- Email: [email protected]
Homage to Catalonia & to the 13th Biennial TiO2 Conference Hosted By Smithers Rapra
FOCUS ON P I G M E N T S A MONTHLY REPORT FROM REG ADAMS
SEPTEMBER 2013
HOMAGE TO CATALONIA & TO THE 13TH BIENNIAL TiO2 CONFERENCE HOSTED BY SMITHERS RAPRA
In this issue
MARKETS 4-5 GIA revises its forecasts: # CaCO3 demand to reach 94 M tonnes by 2018 # plastic masterbatch sales to hit $10.5 bn by 2018 PLANTS 5-7 Albemarle & Senze Meilu JV to build ATH plant in China MTI commissions new PCC plants in US & Thailand, and plans 11th European facility Clariant will move masterbatch plant away from Thane Giriraj brings on-stream new PbO plant in Gujarat Ishihara shuts down chlorideroute TiO2 plant in Singapore COMPANIES 7 Aditya Birla consolidates carbon black assets – as a prelude to flotation? Jiangxi Black Cat appoints HB Chemical to sell carbon black Nubiola heads consortium on EU’s Nanopigmy research programme to develop lowercost pigments EVENTS
PIGMENTS
AN INTERNATIONAL NEWSLETTER MONITORING TECHNICAL AND COMMERCIAL DEVELOPMENTS IN THE PIGMENTS SECTOR ISSN 0969–6210
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Seventy-five years after the first publication of George Orwell’s epic memoir, crowds poured into Barcelona (the Catalan capital) not only for the Labour Day anti-austerity protest demonstration and the European Champions League soccer semi-final against Bayern Munich (both of which took place on 1 May), but also for the Biennial TiO2 Conference. This event was first held in St Louis, Missouri in March 1990. Subsequent venues have included Cannes, Munich, Padua and Rome, but in 2013 for the first time the conference came to Spain. This was also the first time the conference had been hosted under the Smithers Rapra banner and the organisation of the event was directed as smoothly as ever from the Portland, Maine office originally established by Intertech, the company founded by the late Dr Hugh Olmstead. The conference director was Mr Andrew Smaha and the co-chairmen were Mr Reg Adams (of Artikol) and Mr Jim Fisher (of IBMA). It was a very full programme, with 25 presentations in six separate sessions over the three days commencing on Tuesday 30 April. Mr Jim Fisher opened the proceedings with his customary “state-of-the-industry address.” According to IBMA, world TiO2 pigment consumption increased by 1.5% in 2012, following a 4.5% fall in 2011 and a 3.0% rise in 2010. Effectively, there have been “five lost years” and consumption has not yet climbed back to the peak level reached prior to the global financial
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crisis. In fact, consumption last year was 1.1% lower than in 2007. However, world TiO2 pigment capacity has continued to increase, mainly thanks to expansions in China. Faced with the problem of not being able to sell all the pigment they could produce, pigment producers around the world have curtailed their operating rates. Hence, global average capacity utilisation at TiO2 pigment plants has fallen from 94.1% in 2005 to 75.5% in 2011/12. Weak demand growth and a rising margin of overcapacity would normally engender a very bad climate for attempting to raise pigment prices. However, the global average TiO2 pigment price rose by 14% between end-2009 and end-2010, then rose by a further 39% between end-2010 and end-2011. The price rises were justified by producers on the grounds of sharply increased pigment manufacturing costs, which were in turn attributable mainly to an upsurge in TiO2 feedstock costs. Mr Fisher pointed out that TiO2 feedstock accounts for 20-45% of total pigment manufacturing costs, so the doubling of most TiO2 feedstock prices inevitably led to pigment manufacturers trying to pass on these cost increases to their customers. He described this situation as the “bull whip” effect, with pigment prices being driven upwards by cost pressures rather than by normal supply/demand factors. During 2012, there was a strong recoil: paintmakers in particular curtailed their TiO2 pigment usage and adapted their formulations so as to blend in lower-priced and lower-quality TiO2 pigment, putting pressure on the
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FOCUS major multinational suppliers to reduce their prices. According to IBMA, the global average TiO2 pigment price fell by 10.5% between end-2011 and end-2012. So, it is already evident that there was a price spike in 2011. Indeed, the 39% year-on-year increase in price that occurred in 2011 was very similar to the 43% year-on-year increase in price that occurred in 1973. The primary cause at that time was the upsurge in energy and petrochemical costs triggered by the OAPEC crude oil supply embargo and the quadrupling of crude oil prices. As in recent times, the price of pigment was driven upwards by cost pressures rather than by normal supply/demand factors. The pigment price spike of 1973 was immediately followed by a sharp fall in consumption, accompanied by a much more subdued tone in pigment pricing. Looking ahead, Mr Fisher set out several very different scenarios. At best, world TiO2 pigment demand will rise by 4.44% per annum from 5.3 M tonnes in 2012 to 7.5 M tonnes in 2020. At worst, it will rise by only 2.59% per annum to reach 6.5 M tonnes in 2020. Assuming a median forecast of 7.066 M tonnes by 2020, the next factor to consider is China’s pigment capacity expansion potential. At present, less than 2% of China’s TiO2 pigment output is accounted for by chloride-route plants. Mr Fisher believes that chloride-route plants will continue to play an insignificant role in China, but there is scope for substantial sulfate-route capacity expansion. If all the announced Chinese TiO2 projects actually go ahead, world capacity utilisation will remain well below the 80% mark. If only half of all the announced Chinese projects actually go ahead, then world capacity utilisation will creep up from 75.5% in 2012 to 85.0% in 2020. Assuming the latter outcome, Mr Fisher forecasts a gradual rise in the average global TiO2 pigment price from a trough of $2956 per tonne at end-2013 to $3583 per tonne at end2020. In his concluding remarks, he said: “There is simply too much TiO2 pigment capacity in the world. Tight supply conditions will continue to prevail in the TiO2 feedstock sector, so the prices of feedstock will continue to escalate in 2014, after a lull this year. Rising costs, rather than
