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Three black swan events in as many years have meant a tumultuous period for titanium dioxide (TiO2), but the industry may be heading for calmer waters, according to mineral sands expert, Reg Adams.
COVID-19, China’s economic downturn, and the Russian invasion of Ukraine may have rocked the boat, but the industry will ultimately see a stabilisation of prices and the easing of production pressures, he argues.
“With the unexpected resurgence in consumer demand for pigment and packaging plastics during COVID-19, and the hike in energy prices following the Russia-Ukraine war, the sector was, not long ago, under enormous pressure,” said Reg ahead of the Mineral Sands Conference.
“During the pandemic nobody knew that we would have seen such a burst of DIY renovation and decoration, boosting demand for paint and pigment so strongly. In fact, most TiO2 producers tipped demand to head in the opposite direction and scaled back their production accordingly.
“Add to that community issues around the Richard’s Bay production of TiO2 feedstock in South Africa, and disappointment from Iluka’s output in Sierra Leone, it is little wonder global supply was so tight, and prices rising so steeply during 2020 and 2021.
“However, with China’s economy and TiO2 appetite taking a nosedive due to its government’s COVID zero policy, demand growth has settled significantly. China’s output also rose by almost 20 percent, to more than 3.7 million tonnes between 2019 and 2021; and Chinese suppliers were quick to grab a larger share of many markets overseas, as well as fighting off competition from foreign suppliers in the Chinese domestic market.”
Overseas supply is also improving
Western multinational pigment producers, along with smaller players in Europe and India, have all been turning up their operating rates. However, tight supplies of feedstock, chlorine, sulphuric acid, and other inputs have acted as restraints on maximising output.
Thanks to some easing of community tensions over its employment strategy, Rio Tinto’s South African operation is also improving; and Tronox’s long awaited Saudi Arabian plant is now operational, after a string of technical difficulties.
“We are talking output in the realm of 250 tonnes per year of chlorinatable slag from that smelter in Saudi Arabia – half of what it was meant to be before the technical difficulties arose but still a meaningful amount,” Reg said.
In Australia, Iluka’s imminent synthetic rutile kiln reopening at Capel will add 110,000 tonnes into the picture, with sizeable contributions also expected from TNG in the Northern Territory and Strandline in Western Australia – both of which are set to become operational next year.
Around the corner
With world demand growth subdued and supply catching up, TiO2 feedstock prices are now trending downwards. In the near future, Reg expects the prices to drop further as new players come on the scene and global production ramps up.
Further afield, however, the future for TiO2 feedstock and pigment prices remains uncertain. The hike in energy costs after Russia choked off its natural gas supply to Europe has impacted production and transportation costs significantly. With the outlook for the war uncertain, it is unclear how retaliatory sanctions may unfold.
Measures to combat general inflation may also take their toll, with governments and central banks admittedly stopping at nothing to bring rates back to normal benchmark levels, curbing an excessive decline in the value of money.
“Pigment producers have already been citing the inflation situation to justify price increases and I can only imagine this continuing if inflation isn’t brought under control,” Reg said.
Ongoing uncertainty in terms of China’s TiO2 appetite could also have an impact, he warns.
“China is the world’s largest TiO2 feedstock customer and its requirement for imported feedstock has been declining from the second quarter of this year. While some global producers, like Kenmare in Mozambique, are benefitting nicely from the Chinese market, other players have been pushed out of the picture. It will be interesting to see how this unfolds,” Reg said.
More generally, China’s dwindling economy is sounding an alarm bell for future TiO2 demand, with concerns the downturn may go too far.
“For years China has been the engine of world industrial growth. These days its GDP growth is slowing, reflected in its TiO2 pigment demand and production. Putting all that together, worldwide demand for pigment will increase by just 2.5 percent to reach 7.43 million tonnes this year after a record 12.2 percent spike in 2021. Only time will tell how far this decline in the global growth rate will go,” Reg concluded.
Reg Adams is Managing Director of ARTIKOL UK. Giving fresh commentary on the forces shaping the TiO2 industry, he will present at the Mineral Sands Conference hosted by Informa Connect. This year’s event will be held 22-23 November 2022. Learn more and register your place here.
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