The titanium dioxide markets appear to have taken a breather
so far in the second half of 2018, after a relentless trek
upward since the start of 2017.
Fastmarkets recently assessed the price of high-quality
titanium dioxide pigment in China at $2,600-3,000 per tonne,
down from a high of $2,800-3,100 per tonne that persisted into
June 2018, and the first sustained decline in titanium dioxide
prices for more than two years.
Now, buyers and sellers talk about a balanced market, and
even a chance to build up stocks over the rest of the year. But
looming tightness in the feedstock market is a cloud on the
horizon for buyers.
Whiter than white
Titanium dioxide is a unique pigment.
No other affordable product can match it for whiteness,
brightness, opacity and non-toxicity.
Pure titanium dioxide pigment is produced from ores. These
ores contain naturally occurring titanium dioxide, mixed with
iron and other impurities that must be removed, if the pigment
is going to offer the desirable white qualities.
According to data from the United States Geological Survey,
about 95% of titanium is manufactured and sold as oxide
pigment, compared with pure metal.
Most titanium dioxide ores are mined from heavy mineral sand
deposits. These consist of layers of sand deposited by
hydrological or tidal action, all of a similar weight.
The most commonly mined ore by weight is ilmenite. This
product is usually between 48% and 52% titanium dioxide,
usually with high levels of iron alongside. Mineral sand
deposits usually also contain rutile, a higher grade of
titanium dioxide mineral with 90% or higher purity.
A number of heavy non-titanium minerals can also be found in
mineral sands, most commonly zircon. The ore monazite, which
contains rare earth metals and thorium, is sometimes also found
Sulfate versus chloride
There are two main types of titanium dioxide production. The
sulfate route generally results in more pollution, and produces
a lower-grade end-product, but is more suitable for use with
lower grade feedstocks. The chloride route uses more modern
technology that is preferable for environmental reasons and for
better end quality, but demands higher grade feedstock.
These rules of thumb conceal a great deal of difference
between proprietary technologies. For example, Chemours
produces chloride TiO2 from ilmenite, while some sulfate
producers offer a high-grade product, or prefer to use
higher-grade feedstock because it increases their output.
In addition, there are a number of options to upgrade
feedstocks, either by converting ilmenite to high-purity
synthetic rutile, or by smelting it in a furnace into titanium
|US President Donald Trump’s tariffs on
all steel and
aluminium imports into the US has worried Chinese
The titanium dioxide markets began a long-term uptrend in
early 2017, thanks to a range of supporting factors.
Demand for titanium dioxide is closely tied to economic
activity. The pigment is used in a wide range of manufactured
goods, as well as a filler in plastics. As manufacturing
efforts ramp up, demand for the pigment increases.
Another key market is architectural coatings. Construction
of new buildings means more demand for paint to cover them, and
having sufficient income encourages property owners to
renovate, further boosting the demand for paint.
Such forms of spending had been slowed down since the global
financial crisis in 2008, but deferred demand had started to
return on a global scale by late 2016.
But 2017 brought some sharp limitations to supply,
specifically from China. China has carved out a position as the
largest producer of titanium dioxide, but tightening
environmental controls have imposed restrictions on the
producers in the East Asian country.
In particular, production by the more polluting sulfate
route was affected by enhanced environmental spot-checks. But
the exact scale of the resulting capacity closures has been
hard to assess, because they were concentrated among small
legacy producers which produced low-grade pigment with outdated
and polluting technology.
Balance in the market comes from a shift in the situation in
China. Although environmental restrictions remain firmly in
place, a large amount of the outdated legacy capacity has now
been closed. This leaves the industry as a whole more resistant
to the seasonal shutdowns that usually were imposed in the
winter months, when higher power consumption increases air
The merger in 2016 of Sichuan Lomon and Henan Billions set
the stage for a massive rationalization of the industry. With
700,000 tonnes per year of capacity, and a huge expansion
program planned for the years ahead, Lomon Billions (as it is
now known) is the world’s fourth-largest titanium
dioxide producer. A cleaner, more rationalized Chinese industry
is better placed to provide consistent supply, and TiO2
inventories which were stripped out during late 2017 and early
in 2018 are reported to be building up again.
At the same time, local Chinese titanium dioxide demand has
been reported as falling below expectations. Market sources
have given a number of reasons for this. One Chinese exporter
suggested that it was simply down to cyclical factors, after a
period of fairly strong demand in 2017. But a US trader told
Fastmarkets that China’s manufacturing and
construction sectors were being affected by worries about a
developing trade war between their country and the United
The first shots of this war were fired in March 2018, when
US President Donald Trump announced tariffs on all steel and
aluminium imports into the US. Relations cooled further when
China introduced swingeing retaliatory tariffs on imports of US
The current situation sees the US imposing a 25% tariff on a
range of industrial goods, which amounted to around $50
billion-worth of imports last year.
A further tariff list targets the importing of chemicals and
industrial minerals, at a rate of 10%, which could rise to 25%
if an agreement is not reached.
And the White House has warned of further tariffs if an
agreement with China is not reached, saying that these would
bring almost all Chinese goods into the tariff regime. The
resulting trade tensions are damaging manufacturing sentiment
The official manufacturing purchasing managers’
index (PMI) in China, a measure of industrial confidence, fell
to 50.8 in September 2018, down from 51.3 in the previous
month. This was the weakest result since February 2018, and
before that since mid-2016.
All of this means that there is less interest among local
buyers of titanium dioxide, and higher volumes for export.
|A worker at Tronox’s Hamilton plant. If
acquires Saudi Arabia’s Cristal, it would be
inverted take over.