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capacity utilisation, will continue to be the dominant factor in determining pigment price trends. A repeat of the boom-and-bust conditions of the 1980s and 1990s would severely cripple the TiO2 pigments industry.” In the second keynote paper of the conference, Mr Reg Adams focused on the TiO2 feedstock industry in greater detail. His paper was titled: ‘The mineral sands industry – building on firmer foundations.’ According to Artikol, total world TiO2 feedstock consumption was 6.46 M tonnes (TiO2 units) in 2012, of which the pigments industry accounted for 89%, the titanium metal industry for 5.7%, welding-rod coatings for 2.4% and sundry other end-uses for the remaining 2.5%. The type of process employed for making TiO2 pigment has an important influence on the feedstock sector. Sulfate-route plants typically use lower-grade ilmenites and/or slags than chloride-route plants. Rutile, leucoxene and synrutile (the feedstocks with the richest TiO2 content) are more or less insoluble in sulfuric acid and therefore cannot be used for sulfate-route pigment manufacture. Instead, they are reserved for making TiO2 and titanium sponge metal, via chlorination. In 1970, chloride-route plants (mostly located in the US) accounted for only 23% of the world’s TiO2 pigment capacity. In 1992, chloride-route capacity exceeded sulfate-route capacity for the first time and this remained the position until 2010. There have been no new chlorideroute plants commissioned anywhere in the world since 1994, whereas there have been a lot of new sulfateroute plants built in China over the past decade. By 2015, 55% of the world’s pigment capacity will be based on sulfate-route processes, switching the main focus of attention towards sulfatable feedstocks once again. Rio Tinto (with mines in Canada, Madagascar and South Africa) consolidated its position as the world’s leading supplier of TiO2 feedstocks last year, buying out BHP Billiton’s stake in the South African joint venture. (See ‘Focus on Pigments’, Mar 2012, 4-5). Rio Tinto accounted for 30% of total world feedstocks output in 2012. Iluka has sharply curtailed its output of synrutile and sulfatable ilmenite in recent years, though it has increased its
rutile and leucoxene production. But the net result has been a reduction in Iluka’s share of total global TiO2 feedstock output from 20% in 2004/05 to 10.5% last year. There have been several new entrants to the industry, notably Eramet (formerly Sté le Nickel), which took control of the Norwegian ilmenite smelter in mid2008 and then created a joint venture with MDL (of Australia) to gain access to captive ilmenite feedstock from Senegal. Also in West Africa, Pala Investments (of Switzerland) took control of the Sierra Leone rutile mining operation in 2010/11. Another major feature of the feedstocks sector in recent years has been the increasing degree of vertical integration, with pigment manufacturers acquiring captive feedstock sources. This feature will become even more pronounced over the coming decade, reducing the percentage of the global feedstock market available for independent suppliers. Mr Adams presented a series of maps, identifying the locations of existing and projected feedstock sources. Taking into account the growth in demand for pigment, metal and all other enduses, Artikol forecasts an increase in TiO2 feedstock demand to 7.56 M tonnes by 2015 and to 9.13 M tonnes (TiO2 units) by 2020. Of the latter total, slag will probably account for 44%, ilmenite used tel quel for 38%, rutile for 10% and synrutile for 7%, though the actual split by feedstock type will be influenced by relative pricing of chlorine, petroleum coke, sulfuric acid and of course the individual TiO2 feedstocks themselves. During 2011/12, feedstock prices generally soared to levels that were three or four times their long-term historical averages (in terms of constant value dollars). Artikol predicts that they will fall back to more normal levels over the next 5-6 years, partly thanks to the advent of new sources of supply and partly as a result of captive operations playing a more important role. Assuming dollar inflation at 3% per annum, Artikol is forecasting benchmark ilmenite prices at $152-168 per tonne by 2020. Following these two keynote papers from independent observers of the industry, the next session of the conference showcased the views of senior executives from producer companies at different positions within SEPTEMBER 2013
FOCUS the value chain – Mr Jean-François Turgeon (of Rio Tinto); Mr John Romano (of Tronox); and Mr Bill Eibon (of PPG Industries). Mr Turgeon underlined the importance of safety for personnel and for the environment, especially with regard to maximising the value of by-products and minimising the accumulation of solid waste and discharges of dust, liquid and airborne pollutants. Like most major mining companies, Rio Tinto takes a longterm investment view, planning for a typical mine life of 20-50 years and a typical service life of around 30 years for a furnace at an ilmenite smelter. In May 2012, the company announced a $4 bn project to build a new smelter at Bécancour (150 km northeast of Montreal), but it cancelled this project nine months later, citing the collapse in TiO2 feedstock prices and the consequent failure for the venture to meet the group’s profitability criteria. Nevertheless, Rio Tinto is still committed to its $800 M project to upgrade its existing operations in Quebec, including upgrading the Sorel smelter and extending the life of the Lac Tio mine to 2050, which will mark the mine’s centenary. Also, Rio Tinto plans to mine the large Zulti South deposit in South Africa for at least 20 years. It is developing the Sainte Luce property as its next operative mine in Madagascar (after Petriky) and it is continuing its mineral sands exploration programme in Mozambique. Mr Turgeon noted that China has been importing more than 2 M tonnes/y of TiO2 feedstock (gross weight) over the past three years and he said: “The Chinese TiO2 pigment industry today is at a crossroads with regard to the selection of technologies and feedstocks. Rio Tinto is well positioned to supply both the sulfate and chloride segments of the industry. We have to demonstrate our agility, rebalancing our portfolio as needed according to trends in the different segments of the market.” The title of Mr Romano’s paper was ‘Maximising value through vertical integration.’ Tronox (the world’s fifth largest TiO2 pigment producer) and Exxaro (the world’s third largest TiO2 feedstock producer) effectively merged their TiO2 assets in June 2012. (See also ‘Focus on Pigments’, Nov 2011, 7), with Exxaro taking a significant shareholding SEPTEMBER 2013
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(originally 38.5% and now 44.6%) in Tronox. With 465,000 tonnes/y of TiO2 pigment capacity and a supply potential of 753,000 tonnes/y (gross weight) of rutile, leucoxene, synrutile and slag, Tronox is now fully selfsufficient. It also generates revenue from selling surplus TiO2 feedstock, as well as up to 265,000 tonnes/y of zircon and 220,000 tonnes/y of pig iron. The company’s vision is to double the size of its total sales revenue to around $40 bn by 2017. Traditionally, Tronox has been more focused on the paint industry than the other multinational TiO2 suppliers. Currently, about 70% of its TiO2 pigment sales volume is accounted for by paintmakers. According to Tronox’s analysis of the global paint industry, TiO2 pigment inventories held by major paintmakers represented about 50 days’ consumption at the end of 2008, rising to 80 days at end-2009 and to 120 days at end-2011. During 2012, paintmakers consumed pigment that had been stockpiled rather than buying new pigment, forcing reductions in TiO2 suppliers’ sales volumes and selling prices. By the end of 2012, TiO2 pigment inventories held by major paintmakers had fallen back to more normal levels equivalent to 40 days’ consumption. Mr Romano said: “The total sales volume of the major TiO2 pigment suppliers fell by 17%, comparing full-year 2012 against 2011. To this total of 17%, destocking by customers contributed nearly 13%, lower TiO2 loadings in finished products contributed for 35%. Displacement by Chinese suppliers and generally slightly lower demand for paint and other end-use products had only a marginal influence. Also, inventories of TiO2 pigment held by the TiO2 pigment suppliers have fallen by the equivalent of more than 20 days’ sales during the first four months of 2013 thanks to curtailed plant operating rates. We anticipate improvement in the supply/demand fundamentals in the second half of this year. Meeting the forecast increase in TiO2 demand over the next six years will require significant investment in new feedstock supply and this sector is characterised by high risk and long lead-times (5-10 years) in bringing new operations into production. As a vertically integrated company, Tronox is ideally positioned to cope with the
volatility that is becoming endemic to the TiO2 value-chain.” In his presentation, Mr Bill Eibon noted that the dramatic upsurge in the cost of TiO2 pigment by more than 50% over two years suddenly focused high-level management attention. In mid-January 2012, Mr Charles Bunch (the group CEO) set the company’s paint formulators the target of reducing TiO2 pigment loadings by at least 15% by the end of 2013. Similar instructions were issued by senior executives at other major paint companies. Mr Eibon said: “Initially, legions of chemists and engineers who had been casually using TiO2 for years were relatively unprepared to evaluate new materials and new types of equipment at the desired rate of progress. At both pigment producer and pigment consumer companies, staff knowledge and experience ranged from expert to embryonic (or vice versa) with regard to capabilities for: producing good quality materials consistently; characterising their materials; verbalising accurate value propositions; understanding how to assess the efficiency and effectiveness of new formulations, equipment and processes; and understanding the key characteristics of TiO2 pigments. The result was chaos! There was a high percentage of product and equipment failures, especially for the new entrants to the field.” Among the root causes of this chaos, he identified the number, breadth and capabilities of a number of long-established testing procedures. Tests for colour are often poorly designed, with confounded variables. Tests for pigment dispersibility commonly employ highly variable end-point detection methods. Tests for opacity based on visual assessments of hiding power and contrast ratios can be misleading. Mr Eibon advocated replacing a lot of these tests with determinations of basic data on the TiO2 pigment under scrutiny – solid state colour; large-particle fraction; particle size distribution; tint strength, et al. Ideally, the major pigment suppliers and customers should be collaborating in the design of standard testing methods, with rigorous statistical analyses and computer modelling of complex multifactor interactions of each of the key paint ingredients. The US and German automotive industries have
