11 October 2013 09:56 [Source: ICB]
Titanium dioxide (TiO2) is 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, fibres, foods, pharmaceuticals and cosmetics. TiO2 is also resistant to discoloration under ultraviolet light in exposed applications, and is used in plastics and sunscreens. It is also used in photocatalysts, found in light-emitting diodes, liquid crystal displays and electrodes for plasma displays.
Consumption tends to follow general economic trends because the major use of TiO2 is in the mature paints and coatings market and the plastics compounding, paper and paperboard industries.
North American demand is mostly from paints and coatings, paper and paperboard and plastics-compounding markets. Demand is expected to continue to lag supply through the end of 2013, especially given typical weakness in paints and coatings during the fourth quarter.
Despite the expected seasonal downturn, the architectural coatings market remained stable as the fourth quarter began. But some sources said buying interest was beginning to come off its peak, which occurred much later than usual this year because of prevailing inclement weather during the usual height of the spring coatings season in the first half of the 2013.
Although producers have been increasingly adamant that delivery lead times and inventory of some pigment grades are shrinking amid some demand growth, most buyers continued to say that product was readily available.
In other major market news, US-based Huntsman is acquiring Rockwood Holdings’ TiO2 pigments segment, along with its performance additives business, which includes colour pigments, timber treatment and other chemicals, for $1.1bn in a deal expected to close in the first half of 2014, pending regulatory approval.
North American contract prices were expected to continue flat through the end of the year. The oversupply and soft demand that limited third-quarter price-hike efforts threatened to do the same to fourth-quarter price initiatives.
However, some buyers said prices could weaken before the end of the year, and the efforts to boost prices in the fourth quarter had little or no chance of success. Even producers have pinned hopes on either latent demand or renewed demand in first-half 2014.
TiO2 can be produced from ilmenite ore, rutile or titanium slag. Titanium pigment is extracted by using either sulfuric acid (the sulfate process) or chlorine (the chloride route). The sulfate process employs simpler technology than the chloride route and can use cheaper, lower-grade ores. However, sulfate-based material is generally more expensive to produce, and with the sulfuric acid treatment, a sulfate-route plant is more expensive to build than a chloride-route plant. The latter, however, may require the construction of a chlor-alkali unit.
The chloride route produces a purer product with a tighter range of particle size, and is preferred by North American customers, but anatase pigments (used in acetate fibers, for example) can be made only via the sulfate route.
Milling and surface treatment of the base pigment can account for up to a third of the cost of a titanium dioxide plant, but it maximizes optical properties, improves durability, reduces yellowing and improves dispersibility.
Most forecasts indicate improved TiO2 demand in 2014, and thus far, that is the consensus among most buyers, though an architectural coatings maker suggested the economy could remain lackluster into the latter part of next year.
Sources agreed that the economy will be the major headwind in the coming year, although one buyer in the plastics-compounding market gave the first-quarter 2014 initiatives a 50/50 chance of being implemented in January on likely improved buying interest.
Domestic buyers also are still highly interested in cheaper Chinese sulfate-route material, saying its quality - especially for use in some architectural primers - has continued to improve. Extenders that reduce TiO2 content while still allowing blenders to achieve strong opacity also continue to be popular.
Although Asian GDP growth forecast of 7.1% for 2014 is leading the world’s economies, domestic sources said that is unlikely to offer much support to North American and European producers in the coming year.
Analysts have described the broader chemicals industry as having emerged from a “trough” in production and profit, with TiO2 an indicator of economic health.
A recent report forecasts that US demand for paint and coatings will rise 4.2% annually to 1.5bn gallons in 2017, a reversal from volume declines recorded during the 2007-2012 period.
Among the catalysts for that predicted growth will be a strong rebound in construction activity, according to research by the Freedonia Group, a Cleveland-based industry market research firm.
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