Titanium dioxide

21 January 2002 00:00 [Source: ICB]

Global demand has been hit by recession, but consumption in China remains buoyant, with double-digit growth still predicted

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Uses

Titanium dioxide (TiO2) is used as a pigment to provide brightness, whiteness and opacity to paints and coatings, plastics, paper, inks, fibres, food and cosmetics. The largest consumer is paints, which accounts for about 57% of global consumption, followed by plastics with about 21%, paper with about 14% and the remainder for speciality applications. It is available in two grades: anatase and rutile.

Supply/demand

The industry had a bad year in 2001 as the economic slowdown progressively worsened. Players' preliminary estimates show a decline in global consumption of about 4% for 2001 over 2000. Demand fell by about 8% in Europe and the US, and 3% in the Middle East/North Africa. In contrast, Asian consumption was up by 1-2%, as Chinese demand stayed fairly strong. The paper sector fared the worst, followed by plastics and then coatings. Industrial coatings were hardest hit as sales of automotives and hard goods was down, but the decorative sector was not so bad. Operating rates have been trimmed and some capacity idled. Millennium shut a 44 000 tonne/year sulphate unit in Baltimore, US, in early 2001 and Kerr-McGee closed its 24 000 tonne/year Antwerp, Belgium, plant at the end of 2001. Debottleneckings have been implemented during 2001 at Millennium in Kemerton, Australia, and Ashtabula, US, and at TiWest in Kwinana, Australia. Huntsman Tioxide has built a new plant, upgraded existing capacity and scrapped older production at Greatham, UK, as well as expanding capacity at Huelva, Spain, and Teluk Kalung in Malaysia. Cristal Pigment's expansion in Saudi Arabia to 90 000 tonne/year is due onstream this year.

Pricing

Current European prices are quoted at an average E1900/tonne, although there are lower numbers around and big customers will be getting discounts. Producers tried to implement two price increases in 2001 but both attempts failed. A E140-150/tonne rise in January met resistance, as did a E100/tonne hike in quarter two. Prices remain well below reinvestment levels and players say that all the increases achieved in 2000 were wiped out last year. A big gap still exists between European and US prices, with European levels about $300/tonne below their US equivalent. Producers expect to announce new price increases once there is firm evidence of a pickup in demand.

Technology

TiO2 is produced from either ilmenite, rutile or titanium slag. Titanium pigment is extracted by using either sulphuric acid (sulphate process) or chlorine (chloride route). The sulphate route is perceived to be less environmentally friendly, but acid recycling or neutralisation, combined with other by-product developments, can make it as clean as the chloride route. However, the sulphate route generally has higher production costs and, with acid treatment, is more expensive to build than a chloride plant, although the latter may require the construction of a chlor-alkali unit. The chloride route produces a more pure product with a tighter range of particle size, but anatase pigments can only be produced by the sulphate route.

Outlook

European demand growth is about 3%/year but double-digit rates are still predicted for Asia, particularly China. No formal announcements have been made yet for a new worldscale plant but Huntsman is evaluating a project in Asia, with China the most probable location. However, with prices still below reinvestment costs, any grassroots construction is unlikely to proceed in the short term. More new capacity will be needed in the 2003-05 timeframe. There is still scope for further debottleneckings. Kemira will add 10 000 tonne/year at Pori, Finland, for 2003. ISK is also said to plan a capacity hike at Singapore to 60 000 tonne/year, but no timescale has been set.

Major global TiO2 CAPACITY, '000 TONNE/YEAR

Company	Location	Capacity
Cristal Pigment
	Yanbu, Saudi Arabia	74 C
DuPont	Altamira, Mexico	125 C
	DeLisle, Mississippi, US	300 C
	Edge Moor,
	Delaware, US	155 C
	Kwan Yin, Taiwan	90 C
	New Johnsonville,
	Tennessee, US	330 C
Huntsman Tioxide
	Calais, France	100 S
	Greatham, UK	100 C
	Grimsby, UK	80 S
	Huelva, Spain*	90 S
	Scarlino, Italy	80
	Teluk Kalung, Malaysia	56 S
	Umbogintwini, SA	45 S
ISK	Jurong, Singapore	45 C
	Yokkaichi, Japan	92 S
	Yokkaichi, Japan	68 C
	Kemira	Pori, Finland	120 C
Kerr-McGee
	Botlek, Netherlands	56 C
	Hamilton, Mississippi, US	145 C
	Savannah, Georgia, US	54 S
	Savannah, Georgia, US	91 C
	Uerdingen, Germany	105 S
Kronos	Ghent, Belgium	69 C
	Frederikstad, Norway	30 S
	Leverkusen, Germany	124 C
	Leverkusen, Germany	22 S
	Norderram, Germany	60 S
	Varennes,
	Quebec, Canada	65 C
	Varennes,
	Quebec, Canada	16 S
Louisiana Pigments
	Lake Charles,
	Louisiana,US	120 C
Millennium
	Ashtabula, Ohio, US	210 C
	Baltimore, Maryland, US	50 C
	Kemerton, Australia	95 C
	Le Havre, France	95 S
	Salvador, Brazil	60 S
	Stallingborough, UK	150 C
	Thann, France	30 S
Sachtleben
	Duisburg, Germany	90 S
TiWest	Kwinana, Australia	95 C

*expansion to 96 000 tonne/year due mid-2002 Process: S=sulphate, C=chlorideSource: ECN

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