Titanium dioxide (TiO2) has undergone a turbulent
few decades, with the pigment mineral experiencing a
particularly rocky road in the last few years. Producers have
struggled to balance output in response to low demand, and the
resultant consolidation in the industry – which is by
no means over – has created a changed and uncertain
Raw material suppliers have borne the brunt of this
uncertainty, as inventory all along the value chain has built
up. When paint producers have experienced increased demand, the
benefits have failed to trickle down. Market participants have,
on more than one occasion, predicted a recovery in the sector,
which has, until now, failed to materialise.
But those producers that are still standing are cautiously
optimistic that 2016 marks the turnaround the industry has been
waiting for. Characterised by aggressive pushes for price
increases by both Chinese and western producers, industry
sources are reporting that higher prices are finally sticking
and are being duly reflected in TiO2 feedstock
selling values such as ilmenite and rutile.
Yet the path to growth is far from linear. Demand for
TiO2 is expected to increase. However, as global
focus zeroes in on environmentally friendly practices,
producers along the entire supply chain will need to navigate
through sustainability issues in addition to other challenges
as consumers continue to question the health and safety risks
associated with the pigment.
|World pigment capacity in tonnes, 7.2m in
The US Geological Survey (USGS) estimates 2015
TiO2 global capacity at 7.2m tonnes, with analyst
figures pegging global average plant utilisation rate at
around a healthy 88% (though this figure is lower for China).
Lower demand for the pigment mineral, global overcapacity and
continuing environmental pressures particularly in China mean
that the supply landscape for TiO2 has continued
to change in 2016.
China remains the largest producer of TiO2, with
capacity estimated at 3m tonnes according to the USGS, followed
by the US at 1.09m tonnes. US domestic production of
TiO2 (sponge and pigment) fell 8% in 2015 to 1.16m
owing to the closure of a pigment plant in Delaware and the
closure of two production lines in Mississippi as producers
struggled to balance profitability and market demand.
An important distinction in output is the difference between
chloride route and sulphate route TiO2 capacity,
with global output currently led by sulphate route
technology. The difference in processing route determines the
feedstock used by a pigment manufacturer, and changes in
process technology trends will impact raw material demand for
various grades of rutile and ilmenite.
Feedstocks used for the sulphate process include lower grade
ilmenite and sulphate ore slag, while the chloride process
utilises rutile, synthetic rutile and chlorinadable
Following significant growth in TiO2 output in the
1990s, the chloride process overtook sulphate route output.
Since then, China’s growing role in the sector
resulted in another crossover point in 2011, as most of the
country’s growth has been accounted for by
sulphate route technology.
According to Reg Adams, managing director of research firm
Artikol, as China adopts more chloride-route technology in
preference to sulphate plants there will be another cross over
sometime in the next 10 years. Currently only four of
China’s 42 TiO2 producers have the
capacity to produce chloride route TiO2.
In contrast, only around 33% of North American production is
via sulphate-route output, European output is around 67%
sulphate-route and the majority of China’s
production is sulphate route according to figures from
Speaking at the TiO2 World Summit held in
Cleveland, US in October, Adams said: "That’s
going to change over the next 10 years, by 2026
China’s capacity will be around 3.5m tpa with
chloride route accounting for something like 33%."
However, not all event participants agreed with Adams and
his theory on the speed at which chloride route would once
again regain dominance, with Chemours’ global
customer leader, Peter O’Sullivan, questioning how
long it will be before China establishes a significant chloride
production base. He added that Chemours does not see the
pathway to chloride production as a rapid increase in the near
future, contrary to other industry players and analysts.
"For chloride capacity around the world to double in a short
timeframe – we just don’t believe that to
be a likely outcome. Perhaps not impossible but not likely," he
Reg Adams and Chemours’ Peter
O’Sullivan disagreed over the speed at which
chloride-route capacity would once again dominate pigment
capacity at the TiO2 World Summit held in
Cleveland in October.
The Chemours Co.
Spun off from parent company DuPont in 2015, Chemours
remains the biggest producer globally with a capacity of 1.3m
tonnes TiO2, which is 100% chloride route.
