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Chinese iron oxide pigment prices up 50% in 8 months, as costs rise & inventories fall
F O C US “tax” (which would need approval from the New York State legislature). It would add less than 1% to the typical week’s shopping bill for most New York citizens. Despite surprisingly vehement opposition, the scheme is expected to come into effect in early 2009. Legislation has already been enacted in Belgium, Israel, Italy, Singapore and Taiwan, providing for a tax to be levied on plastic carrier-bags issued to shoppers. In France, a proposal to include a tax on plastic bags in next year’s Budget was voted down by a majority of delegates in the National Assembly on 23 October 2008. The proposal was for a tax of €0.10 on plastic bags for packaging fruit and vegetables and a tax of €0.15 on all other plastic bags. Mr Eric Woerth (Minister for the Budget) declared: “Public opinion is not yet ready to accept these measures at this time. But we intend to pursue the objective of reducing the number of plastic bags by other fiscal means.” Plastic carrier-bags were first introduced into most industrialised countries during the late 1970s and they quickly became very popular, largely displacing alternatives made of paper or textiles. By the end of the 1990s, plastic bags accounted for more than 80% of the carrier-bags used by citizens for carrying their shopping purchases home from the supermarkets and other retail outlets. They are seen as being lightweight, durable, adequately strong, low-cost (often free), resistant to rain penetrating from the outside and excellent at containing seepages and spillages on the inside. Moreover, many disposable carrier-bags are subsequently reused as bin-liners, overwraps for soiled nappies, pooperscoopers, fallen leaves or other garden waste and as long-term storage bags. From the retailer’s standpoint, plastic film presents a good surface for printing logos and brandnames in attractive colours and formats. The disposable plastic carrier-bags favoured by supermarkets, do-ityourself (DIY) and pharmacy retailchains are normally made of highdensity polyethylene (HDPE) film with a thickness of 37.5 microns (150 gauge or 1.5 mils) and they weigh 1213 grams each. These bags are typically opacified with white mineral
DECEMBER 2008
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fillers such as calcium carbonate, kaolin or talc and with coloured pigments. Some disposable carrierbags are made of unfilled and unpigmented HDPE film with a thickness of 25 microns and they weigh less than 8 grams each. At the other end of the spectrum, some disposable carrier-bags are made of filled and pigmented HDPE with a thickness of 50 microns and they weigh around 20 grams each. Heavyduty plastic carrier-bags, including those retailed by supermarkets as “bags for life” and designed to be reused for at least 30 shopping-trips, are usually made of linear low-density polyethylene (LLDPE) film with a thickness of up to 100 microns and they weigh over 25 grams each. Also in this category are the thick and glossy plastic bags with patchhandles, drawstring-handles or cliploop-handles, favoured by designer-clothing retailers. The wispy, ultra-thin plastic bags favoured by market stall-holders in China and elsewhere, as well as the garment overwraps favoured by dry-cleaners in Europe and North America, are usually made of unfilled and unpigmented low-density polyethylene (LDPE), with a thickness of less than 25 microns. The typical standard disposable plastic carrier-bag issued by UK retailers contains about 20% (by weight) pigments and fillers, some of which are incorporated into the plastic film, while the rest are contained in the packaging printing inks. The pigments are many and varied, with retailers deliberately choosing colours to highlight their individual brands. Thus: Tesco uses red and blue on a white background; Sainsbury’s use blue and yellow on orange; Waitrose uses white and olive on green; Asda uses green and blue on white; Lidl uses red and blue on yellow; Boot’s uses blue on white; Woolworth’s uses red on white; Argos uses red and white on yellow; Homebase uses green and orange on white; and Marks & Spencer uses white on green. The ban on free disposable carrier-bags in London will result in the loss of an end-use sector accounting for at least 5000 tonnes of pigments and fillers. If the ban were to be ultimately extended to cover the entire United Kingdom, this would result in the loss of an end-use sector