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FOCUS demonstrated the value of this kind of technical collaborative approach. All participants in the paints and pigments industries would benefit from a similar approach. Thus ended the first day of the Barcelona TiO2 conference. Presentations on the second and third days included: the view from Wall Street, by Mr Frank Mitsch (of Wells Fargo Securities); an overview of the global paints industry, by Mr Rob Outram (of Information Research Ltd); nanoparticulate TiO2 products, by Dr Jan Prochazka (of Advanced Materials, JTJ) and by Dr Sandy Reid (of Promothean Particles); the innovative CTL process for making TiO2, by Mr Enrico di Cesare and Mr Philippe Guillemaille (of Argex Titanium); the use of TiO2 in construction materials, by Dr Hashem Akbari (of Concordia University); white plastic masterbatch, by Mr Heinrich Lingnau (of Schulman); effect pigments, by Prof Gerhard Pfaff (of Merck); décor paper for decorative laminates, by Mr Bernhard Beck (of Munksjö); packaging inks, by Mr Tony Palmer (of Sun Chemical); trends in raw materials used for making TiO2 pigment – sulfuric acid, by Mr Richard Hands (of BC Insight); calcined petroleum coke, by Ms Yasmin Roberts Brown (of Jacobs Consultancy); new TiO2 feedstock sources, by Mr Yuri Makarov (of IRC Ltd), by Mr JeanMichel Fourcade (of Eramet/TiZir); and by Mr Mike Kurtanjek (of White Mountain Titanium Corp); synthetic silicate nanofibres as a potential substitute for TiO2, by Dr Vijay Mathur (of GR Silicate Nanofibres & Carbonates); reviews of the TiO2 industry in China, by Dr Wu Zhonghui (of Kcomber/CCM) and by Mr Laurence Wang (of China Titanium Consulting); and an assessment of Vietnam’s prospects for becoming a major force in the pigments industry instead of just being a major source of titanium minerals, by Mr Khanh Lè (of SON International). These presentations will be reviewed in the next issue of ‘Focus on Pigments.’ Reg Adams
For those who were unable to attend the event, the full set of 25 published papers from the Barcelona TiO2 Conference (30 April – 2 May 2013) is available for sale. For details, please contact: Mr Andrew Smaha, Smithers Group, 19 Northbrook Drive, Portland, ME 04105, USA. Tel: +1 (207) 781 9800. E-mail: [email protected]
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MARKETS GIA downgrades forecast global CaCO3 consumption to 94 M tonnes by 2018 In May 2013, Global Industry Analysts Inc (GIA, of San Jose, CA) published a 389-page report, indicating that the world’s consumption of calcium carbonate will reach 94 M tonnes in 2018. This updates the report published in August 2011, in which GIA forecast world consumption at 113.9 M tonnes by 2017. Evidently, the fall in paper output in North America and Europe turned out to be much steeper than had been previously anticipated and this inevitably affected GIA’s baseline assessments of world demand for both precipitated calcium carbonate (PCC) and ground calcium carbonate (GCC). Consumption is expected to make a steady recovery and show good long-term growth, mainly thanks to increased usage in the paper industry as paper mills around the world continue to shift from acidbased to alkaline-based process technology. The Asia/Pacific region is already well established as the largest and fastest growing region for calcium carbonate demand. There is also an ongoing boom in nanoparticulate calcium carbonate production and consumption in China. GCC is by far the largest product sector and demand for GCC is growing faster than demand for PCC. Historical and forecast data is presented on a year-by-year basis for the period from 2004 to 2018, with detailed analyses for each of the major product types, end-use sectors and geographical market areas. There are useful chapters on commercial developments and technical innovations, which essentially consist of compendiums of brief news items, for example: the introduction of natural calcium carbonate products by Omya and Imerys for the cosmetics market; the launch of CalciTech’s RC100S and CalciSP products; MTI’s new capacity in Brazil, India and China. Profiles are presented of 77 companies involved in manufacturing and selling commercial calcium carbonate products, of which 44 companies are headquartered in the Asia/Pacific region, 17 in Europe and 16 in North America. They include:
Excalibar Minerals, Huber Engineered Materials, Imerys, Maruo Calcium, Minerals Technologies Inc (MTI), Mississippi Lime, Okutama Kogyo, Omya, Schaefer Kalk, Shiraishi Kogyo Kaisha and Solvay. Original Source: ‘Calcium Carbonate: a Global Strategic Business Report’ (reference MCP-2033), 389 pp, 228 tables & charts. Price: $4500 (electronic *.PDF format). Available from: Global Industry Analysts Inc, 6150 Hellyer Avenue, San Jose, CA 95138, USA, tel: +1 (408) 528 9966 & +44 (0)20 8123 2220, website: http://www.strategyr.com. © GIA 2013
GIA upgrades forecast global masterbatch spending to $10.5 bn in 2018 In June 2013, GIA published a 404page report on the world’s plastic masterbatch industry. The format was very similar to the calcium carbonate report, with compendiums of brief news items on commercial developments and technical innovations plus analyses of consumption data presented on a year-by-year basis for the period from 2004 to 2018, with breakdowns by the major geographical areas, product types and end-use sectors. In this report, the major product types are: white, black, coloured and additive masterbatches. The major end-use sectors are: automotive, packaging and construction. Europe remains the largest market region, in terms of consumption volume, but Asia/Pacific and Latin America will continue to show more rapid growth. White masterbatch is the largest of the four product types. Packaging is the largest end-use sector for plastic masterbatch consumption. Manufacturers of consumer products are increasingly seeking packaging materials that facilitate low-cost production, and ensure effective storage and transportation. Demand is therefore expected to grow for advanced masterbatches that offer both functional performance and aesthetic appeal. The automotive industry represents the fastest growing end-use sector for masterbatch demand, with consumption forecast to rise at 4.9% per annum between now and 2018. Total global spending on plastic masterbatch is forecast to reach $10.5 bn by 2018. Two years ago, in a similar report, GIA was forecasting the value of the world masterbatch market at $8.5 bn by 2017. SEPTEMBER 2013