Chemours launched a new TiO2 line in September
2016 at the company’s Altamira plant in
Tamaulipas, Mexico. The new line uses Chemours’
chloride production process to manufacture TiO2
pigment, with a full capacity of 200,000 tpa expected to be
achieved over the next several years.
Production at Altamira adds to Chemours’
existing output in Mississppi, Tennessee and Taiwan. Production
will be balanced across the company’s facilities
depending on demand, as Altamira ramps up output. The new line
is anticipated to reduce overall costs of TiO2
manufacturing by at least $20m a year.
According to the company, Chemours has the lowest
sustainable TiO2 production cost globally owing to
the scale of its facility, proprietary process and the
flexibility of using a variety of ore feedstocks, allowing it
to process raw materials from lower grades such as ilmenites
containing 50% TiO2 up to higher grades such as
natural rutiles containing 90% TiO2 and above.
At the TiO2 World Summit in October,
O’Sullivan told delegates that scaling up at
Altamira was progressing as planned.
"We’re quickly advancing our capability there,
and I have to tell you, starting up a chloride line is not for
the faint of heart," O’Sullivan said. "It rarely
results in the type of quick migration to acceptable quality
that we’ve experienced, so we’re
grateful and proud of what we’ve done at
The company also addressed the issue of increasing capacity
in an already oversupplied market.
"The question we get asked all the time is, what are the
repercussions of bringing on a 200,000 tonne line in a market
that’s from some vantage points already
overserved," O’Sullivan sad. "Rest assured,
we’ve offset this with some decline in other
asset output. Just like we’ve always done, and I
suspect everyone else always does, we manage a global circuit
of capabilities designed to find the sweet spot between
customer needs and our needs. I don’t think
Cristal is the world’s second largest producer
of TiO2 following Chemours. The
company’s pigment output consists of seven
locations, with two producing TiO2 via the
sulphate route process.
The Thann plant in France was the first in the world to
produce TiO2 in 1922 and uses a sulphate-based
process. The company’s Brazilian plant in Bahia,
located around 20km from Salvador also produces TiO2
using the sulphate process. Cristal’s remaining
five plants utilise the chloride process for TiO2
The Paraiba mine in Northeastern Brazil supplies the company
with TiO2 feedstocks and comprises a floating
plant and dredge for the extraction of ilmenite, zirconite,
rutile and cyanite, in addition to four fixed production
The third largest producer with capacity of around 734,000
tonnes at the end of 2016, US-headquartered Huntsman Corp.
purchased Rockwood Holding Inc.’s pigment and
additives division for $4bn, but the following year the company
revealed it planned to implement site closures and reduce
headcount in its colour pigments division as part of its
restructuring programme. The majority of the cuts were made at
the newly-purchased production facilities from Rockwood.
The company has since continued with the streamlining of not
just its pigment division but also its other businesses,
progressing with a number of divestitures and closures.
In August 2015, Huntsman announced its intentions to spin
off the flailing pigment division, and despite some recent
recovery from "trough conditions", in July this year the
company confirmed a spin off – either on a plant by
plant basis or of the pigments business in its entirety
– is still on the cards. Most recently Huntsman
announced the planned closure of its smallest production plant,
the Umbogintwini facility in South Africa, expected to be taken
offline in Q4 2016. This will pull 25,000 tpa TiO2
offline, in addition to the company’s previously
announced plans to reduce capacity in Europe by 100,000
Henan Billions and Sichuan Lomon
Chinese producers Henan Billions Chemicals Co. and Sichuan
Lomon Titanium Industry Co. announced plans to merge in May
2015. While the tie-up has yet to be completed, Henan Billions
confirmed in late September that it had raised $1.34bn and that
the funds would be used to proceed the acquisition. The
acquisition will result in Henan Billions holding 99.99% of
shares in Sichuan Lomon, with the remaining 0.01% held by its
subsidiary Xintai. An integration between the two companies
would result in a leading Chinese producer and the fourth
largest TiO2 producer globally with a combined
capacity of 620,000 tpa.