accounting for about 40,000 tonnes of pigments and fillers. Conventional polyethylene carrierbags could be replaced with biodegradable plastic bags. Biodegradable polylactide (aka polylactic acid, obtained from lactic acid, which can in turn be derived from corn or potato starch) could be used instead of polyethylene, but it is significantly more expensive. Alternatively, conventional polyethylene can be rendered biodegradable (if exposed to sunlight for 18-24 months) by adding a small quantity of an ultravioletabsorber. Thwarted from using disposable plastic carrier-bags, shoppers may instead increase their annual consumption of heavy-duty plastic or textile bags. The drying-up of a regular supply of disposable carrier-bags may lead householders to increase their purchases of purpose-designed bin-liners, which are sometimes lightly pigmented. Such developments might benefit pigment suppliers to some degree, but there can be no doubt that the current worldwide war against disposable plastic bags will entail significant collateral damage for suppliers of pigments and fillers. Reg Adams
MARKETS Chinese iron oxide pigment prices up 50% in 8 months, as costs rise & inventories fall As noted in some of our past editorials over the years (See ‘Focus on Pigments’, Feb 1996 & Apr 2000 & Apr 2002 & May 2008), China has clearly established itself as the world’s leading producer and exporter of iron oxide pigments. New records were set last year for both production and exports – respectively 728,000 tonnes and 401,000 tonnes. The value of exports was $250 M, indicating an average unit value of $623 per tonne. However, it is likely that production will fall back this year because the environmental authorities have finally acted to shut down several plants that were causing heavy pollution in the Fuchunjiang River region of Zhejiang province. At the beginning of January 2007, there were more than 140 iron
3
FOCUS oxide pigment plants in China as a whole. By the end of July 2008, there were only 110, with a combined capacity of about 700,000 tonnes/y. Pigment manufacturers have witnessed sharp increases in raw material costs and the increases have been exacerbated by the fall in the value of the US dollar against the Chinese renminbi. At the end of December 2007, $100 would buy RMB 730.4, but at the end of July 2008 $100 would buy RMB 684.3 only. The domestic price of nitric acid (94% HNO3) has increased from RMB 2000 ($274) per tonne at the beginning of January 2008 to RMB 3000-3500 ($438-512) per tonne at the end of July 2008. Over the same period, the price of sulfuric acid (95% H2SO4) increased from RMB 1000 ($137) per tonne to RMB 1600-2300 ($234-336) per tonne. Meanwhile, the price of iron sheet-metal has doubled to RMB 4100-4300 ($599-628) per tonne. Over the past 10 years, metal pickling salts have been displaced as the major feedstock for iron oxide production by copperas (essentially by-product ferrous sulfate generated at sulfate-route TiO2 pigment plants, using ilmenite). Because more and more TiO2 plants are now using titania slag instead of ilmenite, the supply of copperas has been curtailed and prices have risen. On top of that, iron oxide pigment producers have been obliged to improve their anti-pollution measures, which has had the effect of increasing manufacturing costs by RMB 200-300 (about $28-43) per tonne. Labour costs have also increased. So overall manufacturing costs have increased by more than 20% at most iron oxide pigment plants. China: iron oxide* exports, month-by-month, 2008
Jan Feb Mar Apr May Jun Jul Aug
‘000 tonnes 32.3 22.6 33.9 37.1 36.3 33.1 31.1 28.2
$ per tonne 697 743 747 834 868 952 1060 1122
* Iron oxides & hydroxides (IHC product code: 2821.1000) Source: Artikol TSRS, based on Chinese Customs data
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Chinese manufacturers’ inventories of iron oxide pigments have reached extremely low levels and, in a climate of worsening pigment shortages and sharp cost increases, Chinese suppliers have successfully raised their prices by about 50% (in terms of renminbi) over the first eight months of this year. That translates to a 60% rise in terms of US dollars. The domestic price for top-grade iron oxide pigment had gone beyond the RMB 7000 ($1023) level by the end of July 2008. Meanwhile, the average unit value for Chinese exports of iron oxides (IHC product category 2821.1000) increased from $697 per tonne in January 2008 to $1060 per tonne in July 2008 and then increased by a further $62 per tonne in August. China Chemical Reporter, 26 Aug 2008, 19 (24), 24
