Titanium dioxide | markets feature
Ed Barlow of TZMI analyses how the titanium dioxide
pigments market is shaping up after recent upheavals
Tracking titanium dioxide trends
The global titanium dioxide (TiO2 ) market is stabilizing
again after nearly two years of falling prices. Strong sales in the Chinese market over the fi rst half of the year have outpaced production and while inventory levels are still high, the last six months have signalled that the market is capable of clearing. More excess pigment can be squeezed from the value chain. Buyers today enjoy more choice – and wield more infl uence – than they have in recent years.
Supply side view Harsh conditions that governed TiO2
feedstock markets
over 2012 and 2013 are gradually subsiding. Import volumes in the fi rst quarter of 2014 increased by 4% from the previous quarter and 10% from the fi rst quarter of 2013. Approximately half of this volume was for sulphate ilmenite, used in the production of slag and sulphate route TiO2
. China’s imports of ilmenite have fallen in recent years due to a mining boom in Sichuan.
The mineral, which consists of approximately 50% TiO2 and 50% iron oxide, is sourced from the province where it is found together with magnetite. High global iron ore prices have allowed some of the larger Chinese miners to produce very low cost ilmenite. Low feedstock prices and persistent TiO2
capacity
expansion in China have kept pigment prices sup- pressed long past the market’s volume recovery in 2013,
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bottoming only in April this year. This has suppressed profi ts of producers in the rest of the world. Chinese pigment exports have proliferated in new
markets in Latin America and Southeast Asia where it has been quickly accepted by formulators. In part, the pigment shortages of three to four years ago caused this acceleration. Formulators that were marginalized when supplies ran dry turned to Chinese suppliers and have helped them develop higher quality pigment. Global compounders who had more stable supplies have increased their offtake share of Chinese pigment as a part of a diversifi cation strategy. Much of China’s TiO2
is variable in terms of quality.
However, the large export oriented producers like Lomon, Pangang and Billions have worked on product development and now produce widely respected general purpose grades. It is not clear how much of this has crossed over into plastics, which has exacting surface treatment to prevent lacing; anecdotally, customers are blending Chinese TiO2
with material from the global
suppliers. The bottom line is that Chinese pigment is good value in a market where margins are tight. Globally, operating rates remain lower than the level at which suppliers can dictate prices. This is true for almost everyone today and ranges from sub-50% levels of the moribund low-end Chinese producers to the tightly managed multinational concerns. Looking
October 2014 | COMPOUNDING WORLD 13
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