A merger between Henan Billions and Sichuan is likely to
place pressure on China’s remaining producers in
order to remain competitive. Saturated by small-scale
producers, a new wave of M&A activity will facilitate the
development of China’s TiO2 industry.
Additional consolidation will help to weed out excess capacity,
allowing larger, fewer producers to allocate additional
resources towards much-needed R&D.
|Chinese TiO2 production in '000
|Chinese pigment output
is extremely fragmented, consisting of 42 producers, of
which only four have chloride-route
Source: G&J Resources
Changes in China
Much has been made of recent regulations in China to crack
down on more polluting industries, and, as such, the
TiO2 industry has come under fire.
However, government action to shut down more polluting plants
has also been balanced with policies to encourage investment
in chloride route TiO2 production technology,
which is anticipated to encourage additional capacity online
in the next five years.
Chloride output overtook sulphate production in the past for
a number of environmental reasons, according to Chemours, as
the European community made the expansion of sulphate route
output increasingly difficult owing to its higher environmental
implications. As China has expanded its relevancy and footprint
in TiO2, sulphate route technology once again became
the dominant pigment production route in 2011, with all of the
new sulphate capacity added online in the last 20 years
occurring in China.
"The wild card for many of us is, when will the environmental
regulation get some teeth and when do the repercussions for
that potential outcome happen, and what does that mean for
the sulphate producers in China?" Chemours’
While market players disagreed on the speed of which changes
in China might take place, according to George Chen, CEO of
G&J Resources Inc. – responsible for the sales and
marketing of products from Chinese producer Yunnan Xinli
– unofficial data indicates that there are already
five new chloride route plants in development.
One of only four chloride route producers in China, Xinli
also plans to invest an additional $500m by 2025 to increase
its existing product line of 60,000 tpa TiO2 by
adding five additional product lines to bring its total
capacity to 320,000 tpa TiO2.
"The Chinese government has had a lot of ideas to improve
the industry," Chen said. "In June 2015 the government issued
the new China Environment Protection Regulation, closing all
sulphate manufacturers unless they put money towards improving
An additional policy was introduced in April 2016, when the
Chinese government launched a Market Access Blacklist Draft,
prohibiting investment into sulphate grade plants as well as
encouraging investment into chloride grade plants, Chen
As a result, 200,000 tonnes of sulphate route TiO2
capacity came offline in 2015, with Chen predicting that an
additional 300,000 tonnes sulphate grade capacity will be
closed in 2016.
"We can expect that more and more sulphate grade plants will
disappear in China," he said.
With the drive to encourage chloride route investment,
sulphate route plants with capacity lower than 50,000 tpa will
be eliminated if they fail to make environmental changes, while
additional acquisitions – aside from the Henan
Billions and Sichuan Lomon merger – are expected.
"There are many unreleased movements in the industry," Chen
Chinese industry issues
Although the Chinese TiO2 industry was not
established until 1998, in 2001 China surpassed Japan to
become the second largest TiO2 producer globally
at 194,000 tpa. By 2009, with a production of 1.8m tpa
TiO2, China overtook the US and become the
world’s leading producer.
However, the industry is plagued by a number of issues
including environmental concerns, low capacity utilisation
rates, a scattered and fragmented industry, and a lack of
"China is the biggest TiO2 supplier but we still
have some difficulties," Chen said. "Compared to Western
countries, the manufacturing technology is still behind and the
number of manufacturers in China is big, but the individual
size of companies is small."
China currently has 42 TiO2 producers, with output
for some at only 5-10 tpa, while resources are scattered all
over China. Compared with a global capacity utilisation rate
currently at around 88%, Chinese capacity utilisation stands
at only around 70-75%.
|Not all TiO2 is created equal:
the quality of product varies depending on
application, with cosmetics, pharmaceuticals and
durable industrial coatings requiring superior pigment
design and performance.
Meanwhile, the world’s top six producers
accounted for 90% of output in 2014, according to
Chen’s figures, while China’s top six
producers accounted for only 46% of the country’s
"Also, less than 10% of production is chloride grade," Chen
said. "The structure of production also cannot meet domestic
demand. 300,000 tpa TiO2 was imported in 2015. The
existing chloride process is still experiencing production
issues as producers are very new."