SEPTEMBER 2013
HOMAGE TO CATALONIA & TO THE 13TH BIENNIAL TiO2 CONFERENCE HOSTED BY SMITHERS RAPRA
In this issue
MARKETS 4-5 GIA revises its forecasts: # CaCO3 demand to reach 94 M tonnes by 2018 # plastic masterbatch sales to hit $10.5 bn by 2018 PLANTS 5-7 Albemarle & Senze Meilu JV to build ATH plant in China MTI commissions new PCC plants in US & Thailand, and plans 11th European facility Clariant will move masterbatch plant away from Thane Giriraj brings on-stream new PbO plant in Gujarat Ishihara shuts down chlorideroute TiO2 plant in Singapore COMPANIES 7 Aditya Birla consolidates carbon black assets – as a prelude to flotation? Jiangxi Black Cat appoints HB Chemical to sell carbon black Nubiola heads consortium on EU’s Nanopigmy research programme to develop lowercost pigments EVENTS
PIGMENTS
AN INTERNATIONAL NEWSLETTER MONITORING TECHNICAL AND COMMERCIAL DEVELOPMENTS IN THE PIGMENTS SECTOR ISSN 0969–6210
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Seventy-five years after the first publication of George Orwell’s epic memoir, crowds poured into Barcelona (the Catalan capital) not only for the Labour Day anti-austerity protest demonstration and the European Champions League soccer semi-final against Bayern Munich (both of which took place on 1 May), but also for the Biennial TiO2 Conference. This event was first held in St Louis, Missouri in March 1990. Subsequent venues have included Cannes, Munich, Padua and Rome, but in 2013 for the first time the conference came to Spain. This was also the first time the conference had been hosted under the Smithers Rapra banner and the organisation of the event was directed as smoothly as ever from the Portland, Maine office originally established by Intertech, the company founded by the late Dr Hugh Olmstead. The conference director was Mr Andrew Smaha and the co-chairmen were Mr Reg Adams (of Artikol) and Mr Jim Fisher (of IBMA). It was a very full programme, with 25 presentations in six separate sessions over the three days commencing on Tuesday 30 April. Mr Jim Fisher opened the proceedings with his customary “state-of-the-industry address.” According to IBMA, world TiO2 pigment consumption increased by 1.5% in 2012, following a 4.5% fall in 2011 and a 3.0% rise in 2010. Effectively, there have been “five lost years” and consumption has not yet climbed back to the peak level reached prior to the global financial
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crisis. In fact, consumption last year was 1.1% lower than in 2007. However, world TiO2 pigment capacity has continued to increase, mainly thanks to expansions in China. Faced with the problem of not being able to sell all the pigment they could produce, pigment producers around the world have curtailed their operating rates. Hence, global average capacity utilisation at TiO2 pigment plants has fallen from 94.1% in 2005 to 75.5% in 2011/12. Weak demand growth and a rising margin of overcapacity would normally engender a very bad climate for attempting to raise pigment prices. However, the global average TiO2 pigment price rose by 14% between end-2009 and end-2010, then rose by a further 39% between end-2010 and end-2011. The price rises were justified by producers on the grounds of sharply increased pigment manufacturing costs, which were in turn attributable mainly to an upsurge in TiO2 feedstock costs. Mr Fisher pointed out that TiO2 feedstock accounts for 20-45% of total pigment manufacturing costs, so the doubling of most TiO2 feedstock prices inevitably led to pigment manufacturers trying to pass on these cost increases to their customers. He described this situation as the “bull whip” effect, with pigment prices being driven upwards by cost pressures rather than by normal supply/demand factors. During 2012, there was a strong recoil: paintmakers in particular curtailed their TiO2 pigment usage and adapted their formulations so as to blend in lower-priced and lower-quality TiO2 pigment, putting pressure on the
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FOCUS major multinational suppliers to reduce their prices. According to IBMA, the global average TiO2 pigment price fell by 10.5% between end-2011 and end-2012. So, it is already evident that there was a price spike in 2011. Indeed, the 39% year-on-year increase in price that occurred in 2011 was very similar to the 43% year-on-year increase in price that occurred in 1973. The primary cause at that time was the upsurge in energy and petrochemical costs triggered by the OAPEC crude oil supply embargo and the quadrupling of crude oil prices. As in recent times, the price of pigment was driven upwards by cost pressures rather than by normal supply/demand factors. The pigment price spike of 1973 was immediately followed by a sharp fall in consumption, accompanied by a much more subdued tone in pigment pricing. Looking ahead, Mr Fisher set out several very different scenarios. At best, world TiO2 pigment demand will rise by 4.44% per annum from 5.3 M tonnes in 2012 to 7.5 M tonnes in 2020. At worst, it will rise by only 2.59% per annum to reach 6.5 M tonnes in 2020. Assuming a median forecast of 7.066 M tonnes by 2020, the next factor to consider is China’s pigment capacity expansion potential. At present, less than 2% of China’s TiO2 pigment output is accounted for by chloride-route plants. Mr Fisher believes that chloride-route plants will continue to play an insignificant role in China, but there is scope for substantial sulfate-route capacity expansion. If all the announced Chinese TiO2 projects actually go ahead, world capacity utilisation will remain well below the 80% mark. If only half of all the announced Chinese projects actually go ahead, then world capacity utilisation will creep up from 75.5% in 2012 to 85.0% in 2020. Assuming the latter outcome, Mr Fisher forecasts a gradual rise in the average global TiO2 pigment price from a trough of $2956 per tonne at end-2013 to $3583 per tonne at end2020. In his concluding remarks, he said: “There is simply too much TiO2 pigment capacity in the world. Tight supply conditions will continue to prevail in the TiO2 feedstock sector, so the prices of feedstock will continue to escalate in 2014, after a lull this year. Rising costs, rather than
