03 January 2011 00:00 [Source: ICB]
Titanium dioxide (TiO2) is mainly used as a white powder pigment because of its brightness and high refractive index. It is used in paints and coatings, including glazes and enamels, plastics, paper, inks, fibers, foods, pharmaceuticals and cosmetics. ?xml:namespace>
TiO2 is also resistant to discoloration under ultraviolet light in exposed applications, and is used in plastics and sunscreens. Another growing outlet is in photocatalysts, where it is used in applications such as light-emitting diodes, liquid crystal displays and electrodes for plasma displays.
The major consuming industries of TiO2 are in mature sectors of the developed world, such as paints and coatings, paper and paperboard and plastics. As a result, the product's consumption tends to follow general economic trends.
TiO2 demand was impacted in 2009 by the economic downturn. However, markets tightened considerably in 2010 when demand recovered but supplies were constricted at the time by plant outages.
Supply concerns deepened within the North American TiO2 market during the week ended December 17, and delivery lead times remained at 90 days for several buyers, as assessed by ICIS.
The new year is expected to begin much the way 2010 is ending, with demand exceeding supply, according to a seller. Though some customers said they would continue to insist on partial gains in January, momentum was with the supply side. Supply tightened early in 2010 and remained so following destocking and the shutdown of some capacity as producers struggled to deal with weak demand in 2009.
North American prices were at $1.301.44/lb ($286,598-317,462/tonne, €218,957-242,507), pending broad market settlement of the initiatives proposed in September and October 2010, as assessed by ICIS
Price hike initiatives of 8 cents/lb announced in September and October 2010 were expected to be fully implemented on January 1. The usual end-of-year slowdown is expected to neither have a significant effect on lead times nor help suppliers build inventory, according to producers. In addition to the January price hikes, newer 8-10 cent/lb price-hike initiatives are also expected to roll in, effective on or about March 1.
TiO2 is produced from either ilmenite, rutile or titanium slag. Titanium pigment is extracted by using either sulfuric acid (sulfate process) or chlorine (chloride route). The sulfate process employs simpler technology than the chloride route and can use lower grade, cheaper ores. However, it generally has higher production costs and with acid treatment is more expensive to build than a chloride plant. But the latter may require the construction of a chlor-alkali unit.
The chloride route produces a purer product with a tighter range of particle size, but anatase pigments can only be produced by the sulfate route. The sulfate route is perceived to be less environmentally friendly but acid recycling or neutralization, combined with other by-product developments, can make it as clean as the chloride route.
The North American TiO2 market will remain pinched for supply throughout 2011, keeping prices on an upward trajectory, according to market sources.
German-based Deutsche Bank analysts predicted in a recent report that current tight supply, unexpectedly good demand and low inventories would underpin TiO2 price gains of as much as 10% in 2011 and 2012.
Producers are bullish about domestic economic recovery in 2011 and beyond, while most buyers are more cautious, describing recovery as "fragile."
In downstream news, US housing construction activity rose by 3.9% in November 2010 from the previous month, according to the US Commerce Department. However, a major paint manufacturer predicted sluggish demand for architectural coatings.
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