Producers of titanium dioxide and its feedstocks had much to
fear from the Covid-19 pandemic. Demand for pigment has long
been particularly sensitive to fluctuations in the global
economy, so a worldwide pandemic threatened to weigh heavily on
prices. But the sector has proved resilient so far, aided by
factors including the prolonged stock drawdown of previous
years, an increased industry focus on tailoring production to
demand and steady demand from China and other
Titanium dioxide pigment
Global economic growth has traditionally been used as a
proxy for titanium dioxide demand. Construction, renovation
and manufacturing all drive demand for pigment, and these
activities all accelerate during times of rapid economic
growth and slow when the economy is stagnant or
This means the global effects of the Covid-19 pandemic
should be very bearish. But paintmakers, one of the major
buyers of titanium dioxide, have drawn a more sanguine
picture of 2020 demand.
Paintmaker PPG in August upgraded its revenues forecast
while reporting better-than-expected July sales, and upgraded
its expectations for the third quarter. "Led by improving
demand trends in our Chinese and European businesses across a
variety of coatings end-use markets, and in global industrial
production, our July sales increased sequentially from the
month of June and were down by 7% compared with the prior
year," PPG chief executive officer Michael McGarry said.
Producers also saw demand remaining more stable than had
been initially feared. Major titanium dioxide producer
Chemours in August reported that the sharpest drop seen in
demand was from Europe and Asia, with North American demand
sustained by a strong do-it-yourself home improvement sector.
But another producer, Venator, struck a cautious note for
demand in the near term, expecting a "gradual and uneven
recovery in demand."
One reason that the market has been resilient is that
stocks of the material were fairly low at the start of 2020,
meaning buyers are still forced to make hand-to-mouth
purchases. Titanium dioxide has long been a highly cyclical
market. When prices are on the rise, buyers rush to fill up
their inventories, and as demand eases they trim purchases
even faster, allowing their reserves to run down in
anticipation of lower prices. Producers are increasingly keen
to disrupt that trend by varying their output to reflect
changes in demand.
Chemours markets its material at stable prices in
long-term supply agreements. Customers who want to obtain
material outside these long-term agreements can make spot
purchases through an online portal which offers current
product prices based on supply and demand. Chemours reduced
production in 2019, effectively supporting the market by
The global titanium dioxide market is split into two main
production methods. Sulfate titanium dioxide can be produced
from a wide range of feedstocks for a lower price, but the
process has a greater potential for pollution and the
end-product is of lower quality. Chloride-route titanium
dioxide is more technologically challenging, and requires
higher-grade feedstock such as rutile, titanium slag, or
high-quality ilmenite, but the product is brighter. Chemours
produces high-quality titanium dioxide products through the
chloride route with the use of proprietary technology.
Bruce Griffin, founder of consultancy Farview Resources
and commercial director at mineral sand junior Sheffield
Resources (see box panel), noted that the market support
provided by supply constraint was most acute in the United
States. He said that an open question for him is whether
supply discipline in the US would have been as effective
without the tariff barrier there.
Titanium dioxide has been one of the materials caught up
in the trade war between the US and China. A series of
tit-for-tat tariffs means that exports of Chinese titanium
dioxide to the US now attracts an extra 25% tax. This has
supported a decoupling of the US market from the global
"The market has split into three," Griffin said. "China is
a price-driven market. All the quality producers export as
much as they can, and Europe, Asia and Latin America is where
those exports end up as the US market is closed to China
because of tariffs."
Fastmarkets assessed the price of titanium dioxide pigment,
chloride grade, ddp Europe at €2,900-3,000
($3,394-3,512) per tonne on September 24, compared with
$3,000-3,300 a tonne for titanium dioxide pigment, chloride
grade, ddp North America.
Griffin also ascribed the relative strength of US prices
compared with European as a correction to an earlier trend
following the fire at Venator’s
130,000-tonne-per-year plant in Pori, Finland and their
subsequent decision to close the plant in 2018. "Pori buyers
overbought [in response to the fire]," he said. But when
concerns over that supply shock eased, "Europe moved from a
premium to discount."
