2015 began with titanium dioxide (TiO2) producers
pointing to signs of recovery in end markets, however the year
was characterised by existing producers shedding their pigment
divisions or cutting back manufacturing. Others, particularly
in Asia, ramped up production and new sources of supply came
online, ultimately keeping demand for feedstocks (ilmenite,
rutile and leucoxene) depressed.
A number of major TiO2 and feedstock producers
announced capacity cutbacks and staff reductions during 2015,
as weak demand failed to justify maintaining higher output.
Ireland-based miner Kenmare Resources Plc said in February
that compulsory redundancies totalling around 15-20% of the
workforce would be necessary at the company’s Moma
heavy mineral sands (HMS) mine in northern Mozambique.
US-headquartered TiO2 producer Huntsman Corp.
meanwhile announced its intention to cut its European
TiO2 capacity by 100,000 tpa, owing to continued
Producer Cristal Global axed around 70 jobs at its Grimsby
plant in the UK as its manufacturing cost position was deemed
unsustainable and, in April, Anglo-Australian miner Rio Tinto
said it had cut its TiO2 output by 17% to 322,000
tonnes in the first quarter of 2015 in response to soft market
After a long-running battle with investors, US chemicals
company DuPont finally spun-off its TiO2 and
fluorochemicals business into The Chemours Co. in mid-2015.
Chemours proceeded to announce capacity cutbacks and layoffs,
stating that it was focusing on its fluorochemicals
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".
Despite the ructions in the downstream market, a number of
new feedstock businesses came online over the course of the
year. Mineral Deposits Ltd continued to ramp up mineral sands
output from its Grand Cote project in Senegal and Base
Resources Ltd expanded supply from its Kenyan Kwale
In December, ASX-listed Iluka Resources Ltd terminated
takeover talks with Kenmare following an indication by the
Dublin-headquartered miner that its largest shareholder would
not accept Iluka’s most recent non-binding
Demand for TiO2 from end users softened
inexorably over the year, pulling prices down and creating a
tough market for raw material suppliers as inventories in the
sector remained high.
By mid-2015, large producers such as Iluka noted indications
of recovery in demand for high grade TiO2 feedstocks
and other supply side operators voiced confidence in the
recovery of the titanium pigments market, provided large
suppliers exerted supply discipline. Demand in the US continued
to strengthen, with unemployment levels dropping as
construction and industrial activity improved.
However, market commentators expressed concern about the
impact additional production might have in an industry where
the majority of titanium pigment production in Europe and China
was running below capacity.
Although inventories went down throughout the year,
consumption did not pick up enough to lift the industry, while
lower production from Sierra Leone in the wake of the Ebola
crisis also failed to buoy feedstock prices.
Prices reached their highest point in over a decade in 2011
and 2012, but paint, coatings and plastic customers –
accounting for 80% of end use demand – have since
"learned to do more with less" by reformulating, substituting
and downgrading on quality. Chloride-route TiO2 has
been worst hit, with substitution for sulphate-route
TiO2 becoming popular.
Prices for ilmenite, rutile and TiO2 started 2015
on a low, having slid unremittingly over the preceeding 12
months. Market participants predicted that a recovery was
unlikely to occur before 2016.
In April, IM received reports that Chinese
TiO2 producers were pushing to raise prices for the
pigment, however with non-Chinese producers offering heavily
discounted cargoes of chlorite-route TiO2 to buyers
in Asia-Pacific, these efforts did not translate into price
increases for mineral sand suppliers.
In China, rutile TiO2 prices rose by 4.8% between
March and the end of May and anatase TiO2 prices
increased 6% over the same period. However, by the middle of
the year, it became apparent that these prices were
unsustainable in the long term as the slowdown in
China’s real estate market continued to hinder the
In the third quarter of 2015, market reports from Asia
suggested that Q3 contract discussions for TiO2
supply were $50-200/tonne lower than prices offered in Q2.
Globally, oversupply in TiO2 continued to weaken
prices with no signs of bottoming out, while producers reported
lower consumption levels.
By November, prices for TiO2 in China had
reportedly fallen by around $400/tonne since their May-to-June
2015 peak, as the industry continued to suffer from
overcapacity and shrinking export demand. Slow progress in
upgrading manufacturing facilities to more efficient
chloride-route production technology, which is less
environmentally damaging and produces higher quality
TiO2 than the traditional sulphate-route process
more widely used in China, also added pressure to margins.
Towards the end of the year, prices for rutile
TiO2 in China fell further as slower buying activity
and growing inventories prompted producers to give in to lower
bids. Ilmenite and rutile prices tracked those of
TiO2 in 2015, although the pace of decline was
slower than in the previous year.
Locally-based sources said that overcapacity is continuing
to rise in China and that none of the manufacturers of the
pigment chemical are willing to shut off production as they vie
to secure market share.
The newly merged entity of China Henan Billions Chemicals
Co. and Sichuan Lomon Titanium Industry Co., has announced
plans to expand its output with 100,000 tpa additional chloride
route TiO2 capacity over the coming years.
Chemours also has plans to add 200,000 tpa chloride route
TiO2 to its capacity at Altamira in Mexico by the
middle of 2016, which is expected to reduce the
company’s capex and add between $20m and $70m to
annual adjusted earnings.
These additions and a number of new projects in the pipeline
will add further supply side pressure to the TiO2
market, pushing recovery back.