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capacity utilisation, will continue to be the dominant factor in determining pigment price trends. A repeat of the boom-and-bust conditions of the 1980s and 1990s would severely cripple the TiO2 pigments industry.” In the second keynote paper of the conference, Mr Reg Adams focused on the TiO2 feedstock industry in greater detail. His paper was titled: ‘The mineral sands industry – building on firmer foundations.’ According to Artikol, total world TiO2 feedstock consumption was 6.46 M tonnes (TiO2 units) in 2012, of which the pigments industry accounted for 89%, the titanium metal industry for 5.7%, welding-rod coatings for 2.4% and sundry other end-uses for the remaining 2.5%. The type of process employed for making TiO2 pigment has an important influence on the feedstock sector. Sulfate-route plants typically use lower-grade ilmenites and/or slags than chloride-route plants. Rutile, leucoxene and synrutile (the feedstocks with the richest TiO2 content) are more or less insoluble in sulfuric acid and therefore cannot be used for sulfate-route pigment manufacture. Instead, they are reserved for making TiO2 and titanium sponge metal, via chlorination. In 1970, chloride-route plants (mostly located in the US) accounted for only 23% of the world’s TiO2 pigment capacity. In 1992, chloride-route capacity exceeded sulfate-route capacity for the first time and this remained the position until 2010. There have been no new chlorideroute plants commissioned anywhere in the world since 1994, whereas there have been a lot of new sulfateroute plants built in China over the past decade. By 2015, 55% of the world’s pigment capacity will be based on sulfate-route processes, switching the main focus of attention towards sulfatable feedstocks once again. Rio Tinto (with mines in Canada, Madagascar and South Africa) consolidated its position as the world’s leading supplier of TiO2 feedstocks last year, buying out BHP Billiton’s stake in the South African joint venture. (See ‘Focus on Pigments’, Mar 2012, 4-5). Rio Tinto accounted for 30% of total world feedstocks output in 2012. Iluka has sharply curtailed its output of synrutile and sulfatable ilmenite in recent years, though it has increased its
rutile and leucoxene production. But the net result has been a reduction in Iluka’s share of total global TiO2 feedstock output from 20% in 2004/05 to 10.5% last year. There have been several new entrants to the industry, notably Eramet (formerly Sté le Nickel), which took control of the Norwegian ilmenite smelter in mid2008 and then created a joint venture with MDL (of Australia) to gain access to captive ilmenite feedstock from Senegal. Also in West Africa, Pala Investments (of Switzerland) took control of the Sierra Leone rutile mining operation in 2010/11. Another major feature of the feedstocks sector in recent years has been the increasing degree of vertical integration, with pigment manufacturers acquiring captive feedstock sources. This feature will become even more pronounced over the coming decade, reducing the percentage of the global feedstock market available for independent suppliers. Mr Adams presented a series of maps, identifying the locations of existing and projected feedstock sources. Taking into account the growth in demand for pigment, metal and all other enduses, Artikol forecasts an increase in TiO2 feedstock demand to 7.56 M tonnes by 2015 and to 9.13 M tonnes (TiO2 units) by 2020. Of the latter total, slag will probably account for 44%, ilmenite used tel quel for 38%, rutile for 10% and synrutile for 7%, though the actual split by feedstock type will be influenced by relative pricing of chlorine, petroleum coke, sulfuric acid and of course the individual TiO2 feedstocks themselves. During 2011/12, feedstock prices generally soared to levels that were three or four times their long-term historical averages (in terms of constant value dollars). Artikol predicts that they will fall back to more normal levels over the next 5-6 years, partly thanks to the advent of new sources of supply and partly as a result of captive operations playing a more important role. Assuming dollar inflation at 3% per annum, Artikol is forecasting benchmark ilmenite prices at $152-168 per tonne by 2020. Following these two keynote papers from independent observers of the industry, the next session of the conference showcased the views of senior executives from producer companies at different positions within SEPTEMBER 2013
FOCUS the value chain – Mr Jean-François Turgeon (of Rio Tinto); Mr John Romano (of Tronox); and Mr Bill Eibon (of PPG Industries). Mr Turgeon underlined the importance of safety for personnel and for the environment, especially with regard to maximising the value of by-products and minimising the accumulation of solid waste and discharges of dust, liquid and airborne pollutants. Like most major mining companies, Rio Tinto takes a longterm investment view, planning for a typical mine life of 20-50 years and a typical service life of around 30 years for a furnace at an ilmenite smelter. In May 2012, the company announced a $4 bn project to build a new smelter at Bécancour (150 km northeast of Montreal), but it cancelled this project nine months later, citing the collapse in TiO2 feedstock prices and the consequent failure for the venture to meet the group’s profitability criteria. Nevertheless, Rio Tinto is still committed to its $800 M project to upgrade its existing operations in Quebec, including upgrading the Sorel smelter and extending the life of the Lac Tio mine to 2050, which will mark the mine’s centenary. Also, Rio Tinto plans to mine the large Zulti South deposit in South Africa for at least 20 years. It is developing the Sainte Luce property as its next operative mine in Madagascar (after Petriky) and it is continuing its mineral sands exploration programme in Mozambique. Mr Turgeon noted that China has been importing more than 2 M tonnes/y of TiO2 feedstock (gross weight) over the past three years and he said: “The Chinese TiO2 pigment industry today is at a crossroads with regard to the selection of technologies and feedstocks. Rio Tinto is well positioned to supply both the sulfate and chloride segments of the industry. We have to demonstrate our agility, rebalancing our portfolio as needed according to trends in the different segments of the market.” The title of Mr Romano’s paper was ‘Maximising value through vertical integration.’ Tronox (the world’s fifth largest TiO2 pigment producer) and Exxaro (the world’s third largest TiO2 feedstock producer) effectively merged their TiO2 assets in June 2012. (See also ‘Focus on Pigments’, Nov 2011, 7), with Exxaro taking a significant shareholding SEPTEMBER 2013
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(originally 38.5% and now 44.6%) in Tronox. With 465,000 tonnes/y of TiO2 pigment capacity and a supply potential of 753,000 tonnes/y (gross weight) of rutile, leucoxene, synrutile and slag, Tronox is now fully selfsufficient. It also generates revenue from selling surplus TiO2 feedstock, as well as up to 265,000 tonnes/y of zircon and 220,000 tonnes/y of pig iron. The company’s vision is to double the size of its total sales revenue to around $40 bn by 2017. Traditionally, Tronox has been more focused on the paint industry than the other multinational TiO2 suppliers. Currently, about 70% of its TiO2 pigment sales volume is accounted for by paintmakers. According to Tronox’s analysis of the global paint industry, TiO2 pigment inventories held by major paintmakers represented about 50 days’ consumption at the end of 2008, rising to 80 days at end-2009 and to 120 days at end-2011. During 2012, paintmakers consumed pigment that had been stockpiled rather than buying new pigment, forcing reductions in TiO2 suppliers’ sales volumes and selling prices. By the end of 2012, TiO2 pigment inventories held by major paintmakers had fallen back to more normal levels equivalent to 40 days’ consumption. Mr Romano said: “The total sales volume of the major TiO2 pigment suppliers fell by 17%, comparing full-year 2012 against 2011. To this total of 17%, destocking by customers contributed nearly 13%, lower TiO2 loadings in finished products contributed for 35%. Displacement by Chinese suppliers and generally slightly lower demand for paint and other end-use products had only a marginal influence. Also, inventories of TiO2 pigment held by the TiO2 pigment suppliers have fallen by the equivalent of more than 20 days’ sales during the first four months of 2013 thanks to curtailed plant operating rates. We anticipate improvement in the supply/demand fundamentals in the second half of this year. Meeting the forecast increase in TiO2 demand over the next six years will require significant investment in new feedstock supply and this sector is characterised by high risk and long lead-times (5-10 years) in bringing new operations into production. As a vertically integrated company, Tronox is ideally positioned to cope with the
volatility that is becoming endemic to the TiO2 value-chain.” In his presentation, Mr Bill Eibon noted that the dramatic upsurge in the cost of TiO2 pigment by more than 50% over two years suddenly focused high-level management attention. In mid-January 2012, Mr Charles Bunch (the group CEO) set the company’s paint formulators the target of reducing TiO2 pigment loadings by at least 15% by the end of 2013. Similar instructions were issued by senior executives at other major paint companies. Mr Eibon said: “Initially, legions of chemists and engineers who had been casually using TiO2 for years were relatively unprepared to evaluate new materials and new types of equipment at the desired rate of progress. At both pigment producer and pigment consumer companies, staff knowledge and experience ranged from expert to embryonic (or vice versa) with regard to capabilities for: producing good quality materials consistently; characterising their materials; verbalising accurate value propositions; understanding how to assess the efficiency and effectiveness of new formulations, equipment and processes; and understanding the key characteristics of TiO2 pigments. The result was chaos! There was a high percentage of product and equipment failures, especially for the new entrants to the field.” Among the root causes of this chaos, he identified the number, breadth and capabilities of a number of long-established testing procedures. Tests for colour are often poorly designed, with confounded variables. Tests for pigment dispersibility commonly employ highly variable end-point detection methods. Tests for opacity based on visual assessments of hiding power and contrast ratios can be misleading. Mr Eibon advocated replacing a lot of these tests with determinations of basic data on the TiO2 pigment under scrutiny – solid state colour; large-particle fraction; particle size distribution; tint strength, et al. Ideally, the major pigment suppliers and customers should be collaborating in the design of standard testing methods, with rigorous statistical analyses and computer modelling of complex multifactor interactions of each of the key paint ingredients. The US and German automotive industries have
