TiO2: A year in review

By Siobhan Lismore-Scott
Published: Thursday, 28 December 2017

A bleak outlook at the start of the year turns positive as supply squeeze meets robust demand.

The year started with a bleak outlook after Iluka Resources told investors during an earnings conference call that "we’ve entered 2017 with less volume contracted" after foreseeing price increases in 2016.

Matthew Blackwell, head of mineral sands marketing, warned that "sales in 2017 compared with 2016 will be lower, and lower again in 2018". 

Mineral sands miner Base Resources said it expected further improvements in ilmenite prices throughout 2017 due to an improving TiO2 market. It also expected disruption to ilmenite exports from India and lower ilmenite production in China’s Sichuan province due to environmental inspections to buoy prices.

"Base Resources’ expectation is for rutile prices to start trending upwards during 2017," the company said.

While ilmenite prices subsequently tracked higher, they fell back in July although they remained above 2016 levels.

Supply disruption

Environmental legislation in China hit several small producers, causing supply disruptions, and there was also a ban on heavy mineral sand mining in Tamil Nadu, India.

Elsewhere, the closure of Sibelco’s Stradbroke Island became a concern, especially for welding producers, which rely on rutile from the mine. The operation’s shut down will take around 35,000 tonnes of rutile from the market by 2020.

TiO 2 company price hikes

Cristal, Huntsman and The Chemours Co all raised prices over the year by $225-250 per tonne.

Away from the western producers, Chinese TiO2 producers also raised their prices over the year.

Ishihara Sangyo Kaisha Ltd, one of Asia’s largest TiO2 producers, announced in March that it would raise its TiO2 price by $150 per tonne from April 1.

Lomon Billions announced a TiO2 price rise at the start of the year, citing the rapid price increase of source materials and logistics costs. The company subsequently raised prices a further six times. 

Other companies quickly followed suit.

Luoyang Yuxing Chemical Co and Luohe City Xingmao Titanium Industry Co raised prices 700 yuan tonne for chloride route rutile type TiO2 for the domestic market and $100 per tonne for the export market.

Yunnan Metallurgical Xinli Titanium Industry Co raised its chloride route TiO2 prices by 1,000 yuan per tonne for the domestic market and $150 per tonne for the export market.  

CNNC Huayuan Titanium Dioxide Co, Anhui Annada Titanium Industry Co, Guangxi Shunfeng Titanium Industry Co, DoGuide Group, Fangyuan Titanium Industry Co, Dawn Group, Guangdong Huiyun Titanium Industry Corp, Yunnan Xinli Nonferrous Metals Co, Panzhihua Iron & Steel Group Titanium Industry Co, Lomon Billions and Panzhihua Dongfang Titanium Industry Co raised prices by 500-1,000 yuan per tonne in March.

Lomon Billions suggested the market would continue to rise, citing increased demand from developing countries such as India, Brazil and South Africa due to rapid development of infrastructure as well as continued demand growth from China.

Company movements

If it was an interesting year in terms of pricing, it was also a year when many companies made bold moves either to consolidate or earn a greater market share of the TiO2 business. 

Cristal deal

In February, US-based TiO2 producer Tronox Ltd signed an agreement to buy Cristal’s TiO2 business for $1.67 billion.

Tronox sold its Alkali business, which includes soda ash production, to Genesis Energy in September as part of the deal.

The combined company will operate 11 TiO2 pigment plants in eight countries, with total capacity of 1.3 million tpy, as well as titanium feedstock operations in three countries with capacity of 1.5 million tpy. Tronox described the future operation as "the world’s largest and most highly integrated TiO2 pigment producer".

The acquisition, unanimously approved by the boards of both Tronox and Cristal, is subject to approval by Tronox shareholders as well as regulatory approvals. The transaction is expected to close before the second quarter 
of 2018.

Enter Venator 

In February, Huntsman Corp said it would spin off its pigments and additives business into a separate company, Venator Materials Corp.

Venator comprises two main business groups: titanium dioxide, which will produce TiO2 pigments; and performance additives, which includes iron oxide, barium sulphate, complex inorganic coloured pigments, zinc sulphide, metal carboxylate driers, timber treatment chemicals and water treatment chemicals.

In May, Huntsman and Clariant announced a merger by the end of 2017, combining two speciality chemical companies, with interests in a range of industries, including pigments such as titanium dioxide, as well as bentonite, into a new company called HuntsmanClariant.

The new company was expected to deliver sales of around $13.2 billion and adjusted Ebitda of $2.3 billion, valuing the company at around $20 billion.

But the deal was scuppered by activist investors who acquired a sizable stake in Clariant, suggesting that the best value for shareholders was away from the Huntsman deal.

Lomon Billions

Lomon Billions acquired ilmenite producer Panzhihua Ruierxin Co for 190 million yuan to secure raw material supply.

AkzoNobel and PPG Industries Inc

Dutch paints and coatings manufacturer AkzoNobel rejected unsolicited, non-binding and conditional takeover offers from US paints giant PPG Industries Inc in March.

PPG made three bids for the Dutch company. The last, made in late April, valued the European paint company at €26.9 billion (£22.8 billion).

Akzo rejected it, saying it undervalued the company, and accused PPG of a "lack of cultural understanding of the brand."

Akzo then put forward an alternative plan to the merger, promising to give shareholders €1.6 billion. It also said it would spin off its chemicals subsidiary, which represents a third of sales and profits.

This was to placate shareholders, namely Elliot Advisors, the largest shareholder, which repeatedly tried to unseat Akzo chairman Antony Burgmans.

Investors, led by Elliot, were angered by the rejection of a takeover bid from PPG early in 2017. Akzo at the time cited the forecast €100m of earnings among reasons to turn down the offer and suggested its spin-off plan offered better value.

A truce was agreed in August - the company moved forward with plans to spin out its speciality chemicals segment from its coatings business.

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