Chinese production grows
While there have been no precipitous demand shocks triggered
by the Covid-19 epidemic in 2020, there has also been no
sharp drop off in supply. A key feature of the 2020 titanium
dioxide market has been the ability of Chinese titanium
dioxide production to grow uninterrupted, despite the
disruption of the Covid-19 epidemic to logistics and
China is world’s largest titanium dioxide
producer and dominates the production of commodity-grade
sulfate pigment. China exported 117,122 tonnes of titanium
dioxide in August, compared with 87,349 tonnes a year
earlier, according to China customs data. In the year to
August, Chinese exports totaled 777,792 tonnes, compared with
656,425 tonnes a year earlier.
And the largest export volumes were in the first three
months of the year, despite the effects of the Covid-19
epidemic on logistics and production in China being heaviest
in that period. First-quarter exports in 2020 were 331,276
tonnes, compared with 231,815 tonnes in the first quarter of
Market sources report strong demand from many developing
markets, including India, Southeast Asia and South America,
with coatings demand growing strongly despite the effects of
Covid-19 lockdowns on downstream consumption.
Fastmarkets assessed the price of titanium dioxide
pigment, sulfate grade, fob China at $2,200-2,400 per tonne
on September 24, up from $2,100-2,200 at the end of the first
half of 2020, but down from $2,200-2,550 in September
The relative stability of titanium dioxide end markets has
also benefited mineral sand miners. Ilmenite and rutile, the
most important feedstocks for titanium dioxide production,
have been in steady demand. But the market has shifted in one
significant way. For a long time, the fastest growth in
demand and the greatest supply tightness has been in the
higher-grade feedstocks, but this trend has reversed over the
Fastmarkets assessed the price of ilmenite concentrate,
47-49% TiO2, cif China at $230-250 per tonne on September 24
compared with $190-210 a tonne a year earlier. By comparison,
the price of rutile concentrate 95% TiO2 min, bulk, cif China
was $1,200-1,250 per tonne on September 24, compared with
$1,150-1,250 a year earlier.
Natural rutile is a mineral with a very high titanium
content, and supply of this feedstock is low. The growth in
chloride route titanium dioxide demand, as well as demand
from other sectors, including the welding material industry,
has kept prices high. But with Chinese titanium dioxide
proving the most resilient sector, increasingly the most
acute demand is focused on lower grade ilmenite, particularly
as domestic Chinese supply of this ore has been hard to come
At the same time, the higher-grade feedstock market has
been supplied via the resilient output of titanium slag from
Rio Tinto. Titanium slag, produced from ilmenite, can be used
as a high-grade feedstock in chloride production. Rio Tinto
was forced to temporarily shut capacity at both its South
African and Canadian facilities due to Covid-19 restrictions,
with output in South Africa also affected by community unrest
in late 2019. But in July 2020, Rio Tinto reported that
output at both sites had resumed.
Meanwhile, major titanium dioxide producer Tronox is
increasing its vertical integration by acquiring a major
European titanium slag producer. Tronox said in May 2020 it
would pay "approximately $300 million" for
Eramet’s TiZir business.
TiZir’s Titanium & Iron Ilmenite (TTI)
facility in Norway produces around 230,000 tonnes per year of
titanium slag, as well as 90,000 tpy of high-purity pig iron.
Tronox’s existing facilities produced 410,000
tonnes of titanium slag in 2019 and this rate of production
could rapidly increase if the company reaches full capacity
at the massive Jizan facility in Saudi Arabia. Rio Tinto, by
comparison, produced around 1.2 million tonnes of titanium
slag in 2019.
Demand for zircon, meanwhile, has been slow as a result of
a crunch in the construction industry that hit a market
already in a down cycle. Zircon is not a titanium ore, but is
mined alongside rutile and ilmenite in heavy mineral sand
deposits. Fastmarkets assessed the price of zircon, premium
grade, 66.5% ZrO2 min, bulk, cif China at $1,400-1,500 per
tonne on September 23. This compares with a price of
$1,500-1,600 per tonne a year earlier.