Indian TiO2 pigment producers want to maintain anti-dumping duties on imports from China Indian law on dumping – importing products for resale at less than fair value – mirrors US law insofar as the imposition of anti-dumping duties automatically lapses after five years. However, domestic manufacturers can petition the Commerce Department to carry out a “sunset review” before the five years has passed if they believe that lifting the anti-dumping duties would lead to a recurrence of damage to the domestic industry. Following complaints from all three Indian manufacturers of sulfateroute TiO2 pigment, the Indian Minister of Commerce authorised antidumping duties on all imports of anatase TiO2 from China, with effect from 6 June 2003. Conclusive antidumping duties of $304-358 per tonne were implemented as from 9 April 2004 (See ‘Focus on Pigments’, Jul 2003, 3). Travancore Titanium Products (TTP) and Kilburn Chemicals have both recently petitioned the Minister for a sunset review, arguing that the level of anti-dumping duties on Chinese TiO2 imports should stay at the current level beyond April 2009. Chemical Weekly, 5 Aug 2008, 53 (51), 124
PLANTS Australia: MCL/ACCL – kaolin Minerals Corp Ltd (MCL) commenced production at its Skardon River property on the Cape York peninsula (Queensland) in March 2003 and production has been gradually ramped up to capacity in line with increasing sales. By the middle of 2009, the company expects its sales volumes to be at similar levels to its plant capacities, namely 175,000 tonnes/y of primary kaolin and 75,000 tonnes/y of calcined kaolin. Customers in the construction industry, based in the UK, the US and the United Arab Emirates have been satisfied with the quality and consistency of Skardon River kaolin – presumably as a cement additive – as a result of which MCL now has several sales agreements and letters of intent to purchase. Meanwhile, MCL has also completed a pilot-scale programme at its Swan River kaolin property in Western Australia and it is now poised to go ahead with full-scale mine development here. Before the end of this year, MCL plans to float off its kaolin business as a separate entity – Australian China Clays Ltd (ACCL) – by means of an initial public offering (IPO) of shares. Industrial Minerals, Oct 2008, (493), 12
Canada: Whitemud – kaolin for cement Whitemud Resources Inc successfully commissioned its plant at Goller Creek, Saskatchewan and is now producing low-grade kaolin (so called “metakaolin”) at an annual equivalent rate of 150,000 tonnes/y (See ‘Focus on Pigments’, Jul 2008, 4-5). The product is being marketed mainly as a cement additive, increasing durability and chemical resistance of the finished concrete. A mixture in which 20% of conventional cement is substituted by “metakaolin” facilitates a 55% reduction in total greenhouse gas emissions during the manufacturing process. Industrial Minerals, Oct 2008, (493), 83
DECEMBER 2008
DECEMBER 2008
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fillers such as calcium carbonate, kaolin or talc and with coloured pigments. Some disposable carrierbags are made of unfilled and unpigmented HDPE film with a thickness of 25 microns and they weigh less than 8 grams each. At the other end of the spectrum, some disposable carrier-bags are made of filled and pigmented HDPE with a thickness of 50 microns and they weigh around 20 grams each. Heavyduty plastic carrier-bags, including those retailed by supermarkets as “bags for life” and designed to be reused for at least 30 shopping-trips, are usually made of linear low-density polyethylene (LLDPE) film with a thickness of up to 100 microns and they weigh over 25 grams each. Also in this category are the thick and glossy plastic bags with patchhandles, drawstring-handles or cliploop-handles, favoured by designer-clothing retailers. The wispy, ultra-thin plastic bags favoured by market stall-holders in China and elsewhere, as well as the garment overwraps