Titanium dioxide is the world’s most widely
used white pigment. Demand is strongly correlated to house
building, personal spending, manufacturing and the growth of
the middle class. This means the market has traditionally been
considered a proxy for the global economy. Prices peak when the
economy is growing rapidly and fall as growth cools
Up until now, large western producers have worked on a
system of contract sales. Customers were contracted to take a
specific volume of titanium dioxide, with price adjustments
communicated to customers on a quarterly basis.
But one company has set out to challenge the cyclical nature
of this market. Chemours is the world’s largest
titanium dioxide producer. It was spun out of DuPont in 2015
and inherited the chemical giant’s proprietary
pigment production technology.
DuPont is the company which in the 1940s developed the
chloride process for titanium dioxide, a production process
that is both less polluting and yields a higher grade of
Chloride process production is now the dominant method for
the large European and North American titanium dioxide
producers, and adopting the technology is also a priority for
Chinese producers, including the giant Lomon
But Chemours continues to hold a technological advantage in
this area because its proprietary process allows for the use of
lower-grade feedstocks than that used by other pigment
The two other largest titanium dioxide producers, Tronox and
Lomon Billions, have had little incentive to balance markets in
Tronox completed the acquisition of its larger rival Cristal in
May and is working to increase its market share.
Lomon Billions, which is the product of a merger between
Sichuan Lomon and Henan Billions in 2016, is on a mission to
increase its footprint globally as the only major Chinese
producer that can compete with the western giants on quality
So the task of balancing the titanium dioxide market has
fallen entirely on the shoulders of Chemours.
Customers who are not willing to enter into these long-term
supply agreements can instead buy titanium dioxide through
Chemours’ online portal. This system involves the
customer requesting a specific volume and delivery date. They
are then given a "take it or leave it" offer through the online
portal, with the system explicitly designed to avoid protracted
Part of this strategy involves a greater degree of
production flexibility. Buyers will contract to take a certain
proportion of their total consumption from Chemours, meaning if
end use falls the contracted volume falls.
This means that Chemours will see its volumes sold rise and
fall, even as it hopes price will remain more stable.
This effect is already apparent in the company results. On
November 4, Chemours’ titanium segment reported
net sales of $614 million in July-September, compared with $791
million in the same prior-year quarter.
This drop in sales revenue was down to lower volumes, while
the price remained stable, the company said.
Chemours management hopes this effort to draw down on stocks
will support prices and demand in the future.
Speaking to investors on November 4, Chemours president and
chief executive Mark Vergano said, "We probably have seen one
of the largest destocking events in the history of this
"I think the inventory levels are at significantly low
levels across the board, across all our customer base and
downstream from them."
Chemours does not publish production figures, but market
sources agree that a huge production cut has taken place, with
around 200,000 tonnes of production cut in the first half of
The total amount of production cut in 2019 may be as much as
300,000 tonnes, market sources say. This would represent about
3% of the total global market, and a much higher proportion of
the chloride grade market.
Over the same period, prices have been extremely stable.
Fastmarkets assessed the price of
titanium dioxide pigment, high quality, bulk volume, cfr
Asia at $2,200-2,550 per tonne on December 12 compared with
2,300-2,600 a year earlier. The price has hovered between
$2,200-2,600 per tonne in the year to December 12.
Other producers have benefited from this stability. But the
question remains as to how long Chemours can continue to
sacrifice volume for price stability. The
company’s share price has fallen to $17.32 as of
December 13, compared with $29.32 at the start of the year, and
highs of over $40 touched in March and April.
In 2020, the key question for titanium dioxide markets will
be whether Chemours’ price stabilization program
can continue to balance global production, and if one of the
most cyclical markets can really be tamed.