However, Chen is confident that Chinese producers will be
able to take on the challenge as TiO2 prices in
China continue to rise, noting the increase in price from
$1,600/tonne in January to $2,000/tonne currently.
Commenting on predictions from Artikol’s Reg
Adams that chloride route capacity will reach 1.4m by 2025,
Chen said: "To reach that amount they will need lots of money
but I believe that it is possible in the next 5-10 years."
Artikol pegs world 2015 consumption of TiO2
pigments at 5.89m tonnes, with China leading demand at 1.948m
tonnes, followed by Europe with 1.17m tonnes consumption and
North America at 950,000 tonnes consumed in 2015.
Some applications for titanium products have seen growth such
as for titanium sponge in aviation, however the large
majority of TiO2 is still consumed by the paint
sector, which accounted for approximately 55% of global
consumption in 2015. The second largest end market is
plastics – the fastest growing segment –
accounting for 26% of TiO2 demand in the last
year. This is followed by the paper industry, which includes
décor and speciality grade paper. Other uses for
titanium dioxide include ceramics, coated fabrics and
textiles, floor coverings and roofing granules.
|World TiO2 pigment consumption by end use
These figures differ slightly between various geographies
and in China, paint and coatings account for around 59% of
consumption, while plastics account for a smaller 19%, and
paper for 11%.
|Chinese domestic pigment demand
Source: G&J Resources
"In the past few years, demand for TiO2 in plastic
and paper has increased faster than for paint and ink," Chen
said. "The demand for wallpaper increased by over 15% in 2015
and demand for TiO2 in Chinese wallpaper reached
over 220,000 tonnes in the same year."
Most types of paint contain some form of TiO2
although generally rutile grades are preferred, with chloride
grades used for high end applications. White paints have higher
TiO2 loadings although coloured paints consist of
TiO2 pigment in addition to another organic
Differentiating between high quality applications, Chemours
notes the differences between pigment standards needed for
various industries. According to O’Sullivan, the
company focuses on areas it sees growth – speciality
and high quality applications and the rapidly-growing
multipurpose applications, requiring high performance
"Without question, the quality of TiO2 products
differ considerably between different segments and
applications," O’Sullivan said during a company
presentation at the TiO2 World Summit.
"We’re confident and fully believe that
utilisation is higher at manufacturing facilities supplying
speciality and higher value pigment segments and its separation
remains in multipurpose segments based on pigment quality and
product design," he added.
The demonisation of TiO2
While the vast majority of TiO2 is used in paint,
plastic and paper production, around 1% of global supply is
consumed by the food and pharmaceutical industries. The
pigment is present in a range of consumer goods such as
sunscreen, toothpaste, powdered sugar and sweets.
However, consumers are growing increasingly concerned over
the ingredients that make up their food and cosmetic products,
and following public pressure, two major bakery chains
– Panera Bread and Dunkin’ Donuts
– announced decisions to drop TiO2 as an
ingredient from their baked goods in 2015.
TiO2 has been marked as safe for human consumption
and is regulated as a colour additive for food by the US Food
and Drug Administration (FDA) – which says that it
may be used to colour foods as long as it does not exceed 1%
by weight of the food.
In March last year, Dunkin’ Donuts announced
plans to remove TiO2 from its baked goods, where it
is used as a whitening agent in the company’s
powdered sugar doughnuts in the US. The move followed pressure
from non-profit organisation As You Sow, which argued that the
mineral may cause risks to human health and the
At the time, the FDA told IM that it was
not aware of any new information which would change its
determination of TiO2 for use in foods.
As You Sow has argued on numerous occasions that the FDA
regulations pertain only to TiO2 regulated at
non-nano size, which does not cover its use in the form the
pigment is often found in food. Dunkin’ Donuts has
refuted that its products fall under the nonmaterial umbrella,
and the voluntary removal of TiO2 as an ingredient
seems to be more a response to pressure rather than health
|Global TiO2 market split
|Source: Peter O’Sullivan,
Carcinogen 1B classification
In November last year, the French Agency for Food,
Environmental and Occupational Health and Safety (Anses) sent a
proposal to the European Chemicals Agency (ECHA) for the
classification of TiO2 as a category 1B carcinogen.