favoured by dry-cleaners in Europe and North America, are usually made of unfilled and unpigmented low-density polyethylene (LDPE), with a thickness of less than 25 microns. The typical standard disposable plastic carrier-bag issued by UK retailers contains about 20% (by weight) pigments and fillers, some of which are incorporated into the plastic film, while the rest are contained in the packaging printing inks. The pigments are many and varied, with retailers deliberately choosing colours to highlight their individual brands. Thus: Tesco uses red and blue on a white background; Sainsbury’s use blue and yellow on orange; Waitrose uses white and olive on green; Asda uses green and blue on white; Lidl uses red and blue on yellow; Boot’s uses blue on white; Woolworth’s uses red on white; Argos uses red and white on yellow; Homebase uses green and orange on white; and Marks & Spencer uses white on green. The ban on free disposable carrier-bags in London will result in the loss of an end-use sector accounting for at least 5000 tonnes of pigments and fillers. If the ban were to be ultimately extended to cover the entire United Kingdom, this would result in the loss of an end-use sector
accounting for about 40,000 tonnes of pigments and fillers. Conventional polyethylene carrierbags could be replaced with biodegradable plastic bags. Biodegradable polylactide (aka polylactic acid, obtained from lactic acid, which can in turn be derived from corn or potato starch) could be used instead of polyethylene, but it is significantly more expensive. Alternatively, conventional polyethylene can be rendered biodegradable (if exposed to sunlight for 18-24 months) by adding a small quantity of an ultravioletabsorber. Thwarted from using disposable plastic carrier-bags, shoppers may instead increase their annual consumption of heavy-duty plastic or textile bags. The drying-up of a regular supply of disposable carrier-bags may lead householders to increase their purchases of purpose-designed bin-liners, which are sometimes lightly pigmented. Such developments might benefit pigment suppliers to some degree, but there can be no doubt that the current worldwide war against disposable plastic bags will entail significant collateral damage for suppliers of pigments and fillers. Reg Adams
MARKETS Chinese iron oxide pigment prices up 50% in 8 months, as costs rise & inventories fall As noted in some of our past editorials over the years (See ‘Focus on Pigments’, Feb 1996 & Apr 2000 & Apr 2002 & May 2008), China has clearly established itself as the world’s leading producer and exporter of iron oxide pigments. New records were set last year for both production and exports – respectively 728,000 tonnes and 401,000 tonnes. The value of exports was $250 M, indicating an average unit value of $623 per tonne. However, it is likely that production will fall back this year because the environmental authorities have finally acted to shut down several plants that were causing heavy pollution in the Fuchunjiang River region of Zhejiang province. At the beginning of January 2007, there were more than 140 iron
3
FOCUS oxide pigment plants in China as a whole. By the end of July 2008, there were only 110, with a combined capacity of about 700,000 tonnes/y. Pigment manufacturers have witnessed sharp increases in raw material costs and the increases have been exacerbated by the fall in the value of the US dollar against the Chinese renminbi. At the end of December 2007, $100 would buy RMB 730.4, but at the end of July 2008 $100 would buy RMB 684.3 only. The domestic price of nitric acid (94% HNO3) has increased from RMB 2000 ($274) per tonne at the beginning of January 2008 to RMB 3000-3500 ($438-512) per tonne at the end of July 2008. Over the same period, the price of sulfuric acid (95% H2SO4) increased from RMB 1000 ($137) per tonne to RMB 1600-2300 ($234-336) per tonne. Meanwhile, the price of iron sheet-metal has doubled to RMB 4100-4300 ($599-628) per tonne. Over the past 10 years, metal pickling salts have been displaced as the major feedstock for iron oxide production by copperas (essentially by-product ferrous sulfate generated at sulfate-route TiO2 pigment plants, using ilmenite). Because more and more TiO2 plants are now using titania slag instead of ilmenite, the supply of copperas has been curtailed and prices have risen. On top of that, iron oxide pigment producers have been obliged to improve their anti-pollution measures, which has had the effect of increasing manufacturing costs by RMB 200-300 (about $28-43) per tonne. Labour costs have also increased. So overall manufacturing costs have increased by more than 20% at most iron oxide pigment plants. China: iron oxide* exports, month-by-month, 2008