Chinese material heads to Europe
The US tariffs also have a more direct effect on the
titanium dioxide markets, because pigments are among the
materials that are being taxed at the 10% level. Market sources
have reported that this has not had an immediate sharp effect
on prices, due to the fact that the EU was already buying
mostly high-grade titanium dioxide, with US imports only
According to EU data, between January and July 2018, the
trading bloc imported 87,822 tonnes of titanium dioxide under
HS code 32061100. This was more than the total import volume in
2017 of 86,998 tonnes, and showed the fastest growth in imports
on record, about 2.7 times faster than the pace seen in
This shift in dynamics has been driven by a number of
factors. One has been limited European production. A fire at
Venator’s plant in Pori, Finland, early in 2017
knocked out a large amount of capacity. After a series of
delays to the rebuilding of the facility, Venator announced
that it would close the plant in September 2018.
Imports from Eastern Europe, meanwhile, have been hit by the
tensions between Russia and Ukraine. Ukraine’s
largest titanium dioxide producer was based in the Crimean
peninsula, while its ilmenite mining business was based on the
mainland. The company has struggled with sanctions and
embargoes along its supply chains ever since
Russia’s annexation of Crimea in 2014.
European titanium dioxide traders have also reported a shift
in attitudes to China-origin pigment. For years, the country
had the reputation of producing only low-grade material,
unsuited to all but commodity buyers. But after being forced to
take on Chinese material when markets grew tight in 2017,
buyers have become increasingly comfortable with the service
from the suppliers, particularly those which have been most
successful at marketing their material into Europe.
|The merger in 2016 of Sichuan Lomon and Henan
Billions set the stage
for a massive rationalization of the industry.
Where will prices head in the year to come? There are now
two sharply diverging views of the market.
Those further down the supply chain tend to be bearish on
prices. With global demand muted, and supplies heavy, there
seems to be little prospect for a reversal in the markets
through the northern hemisphere winter.
Titanium dioxide demand usually peaks around the second
quarter of the year, when pigment companies start to buy in
anticipation of the northern hemisphere "coating season." Dry
summer weather allows for the building of houses, and the
painting of industrial and marine structures, pushing up the
demand for coatings. In winter, on the other hand, both buying
and selling slow down or halt while the market takes on a more
This combination of long-term stability and cyclical decline
is expected to limit the possibility for price rises well into
But a contrary view is more common in the feedstock end of
the market. The fact remains that titanium capacity and demand
are on a long-term uptrend. And increasingly the upgrading of
facilities and the trend toward chloride over sulfate
production is driving demand for higher-grade feedstocks.
Another major industry shakeup will come if Tronox manages
to take over the Saudi Arabia-owned producer Cristal.
The deal would be an inverted one, in which the smaller
Tronox takes over its larger rival. Cristal is currently owned
by state investment company Tasnee.
The deal has been cleared in all markets except the US, but
there is stiff opposition from regulators there. The sticking
point is that Cristal and Tronox between them control a large
slice of chloride-route titanium dioxide production in the US.
For buyers which need this high-grade pigment, the deal could
constitute a significant concentration of supply.
Tronox has offered to divest some of its chloride-route
capacity to rival Venator, which has already snapped up some of
Tronox’s technology in Europe, in order to lessen
the latter’s control of the paper-laminate market
in the region.
But globally the effect of the deal may be felt more
intensely in the feedstock market. Tronox is a highly
integrated producer, with a large amount of feedstock
production capacity, and has previously sold its excess
The purchase of Cristal would bring a large amount of extra
TiO2 production capacity into the company, however, thus
increasing its internal consumption of feedstock.
Tronox announced in July 2018 that it would cease external
sales of rutile and leucoxene by the end of this year, which
will further limit the supply of those materials available for
other buyers, while mineral sand miner Sibelco sees its sales
slow down as a consequence of stock depletion.
One important factor resulting from the squeeze on
high-grade feedstock is the potential to cap output. Although
many pigment producers have a high amount of flexibility in the
feedstock they buy, the fact remains that the lower the purity
of the ore going in, the lower the total volume of pigment that
can be produced at the other end. This means that, even for
producers which can continue to operate, they may struggle to
produce at the same rate.
|Titanium slag being tapped from a smelter
using an oxygen lance.
Richards Bay Minerals
High-grade feedstock markets have also been hit by a series
of production problems for slag producers in late 2017 and in
Rio Tinto’s Richards Bay Minerals business in
South Africa was forced to declare force majeure to
TiO2 customers in 2017 after a failure at its ilmenite roaster,
which prepares the ore for smelting.
Then the company was caught up in violent protests by
workers at one of its contractor companies, which resulted in
the death of a security guard. These protests closed an access
road to the Richards Bay site, and damaged equipment across the
site. The situation was reported as resolved in July, after an
urgent request for action by Rio Tinto management to local
But further technical trouble led to furnace failures for
Rio Tinto’s other titanium slag business, based in
Quebec, Canada. And similar problems hit output from rival
TiZir, based in Norway, Europe’s only titanium
Sporadic production outages are an expected part of heavy
industry, but this sequence of delays and capacity reductions
could not have come at a worse time for some producers.
In particular, attention is now turning to those facilities
which are by necessity dependent on natural rutile. With
production of this material on a long term downtrend due to ore
depletion across the industry, and the additional consumption
by buyers caught out by a lack of slag availability, there is
widespread concern about how at least one European facility can
keep running in the long term.
Concentration of titanium dioxide production is
rationalizing the industry, but also concentrating it. The
coming feedstock squeeze remains a key element of
But for the moment, titanium dioxide buyers are expecting a
quiet end to the year, at least by the standards of this
historically cyclical market.