1A or B carcinogen classification could have significant
implications under REACH as these classified substances should
be restricted in consumer applications.
The public consultation of France’s proposal
ended on 15 July, with an overwhelming response received from
various producers, consumers and industry bodies.
"We are quite at the start of the process," an ECHA
spokesperson told IM. "The comments received during this
consultation have been published online and will be responded
to by the French authority. Subsequently, ECHA’s
Committee for Risk Assessment (RAC) will prepare the scientific
According to legislation, ECHA’s RAC has 18
months from time of receipt to adopt an opinion on any
classification and labelling proposal, the organisation said,
adding that it will adopt an opinion by the end of November
2017. The RAC scientific committee will consider all relevant
data, including that provided by third parties, and present its
independent scientific opinion to the European Commission (EC),
which will take a final decision.
However, a number of companies and associations have
criticised the move by the French authority, claiming that the
proposals are based on old and outdated studies that have been
reinterpreted, and that the loading levels used in the studies
Responding to these criticisms, ECHA told IM: "The opinion of
RAC will take into account the scientific data on
TiO2 available to RAC, including any
scientifically relevant data and comments from concerned
parties received in the public consultation."
Speaking to IM on the proposal, Jan van der
Meulen, managing director of CEPE, the European Confederation
of Paint, Printing Ink and Artists’ Colours
Industry, said the organisation does not believe there is
reason to classify TiO2 as a carcinogen.
"The argument is not really valid –
it’s based on studies which showed a heavy
overdose of TiO2. The question is if it was even
possible to have such large amounts. There is no new
information – this is the recategorisation of old
results. We have submitted comments but we have no idea how
this will develop further."
Van der Meulen said that, should the classification go
ahead, the effects on the TiO2 sector would be
dramatic, forcing the industry to use hazard classification
labels. This would prevent the pigment’s use in
all decorative paints, an issue owing to the lack of
substitution options for TiO2.
Van der Meulen also questioned the studies used by the French
authority – which looked at respirable
TiO2 in rats – noting that the levels of
TiO2 were so high that the study is irrelevant by
existing industry standards.
Tony Jones, global technology fellow for Huntsman Pigments,
agreed, adding that there has been no new information or
studies to prompt the move.
"There is absolutely no new information at all. The main
study used dates from 1986, and it wouldn’t be
allowed to be carried out today because that level of dust just
wouldn’t be approved," he told
Jones noted that while the occupational exposure limit for
TiO2 varies globally, the highest exposure limit
worldwide currently stands at 10mg/m3. In contrast,
the studies used by the French authority examine far greater
levels of exposure.
"The 10mg limit is 25 times lower than the levels that the
tests looked at and it’s only at these levels
that the effect was seen," he said.
Additionally, Jones suggested that the reason there has been
interest from industries outside of TiO2 is the
effect shown by the studies – that there is no
specific physical effect from TiO2 itself. If the
classification is applied, it would apply to all inert dusts,
not just TiO2.
A consequence of the type of labelling required should the
classification go through would also mean that
TiO2-containing substances will only be permitted
for handling by professionals.
"That means DIY paints would not be useable anymore. That
would be a pretty big impact and it would affect most
people," Jones told IM. "There could also be
enactment into other regulation such as in toys, plastics and
special dispensation for food and cosmetics. The studies have
shown that TiO2 is only potentially a carcinogen
by inhalation, but the way the legislation works will have an
automatic effect and it will be applied everywhere."
The legislation could also lead to other minerals containing
a small percentage of TiO2 being classified as
hazardous waste. Owing to its far-reaching implications, the
consultation received a huge response from companies worldwide
– a total of 514 responses, including reactions from
116 trade associations, were received.
Echoing concerns over the substitution of pigments, Jones
noted that the lack of replacement for TiO2 would
mean some colours would not be possible anymore, while
increasing levels of other minerals in paints would also be
problematic as many other possible options – such as
zinc oxide or calcium carbonate – are also classed as
However, Huntsman is not sitting idly by while the risk
assessment takes place, and the company is in the process of
carrying out meetings with member state authorities to raise
awareness at a high level on the potential socio-economic
impact of the legislation.
