- Email: [email protected]
Huntsman challenges suspension of EU import duties on TiO2 pigments
FOCUS The healthy growth rate over the next five years contrasts against the relative stagnation of global kaolin demand over the past five years. The paper industry will continue to be the largest end-use sector for kaolin, while the ceramics industry will be the fastest growing. Kaolin consumption for ceramics is forecast to increase at an average rate of 5.3% per annum between 2010 and 2015. Most of the forecast future growth in world kaolin consumption will be attributable to the “emerging markets”, with China alone accounting for an additional 1750 tonnes/y of kaolin consumption. Within the next few years, China will overtake the US as the world’s largest kaolin consuming country. Within Freedonia’s report, separate sections and sub-sections contain detailed analyses of individual geographical and end-use markets. There is also a chapter containing company profiles for the leading kaolin producers, namely: Ashapura; BASF; Daleco Resources (and its subsidiary Clean Age Minerals); Eczacibasi Holding Co; English Indian Clays; Erdene (and its 60% owned subsidiary Advanced Primary Minerals); Goonvean; Gulf Alumina; I-Minerals; Imerys (including Para Pigmentos and AGS Mineraux); Jiangxi Sincere Mineral Industry Group Co; Kalemaden Endustriyel Hammaddeler (KALE); KaMin; Kaolin AD (of Bulgaria); Kerala Clays & Ceramic Products; Lasselsberger GmbH; Longyan Kaolin Clay Co; Minotaur Exploration; Motamineral Minerais; Quarzwerke; SCR-Sibelco (including Unimin); Sedlecky; Sté Kaolinière Armoricaine (SOKA); Stephan Schmidt; Tecumseh; Thiele Kaolin; the Vale group (including Cadam of Brazil); Veneta Mineraria (and its Spanish subsidiary Caolines Vimianzo) and Xatico. Original Source: ‘World Kaolin to 2015’ (Report 2846), 235 pp. Price: $5900 (electronic *.PDF format). Available from: Freedonia Inc, 767 Beta Drive, Cleveland, OH 44143, USA, tel: +1 (440) 684 9600, website: http://www.freedoniagroup.com © Freedonia 2012
Booming Chinese carbon black exports to the US & Asian markets Chinese suppliers dramatically increased their exports of carbon black to the US last year. According to
JUNE 2012
ON
PIGMENTS
data recently released by the US Department of Commerce, the US imported 22,344 tonnes from China in 2011, compared against only 701 tonnes in 2010. Imports from Canada fell by nearly 9% from 111,713 tonnes in 2010 to 101,731 tonnes in 2011. Imports from other countries increased from 38,897 tonnes to 48,249 tonnes. Total US imports of carbon black increased by 14% from 151,311 tonnes to 172,324 tonnes. Looking at the data on a month-bymonth basis, imports from China peaked at 4278 tonnes in May 2011 and then fell steadily during the second half of the year. In the early months of 2012, they fell further still, down to only 114 tonnes in February 2012. As well as boosting their presence in the US market last year, Chinese suppliers also increased their exports to India, Thailand, Indonesia, Japan, South Korea, and Vietnam. In fact, China was the world’s largest exporter of carbon black in 2011, whereas it had been in third place – behind Russia and Egypt – in 2010. Notch Consulting provides some interesting insights into this dramatic increase in Chinese carbon black exports. Chinese coal tar prices have been quite low compared to crude oil prices in recent years. This is because of a high level of activity on the part of Chinese steelmakers, most of which prefer to use coke in their blast furnaces. So Chinese carbon black producers using coal tar oil feedstock enjoyed a significant cost advantage over producers elsewhere in Asia using decant oil feedstock derived from crude oil. In addition, expansion in China’s carbon black capacity has outpaced the growth in domestic demand, prompting Chinese suppliers to seek attractive export opportunities. Original Source: European Rubber Journal, 9 May 2012, (Website: http://www.european-rubberjournal.com/) © Crain Communications Ltd 2012
India to impose anti-dumping duties on Chinese carbon black? In response to complaints from the Indian carbon black industry’s trade association, the All-Union Government announced on 18 December 2011 that the Directorate General of Safeguards (DGS) would commence an investigation into the import of Chinese carbon black into India to
