TZMI 2015: TiO2 industry needs to get balance right

By Albert Li
Published: Friday, 27 November 2015

Market facing “COBAL” list of challenges; closer cooperation with value chain needed.

The titanium dioxide (TiO2) industry could be facing another decade of weak trading conditions unless it rebalances the global supply chain for the pigment chemical, delegates at the TZMI 2015 Congress in Shanghai, China, heard in mid-November.

David Robb, CEO of Australian mineral sands miner, Iluka Resources Ltd, told the meeting that it was important to "get the balance right" in the TiO2 industry.

He summarised the industry as suffering from "COBAL" – namely, cash flow pressures, ownership uncertainties, balance sheet distress, asset quality concerns and leadership issues.

Robb said that Chinese pigment production had increased at a compound annual growth rate (CAGR) of around 20% between 1999 and 2014 and was expected to continue rising through 2015. However, the fact that China's TiO2 industry was dominated by the sulphate-route production process rather than the more efficient chloride-route had implications for the industry's competitiveness, he intimated.

Simon Turner, president of the pigments and additives division at US-based Huntsman Corp., the world's second largest TiO2 supplier after The Chemours Co., said that his company was confronting challenges facing the industry by internally restructuring its business model and capacity.

Huntsman currently has a capacity of around 800,000 tpa TiO2 spread across 10 facilities, accounting for 75% of its business. Its major markets include Europe, accounting for over half of Huntsman's activity in this area, followed by the US, Asia-Pacific and others.

Turner outlined self-help measures such as productivity improvement, including a 20% reduction in positions and capacity optimisation involving a 100,000 tpa cut in output from Huntsman's TiO2 plant in Calais, France. He also pointed to restructuring in the company's German operations, specifically at its Duisburg facility, which makes speciality TiO2 and performance additives, and at Uerdingen, where Huntsman runs a large scale TiO2 plant. This restructuring is leading to staff reductions at the plants of 360 and 160, respectively.

In October, Huntsman confirmed that it intended to exit the TiO2 business, either by spinning off the unit to shareholders or by pursuing "a more strategic move".

Industry participants acknowledged the tough conditions facing the industry as a whole and conceded that an upturn in the market is needed to revive the fortunes of TiO2 manufacturers. Global demand for TiO2 averaged a CAGR of 2% for the last ten years, Turner said, but noted that this average reflected expansion of less than 1% per annum for the last five years.

According to Bryan Snell, president of titanium technologies at Chemours, the industry should be thinking of recovery over the next decade. He pointed to recent media reports forecasting long-term gloom for the TiO2 sector and highlighted four key points he considered essential to ensuring the businesses' success to 2025.

"Manufacturing with integrity" was the first of these measures, Snell said, explaining that suppliers needed to set and adhere to the standards required to meet customer needs. Application development, which he described as a "priority" for Chemours, and co-creation, or closer partnerships, with the industry's value chain were also highlighted. Finally, he said that the sector needed to be flexible, enabling it to adapt positively to changes in trading conditions.

These targets need to be met, Snell said, in order to move the TiO2 industry from being just "good enough" to being "great".

Henan Billions' zircon products and capacities

Product

Capacity

ZOC (chloride zirconia)

25,000 tpa

Zr2O2 powder (including standard grade and stabilised zirconia)

3,000 tpa

Zirconia grinding media

500 tpa

Zirconia ceramics

300 tpa

Source: Henan Billions

Henan Billions outlines sales plans to 2018

Chinese TiO2 producer Henan Billions Chemicals Co. expects to sell around 350,000 tpa TiO2 between 2016 and 2018, including 100,000 tpa chloride-route TiO2, the company's chairman, Ruiqing Tan, told delegates at TZMI 2015.

Having merged with local rival Sichuan Lomon Titanium Industry Co. in June this year, Billions is among the largest TiO2 manufacturers in China and is one of only a few to have chloride-route process technology for making the pigment, in addition to sulphate-route production capacity.

The company's total sales volumes reached 260,000 tonnes TiO2 including exports, in 2014, a figure that the company expects to fall back to 250,000 in 2015, including 20,000 tpa chloride-route TiO2, as a result of the weak market.

Billions started producing chloride-route TiO2 in mid-October this year and is aiming to reach 100,000 tpa capacity. Its traditional sulphate-route production lines currently have a combined capacity of more than 200,000 tpa, according to Ruiqing.

The company has its own titanium slag plant with a capacity of 150,000 tpa, which it plans to expand to 300,000 tpa in the next one-to-two years to supply around two thirds of the feedstock material needed for its chloride-route process.

Ruiqing said that the company is planning to continually enlarge its production scale to 500,000 tpa TiO2 capacity, which will be equally divided between sulphate-route and chloride-route production.

Commenting on the merger with Lomon, Ruiqing said that even though the deal was inked in June, full integration of the two companies is ongoing and will take some time.

The company also produces around 28,900 tpa zircon products.