Jan Feb Mar Apr May Jun Jul Aug
‘000 tonnes 32.3 22.6 33.9 37.1 36.3 33.1 31.1 28.2
$ per tonne 697 743 747 834 868 952 1060 1122
* Iron oxides & hydroxides (IHC product code: 2821.1000) Source: Artikol TSRS, based on Chinese Customs data
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Chinese manufacturers’ inventories of iron oxide pigments have reached extremely low levels and, in a climate of worsening pigment shortages and sharp cost increases, Chinese suppliers have successfully raised their prices by about 50% (in terms of renminbi) over the first eight months of this year. That translates to a 60% rise in terms of US dollars. The domestic price for top-grade iron oxide pigment had gone beyond the RMB 7000 ($1023) level by the end of July 2008. Meanwhile, the average unit value for Chinese exports of iron oxides (IHC product category 2821.1000) increased from $697 per tonne in January 2008 to $1060 per tonne in July 2008 and then increased by a further $62 per tonne in August. China Chemical Reporter, 26 Aug 2008, 19 (24), 24
Indian TiO2 pigment producers want to maintain anti-dumping duties on imports from China Indian law on dumping – importing products for resale at less than fair value – mirrors US law insofar as the imposition of anti-dumping duties automatically lapses after five years. However, domestic manufacturers can petition the Commerce Department to carry out a “sunset review” before the five years has passed if they believe that lifting the anti-dumping duties would lead to a recurrence of damage to the domestic industry. Following complaints from all three Indian manufacturers of sulfateroute TiO2 pigment, the Indian Minister of Commerce authorised antidumping duties on all imports of anatase TiO2 from China, with effect from 6 June 2003. Conclusive antidumping duties of $304-358 per tonne were implemented as from 9 April 2004 (See ‘Focus on Pigments’, Jul 2003, 3). Travancore Titanium Products (TTP) and Kilburn Chemicals have both recently petitioned the Minister for a sunset review, arguing that the level of anti-dumping duties on Chinese TiO2 imports should stay at the current level beyond April 2009. Chemical Weekly, 5 Aug 2008, 53 (51), 124
PLANTS Australia: MCL/ACCL – kaolin Minerals Corp Ltd (MCL) commenced production at its Skardon River property on the Cape York peninsula (Queensland) in March 2003 and production has been gradually ramped up to capacity in line with increasing sales. By the middle of 2009, the company expects its sales volumes to be at similar levels to its plant capacities, namely 175,000 tonnes/y of primary kaolin and 75,000 tonnes/y of calcined kaolin. Customers in the construction industry, based in the UK, the US and the United Arab Emirates have been satisfied with the quality and consistency of Skardon River kaolin – presumably as a cement additive – as a result of which MCL now has several sales agreements and letters of intent to purchase. Meanwhile, MCL has also completed a pilot-scale programme at its Swan River kaolin property in Western Australia and it is now poised to go ahead with full-scale mine development here. Before the end of this year, MCL plans to float off its kaolin business as a separate entity – Australian China Clays Ltd (ACCL) – by means of an initial public offering (IPO) of shares. Industrial Minerals, Oct 2008, (493), 12
Canada: Whitemud – kaolin for cement Whitemud Resources Inc successfully commissioned its plant at Goller Creek, Saskatchewan and is now producing low-grade kaolin (so called “metakaolin”) at an annual equivalent rate of 150,000 tonnes/y (See ‘Focus on Pigments’, Jul 2008, 4-5). The product is being marketed mainly as a cement additive, increasing durability and chemical resistance of the finished concrete. A mixture in which 20% of conventional cement is substituted by “metakaolin” facilitates a 55% reduction in total greenhouse gas emissions during the manufacturing process. Industrial Minerals, Oct 2008, (493), 83
DECEMBER 2008