"This isn’t a case of sitting back and waiting
for two years. We are working with downstream users and
associations," Jones told IM. "We are
concentrating on building a scientific argument and will be
holding a scientific conference in Paris in
Prices turn a corner
In August, TiO2 pigment producer Tronox reported
the first sequential increase in TiO2 prices since
2012, predicting an additional sequential improvement in the
third quarter as announced price increases roll across its
"We believe that the second quarter marked the turn in
pigment pricing and we expect feedstock prices to follow within
a few quarters," the company’s CEO, Tom Casey,
said in its second quarter earnings statement.
A number of price increases were announced by major
TiO2 producers this year, while Chinese
manufacturers attempted to push through no less than 10 price
"Chinese producers themselves have announced no less than 10
separate price increases over the first eight months of 2016.
Obviously, as in the west, not all of those price increases
have been realised but it has certainly led to an uptick. This
has also been reflected in an increase in the US
TiO2 price. The low point was reached at the very
end of last year and there has been an uptick since then,"
Artikol’s Adams said.
"In the second quarter our average price – and
probably the price for other producers – was only a
faction above what it cost to operate, so change was needed to
remain sustainable," Chemours’
As such, Chemours took a number of pricing actions in 2016 to
ensure sustainable reinvestment levels, including global
price hikes in January and May and a price increase announced
at the start of September of $150/tonne in EMEA and Latin
One producer told IM that while price increases from China
had been announced, not all of them had stuck, and the company
had yet to be hugely impacted by the price push as it buys much
of its inventory in advance.
Meanwhile another US-based TiO2 buyer, which
sources pigment from both the US and China, said the company
had not yet experienced any price increases from Chinese
"But we have seen a significant price rise from North
American producers," the buyer added. "Once one pushes a price
increase through successfully other producers do so as
Chinese sources meanwhile have continued to present a united
front on price increases, distributor Shanghai Liantai
Industrial Co., told IM. The company
added: "The current price is still lower than last year, so
it may continue to increase this year."
Tianjin Bairuide Trading Co., another distributor, also
noted the real estate recovery in China, which often has a
delayed positive effect on TiO2 prices, and an
uptick could materialise on a six-month lag.
While one Chinese source recently pegged the upper range of
China’s export prices at $3,000/tonne, US buyers
have pegged the price at closer for a mid-point of $2,300 for
Q3, with one adding: "I don’t know anyone who
would be paying $3,000 for Chinese product." (pp50-56)
|Chinese domestic prices
|Source: China TiO2
According to Robert Koort, research analyst for chemicals at
Goldman Sachs, the company is currently "a big fan of
TiO2 companies", placing an optimistic buy rating on
both Huntsman and Chemours.
Although the current uptick in North American prices
followed a deep downcycle, the general consensus by analysts,
including Koort, is that TiO2 prices are on the rise
and increases are likely to continue globally.
With China developing additional chloride-route capacity,
its dominance is set to continue, particularly as the country
exported just over 200,000 tonnes of pigment in Q2 2016
– the highest quarter ever for Chinese pigments. While
much of this output made its way to non-western destinations,
Artikol’s Adams cautioned buyers from thinking
China’s exports had declined: "Just because
it’s not so visible in the North American and
European markets, China is making a really big push in those
And, increased activity and output ramp-up at
TiO2 pigment plants has finally resulted in positive
sentiment in the feedstock market. Prices in China for domestic
ilmenite have now seen a 50% increase since the lows seen in
Q1, while average ilmenite prices from elsewhere have also seen
price increases. Rutile prices have been slower to follow but
additional price increases have been predicted by suppliers as
they continue to discuss new contracts.
Year-on-year (y-o-y) demand for pigments grew by around 9%
in Q1 and 7% in Q2, but it remains to be seen how pigment
producers in the Northern Hemisphere will respond to the
seasonal downturn during the winter months.
Should producers keep momentum going and maintain higher
production levels in Q4 in anticipation of higher demand,
feedstock producers could also see an uptick in prices and