Tight supply of high-grade titanium feedstock to impede pigment production in Europe

By Cameron Perks
Published: Thursday, 19 July 2018

European pigment producers must contend with high-grade titanium feedstock supply tightness following declines in output of rutile and titanium slag from key producing nations.

Pigment producers in Europe are facing a shortage of high-grade titanium feedstocks rutile and titanium slag following a decline in supply of both materials from Australia, Canada and South Africa.

The tightened supply of rutile largely reflects a decrease in output from Iluka’s closed Murray Basin operation, while availability, current prices and contracts are already being affected by the announcement from Tronox that it will remove around 20,000 tonnes of rutile and leucoxene from the market by end of this year.

As well, the imminent closure of Sibelco’s Stradbroke Island mine will remove up to 35,000 tonnes of rutile from the market by 2020.

This supply tightness recently triggered a rise in rutile prices for the third quarter of 2018.

Industrial Minerals’ assessment for rutile concentrate min 95% TiO2 bulk cif China rose to $950-1,100 per tonne on July 5 from $850-950 per tonne a week earlier, while the assessment for the price of rutile concentrate min 95% TiO2 large volumes for pigment fob Australia increased to $930-1,020 per tonne on July 5 from $800-900 per tonne in the prior week.

In times of tight rutile availability, welding customers usually pay a premium for certain types of material due to a general preference for natural rutile and the inability of many customers to use synthetic material. This usually results in a further reduction in the availability of natural rutile for pigment customers.

Although many chloride pigment producers are able to switch between slag and synthetic rutile, some could struggle to source sufficient feedstock given the low availability of slag currently.

Of the global pigment producers, Chemours has the greatest flexibility in switching feedstocks but not all pigment producers have the same ability.

Many market participants have tipped Kronos, a major global pigment producer that purchased an estimated 38% of globally imported rutile last year, to feel the deepest effects of dwindling availability of high-grade titanium feedstock.

One market source suggested that Kronos’ Belgium-based plant requires a predominantly rutile feedstock and will therefore be forced to pay a higher price to its suppliers.

The company may already be feeling the effects of the pigment feedstock tightness.

One trader told Industrial Minerals that Kronos’ lead times for chloride route production are extending - reaching around eight weeks in Europe compared with four or five weeks for its rivals.

While it is unclear if this is connected to the pigment producer’s feedstock supply, a second market source "wouldn’t be surprised" if that were the case, he said.

Kronos could not be reached for comment at the time of writing.

Pigment producers that can switch to chloride titanium slag or those who predominantly rely on chloride titanium slag will struggle more to source this material because of major disruptions at Rio Tinto’s South African Richards Bay Minerals (RBM) operation.

Around 120,000-150,000 tonnes of chloride slag have been removed from the market because of these disruptions, one market participant estimated, with an unknown volume of sulfate slag removed from the market due to operational interruptions to operations at Rio Tinto’s plant in Sorel-Tracy in the Canadian province of Quebec.

Rio Tinto has cut its titanium dioxide production forecast for 2018 to 1.1-1.2 million tonnes from its previous guidance of 1.1-1.3 million tonnes in April and 1.2-1.4 million tonnes in February, it said earlier this week.

But while many fear a complete shutdown of Rio Tinto’s RBM operation, most market participants agree that it is not in the local government’s interest to do so and would therefore make every effort to keep the facility open.

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