Mineral sand miner Iluka, which is the most zircon-focused
of the major mineral sand miners, in August reported a drop
in revenues for the first half of 2020, driven primarily by
lower zircon sales and pricing.
Iluka reported sales revenues for the first half of 2020
at A$456.6 million ($324.5 million), compared with A$545.6
million for the corresponding period of 2019. The company
sold 78,400 tonnes of zircon in the first half of 2020,
compared with 133,300 tonnes a year earlier, a fall of 41.2%.
Its realized price for zircon in the first half of 2020 was
11% lower than in the first half of 2019, Iluka said.
A key driver of zircon demand is the construction sector,
particularly in China, because it is used in ceramic fittings
and tile production. "Ceramic industry activity in China
recovered in April but remained relatively flat throughout
the second quarter. Chinese tile makers’
operating rates were around 50-60% of the operating rates in
the same period in 2019," Iluka said.
"[Meanwhile], pressure from property developers for more
favorable pricing and payment conditions resulted in margin
pressure throughout the entire value chain, and in the
closure of some smaller producers," it added. "Chinese tile
exports were also affected by reduced demand from key
markets, including the US."
"The cycle peaked in mid-2019, it was already declining
before Covid-19," Griffin said. "There was weak Chinese
demand, particular ceramic demand." He added that in Q2,
China bounced back a bit, but also that demand has weakened
Finding funding: Thunderbird case
Mineral sands may be facing short-term demand disruptions,
but in the longer term the industry is moving toward deficit.
Mineral sand miners focus on the highest value part of the
deposit first, meaning that ore quality falls over the life
of the mine. These lower quality ores yield less ilmenite,
zircon and rutile per tonne mined, meaning the rate of their
As a number of large projects have been operational for
decades, the output of heavy minerals is falling, and there
is a shortfall in the number of new projects. For this
reason, the struggle of some potential major new sites to
find funding has been watched with concern.
One such site is Thunderbird, in Western Australia, owned
by Sheffield Resources. The resource has an estimated 3.2
billion tonnes of ore, containing 6.9% heavy minerals
including zircon, leucoxene and ilmenite.
But in early 2020, the project was still struggling to
find funding. In February 2020, Sheffield Resources announced
it cut back development to reduce capital costs. And in
April, the company said it had suspended care and maintenance
activities in order to preserve cash, announcing a 25% cut to
executive pay and a reduction in staff at the same time.
The fortunes of the project shifted in August 2020, when
the company secured an A$130.1 million ($93.3 million)
investment from Chinese steel producer Yansteel to develop
the Thunderbird mineral sand project to supply ilmenite for
titanium dioxide production.
The agreement means Yansteel will acquire 50% of the
Thunderbird project via the investment. Yansteel is a
wholly-owned subsidiary of Tangshan Yanshan Iron & Steel
– a privately owned Chinese steel manufacturer
– which recently started constructing a 500,000-tpy
titanium dioxide processing facility, including a titanium
The deal also includes a take or pay offtake agreement for
the total ilmenite output of stage 1 of the project, which is
due to be processed at Tangshan’s Chinese
titanium dioxide facility, subject to an Australian
government review into foreign investments.
Sheffield has also contracted offtake agreements for all of
the zircon production during the first stage of development
at Thunderbird, the producer said, with agreements for all
ilmenite production also signed.
Sheffield will begin a full-scale trial-mining program by
the end of the year to confirm the mining plant design and
contract costs, and to collect bulk ore samples. Site
investigation and design will take place over the same
Commercial director at Sheffield Resources Bruce Griffin
ascribed the rapid development of the deal to
Sheffield’s ability to be flexible about
offering the ideal product to Yansteel, which is in need of
feedstock for its titanium slag and titanium dioxide
production plans. "We thought about what the right product
was and were able to be responsive to a motivated
"There’s a decent sized market for ilmenite.
The challenge is finding someone who wants to work with you,"
he explained. "This was a case of the right party coming at
the right time," he added. "In this case it was people who
were looking to build a smelter, and they were looking to
manage their feedstock risk."
Griffin also noted that the Australian government has an
interest in supporting economic activity in the sparsely
populated region of Western Australia where the Thunderbird
mine is located.