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FOCUS demonstrated the value of this kind of technical collaborative approach. All participants in the paints and pigments industries would benefit from a similar approach. Thus ended the first day of the Barcelona TiO2 conference. Presentations on the second and third days included: the view from Wall Street, by Mr Frank Mitsch (of Wells Fargo Securities); an overview of the global paints industry, by Mr Rob Outram (of Information Research Ltd); nanoparticulate TiO2 products, by Dr Jan Prochazka (of Advanced Materials, JTJ) and by Dr Sandy Reid (of Promothean Particles); the innovative CTL process for making TiO2, by Mr Enrico di Cesare and Mr Philippe Guillemaille (of Argex Titanium); the use of TiO2 in construction materials, by Dr Hashem Akbari (of Concordia University); white plastic masterbatch, by Mr Heinrich Lingnau (of Schulman); effect pigments, by Prof Gerhard Pfaff (of Merck); décor paper for decorative laminates, by Mr Bernhard Beck (of Munksjö); packaging inks, by Mr Tony Palmer (of Sun Chemical); trends in raw materials used for making TiO2 pigment – sulfuric acid, by Mr Richard Hands (of BC Insight); calcined petroleum coke, by Ms Yasmin Roberts Brown (of Jacobs Consultancy); new TiO2 feedstock sources, by Mr Yuri Makarov (of IRC Ltd), by Mr JeanMichel Fourcade (of Eramet/TiZir); and by Mr Mike Kurtanjek (of White Mountain Titanium Corp); synthetic silicate nanofibres as a potential substitute for TiO2, by Dr Vijay Mathur (of GR Silicate Nanofibres & Carbonates); reviews of the TiO2 industry in China, by Dr Wu Zhonghui (of Kcomber/CCM) and by Mr Laurence Wang (of China Titanium Consulting); and an assessment of Vietnam’s prospects for becoming a major force in the pigments industry instead of just being a major source of titanium minerals, by Mr Khanh Lè (of SON International). These presentations will be reviewed in the next issue of ‘Focus on Pigments.’ Reg Adams
For those who were unable to attend the event, the full set of 25 published papers from the Barcelona TiO2 Conference (30 April – 2 May 2013) is available for sale. For details, please contact: Mr Andrew Smaha, Smithers Group, 19 Northbrook Drive, Portland, ME 04105, USA. Tel: +1 (207) 781 9800. E-mail: [email protected]
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MARKETS GIA downgrades forecast global CaCO3 consumption to 94 M tonnes by 2018 In May 2013, Global Industry Analysts Inc (GIA, of San Jose, CA) published a 389-page report, indicating that the world’s consumption of calcium carbonate will reach 94 M tonnes in 2018. This updates the report published in August 2011, in which GIA forecast world consumption at 113.9 M tonnes by 2017. Evidently, the fall in paper output in North America and Europe turned out to be much steeper than had been previously anticipated and this inevitably affected GIA’s baseline assessments of world demand for both precipitated calcium carbonate (PCC) and ground calcium carbonate (GCC). Consumption is expected to make a steady recovery and show good long-term growth, mainly thanks to increased usage in the paper industry as paper mills around the world continue to shift from acidbased to alkaline-based process technology. The Asia/Pacific region is already well established as the largest and fastest growing region for calcium carbonate demand. There is also an ongoing boom in nanoparticulate calcium carbonate production and consumption in China. GCC is by far the largest product sector and demand for GCC is growing faster than demand for PCC. Historical and forecast data is presented on a year-by-year basis for the period from 2004 to 2018, with detailed analyses for each of the major product types, end-use sectors and geographical market areas. There are useful chapters on commercial developments and technical innovations, which essentially consist of compendiums of brief news items, for example: the introduction of natural calcium carbonate products by Omya and Imerys for the cosmetics market; the launch of CalciTech’s RC100S and CalciSP products; MTI’s new capacity in Brazil, India and China. Profiles are presented of 77 companies involved in manufacturing and selling commercial calcium carbonate products, of which 44 companies are headquartered in the Asia/Pacific region, 17 in Europe and 16 in North America. They include:
Excalibar Minerals, Huber Engineered Materials, Imerys, Maruo Calcium, Minerals Technologies Inc (MTI), Mississippi Lime, Okutama Kogyo, Omya, Schaefer Kalk, Shiraishi Kogyo Kaisha and Solvay. Original Source: ‘Calcium Carbonate: a Global Strategic Business Report’ (reference MCP-2033), 389 pp, 228 tables & charts. Price: $4500 (electronic *.PDF format). Available from: Global Industry Analysts Inc, 6150 Hellyer Avenue, San Jose, CA 95138, USA, tel: +1 (408) 528 9966 & +44 (0)20 8123 2220, website: http://www.strategyr.com. © GIA 2013
GIA upgrades forecast global masterbatch spending to $10.5 bn in 2018 In June 2013, GIA published a 404page report on the world’s plastic masterbatch industry. The format was very similar to the calcium carbonate report, with compendiums of brief news items on commercial developments and technical innovations plus analyses of consumption data presented on a year-by-year basis for the period from 2004 to 2018, with breakdowns by the major geographical areas, product types and end-use sectors. In this report, the major product types are: white, black, coloured and additive masterbatches. The major end-use sectors are: automotive, packaging and construction. Europe remains the largest market region, in terms of consumption volume, but Asia/Pacific and Latin America will continue to show more rapid growth. White masterbatch is the largest of the four product types. Packaging is the largest end-use sector for plastic masterbatch consumption. Manufacturers of consumer products are increasingly seeking packaging materials that facilitate low-cost production, and ensure effective storage and transportation. Demand is therefore expected to grow for advanced masterbatches that offer both functional performance and aesthetic appeal. The automotive industry represents the fastest growing end-use sector for masterbatch demand, with consumption forecast to rise at 4.9% per annum between now and 2018. Total global spending on plastic masterbatch is forecast to reach $10.5 bn by 2018. Two years ago, in a similar report, GIA was forecasting the value of the world masterbatch market at $8.5 bn by 2017. SEPTEMBER 2013