 2012, according to Roskill figures. The largest proportion of kaolin production is consumed by the paper industry, though the mineral also plays a role in other filler applications such as paint and plastics.

However, although paper is expected to remain the primary end use for kaolin, its share of the market is declining as it is replaced by other fillers, particularly ground and precipitated calcium carbonate. Roskill forecasts that by 2017, 36% of kaolin produced will be used in paper production, down from 39% in 2012, while its use in ceramics is expected to increase from 29% to 31% by 2017.





China clay producers

Imerys SA is the market leader in the production of kaolin with KaMin, Thiele, Sibelco, AKW (Quartzwerke) and BASF being the others. The last independent UK kaolin producer disappeared in November 2012 as Imerys announced the acquisition of Goonvean’s kaolin activities in Cornwall. This gave the company access to additional high-quality reserves for porcelain and other ceramics and platy clays for paper filler and other markets.

Soon after the purchase was made, the acquisition was referred to the Competition Commission (CC) in the UK, which launched an investigation following concerns that the merger between the two companies could lead to a loss of competition and higher prices for some existing customers in the performance mineral applications market. Although a price cap was imposed for performance mineral customers, the CC found that there would not be a significant lessening of competition in the other product markets served by Imerys and Goonvean such as kaolin used in paper, sanitaryware, tableware, pharmaceuticals or by-products from the extraction process.

Zircon

Due to its opaque and hard wearing properties, zircon is used in the production of ceramic tiles. It adds attributes like opacity and whiteness, as well as water, chemical and abrasion resistance to products such as floor and wall tiles, sanitaryware and tableware.

Although the chemicals sector is the fastest growing end use for zircon, figures from TZMI indicate that the ceramics industry was the largest end market for the 1.4m tonnes zircon produced in 2011 (accounting for 55% of zircon use) increasing with an annual average growth rate of 5% thanks to drivers such as urbanisation and construction.

Zircon supply is relatively consolidated with three producers accounting for two thirds of the global production of zircon and high grade TiO2 products; Rio Tinto, Tronox and Iluka.

US domestic production of zirconium mineral concentrates increased from 2011-2012 with consumption remaining stable and additional supply coming online in 2013 due to a recovery in the economy and housing market in the second half of the year.

Demand recovery

Demand in zircon has been very much led by consumption with China accounting for 41% of demand, Europe for 25%, other Asia Pacific for 18%, and North America for 8% in 2011.

However, global production of zirconium concentrates in 2012, excluding the US, decreased compared with 2011 due to a slowdown in Chinese consumption. Lower demand was caused by a sluggish Chinese economy, which saw a drop in housing construction and therefore lower demand for ceramic tiles and sanitaryware.

According to Iluka, the industry has suffered from a prolonged period of poor upstream industry returns, which have been exacerbated by contracts. Volatility in demand and pricing has also led to minimal new investment and a limited pipeline of new supply options, as well as limited technology contributions.

Although zircon producers such as Iluka have confirmed that zircon demand overall recovered in 2013, Iluka added that, “recovery was uneven across geographical markets, end use sectors, as well q-o-q and sales remain below the levels seen in 2010 and 2011”.

In Europe some slow demand recovery for zircon is expected over the course of 2014. Chinese demand is also expected to improve as stockpiles are depleted, although India remains an important emerging market. Demand was negatively affected in December 2013 as 600 ceramics industrial units went on strike for 23 days.

Feldspar

Demand for feldspar, used in the ceramic and glass industries, is also closely linked with the construction and housing markets. The mineral’s alumina and alkali content makes it ideal for use as a fluxing agent in temperature reduction in quartz and clays and is the main component of the body composition in the ceramics tile sector. It is also used in glazes for ceramic products, enabling the dissolving of silica and the production of a durable end product.

USGS figures indicate that around 70% of feldspar production is used in glass production, with the remaining 30% used in ceramics and other applications.

Although demand for feldspar has been slow to rebound in regions such as Europe, demand is increasing in regions such as Asia and the Middle East along with recovery in the construction and housing markets. Roskill predicts that future demand will continue to be linked specifically to the housing sector, which is accelerating in Middle Eastern regions.

“The low rate tile consumption per capita in the Middle East compared to North America and Europe means that there is a large potential market given the size of the populations,” Iluka said.

According to figures from the USGS, feldspar production in the Middle East has been largely dominated by Turkey, which in 2009 produced around 4m tonnes, rising to just over 7m tonnes in 2012.

White fillers - talc and wollastonite

The largest global end market for talc is still paper, which accounts for 34% of the mineral’s end use. The second largest is the steadily growing polymer market, accounting for 23%, followed by ceramics (15%) and paint (12%).

In 2009, China was the number one producer of paper, coating, automobiles, household appliances and ceramics. These markets also appeal to the main application fields of talc and have great market potential.

Wollastonite is used primarily in plastics and rubber products, ceramics, metallurgical applications, paint and friction products.

The wollastonite industry has very few large international players being mostly centred on a small number of producers which dominate global trade. The leading producing countries are China, which produced around 300,000 tonnes in 2011, and India, where production increased slightly to 150,000 tonnes in 2011 from an estimated 145,000 tonnes in 2010. The US also remains an important producer, accounting for approximately 12% of world production.