determine if anti-dumping duties should be levied. Imports from China were less than 15,000 tonnes in 2008, but increased to more than 75,000 tonnes in 2011. According to the ‘ERJ’, India was the most important market for China’s exports last year. Total Chinese shipments to overseas markets soared from 224,900 tonnes in 2010 to 487,500 tonnes in 2011. In mid-January 2012, executives from three major companies (Jiangxi Black Cat, Hebei Bright and Shandong Gold) visited Indian carbon black and tyre manufacturers during a fact-finding mission sponsored by the Chinese Ministry of Commerce. They reported that India’s carbon black capacity is currently 910,000 tonnes/y. For 2011, output was 860,000 tonnes and exports were around 200,000 tonnes. They also reported that price is a major factor in the minds of Indian tyre manufacturers (such as Apollo Tyres and JK Industries), but so too is reliability of deliveries. They noted that Indian tyre manufacturers are likely to limit their purchases from Chinese suppliers to 25% of their total tonnage requirement. Original Source: European Rubber Journal, 9 Feb 2012 & 6 Apr 2012, (Website: http://www.european-rubberjournal.com/) © Crain Communications Ltd 2012. Original Source: Chemical Weekly, 6 Mar 2012, 136 (Website: http://www.chemicalweekly.com/) © Sevak Publications & Chemical Weekly Database P Ltd 2012
Huntsman challenges suspension of EU import duties on TiO2 pigments On 19 December 2011, the Council of the European Union officially declared that it was suspending the import duty on a number of products, including rutile grades of TiO2 pigment with a TiO2 content of at least 90%. The cost of TiO2 pigments had risen steeply over the previous 18 months and a number of European consumers were keen to encourage supplies from sources outside the EU, notably the US, Mexico, Ukraine and China. The European Confederation of Paint, Printing Ink & Artists Colours Manufacturers Associations (CEPE) actively campaigned for the abolition of the 6% duty payable on imports of TiO2 pigment. Thanks to the EU Council Regulation 1344/2011 enacted on 19 December 2011, repealing Regulation 1255/96, the import duty payable on TiO2 pigment has been reset to zero.
3
FOCUS On 12 March 2012, Tioxide Europe and a number of other companies within the Huntsman group filed a legal action against the EU Council. The action has been designated as Case T-116/12. The plaintiffs are seeking to have Regulation 1344/2011 annulled, so that the TiO2 pigment import duty regime can continue as before. They are also seeking reimbursement of costs incurred. In support of the action, Tioxide Europe is relying on three pleas: alleged failure to provide reasons justifying the enactment of Regulation 1344/2011; alleged manifest error of assessment; and alleged breach of the principle of proportionality. By their first plea, the plaintiffs submit that the EU Council has failed in its obligation to provide sufficient reasons for suspending the import duty in relation to the relevant products. By their second plea, the plaintiffs consider that Regulation 1344/2011 infringes Articles 31 and 32 TFEU since the EU Council, by basing itself on an unlawful proposal of the Commission without any further examination of the relevant facts, has committed a manifest error of assessment. By their third plea, the applicants further submit that the EU Council has breached the principle of proportionality by adopting a tariff suspension under the contested Regulation, as opposed to the less onerous measure available to it, ie a tariff quota, since “identical, equivalent or substitute products” were being manufactured within the European Union. Huntsman is the largest manufacturer of TiO2 pigments within the EU, operating: a 150,000 tonnes/y plant at Greatham (UK); a 95,000 tonnes/y plant at Calais (France); an 80,000 tonnes/y plant at Huelva (Spain); and an 80,000 tonnes/y plant at Scarlino (Italy). Original Source: Official Journal of the European Union C Information and Notices, 28 Apr 2012, 55 (C126), 25 (Website: http://eurlex.europa.eu/JOIndex.do) © European Union 2012. Original Source: TiO2 Worldwide Update, 20 (1), 48 (Website: http://www.artikol.com) © Artikol 2012
Indian Govt cuts duty on imported TiO2 & seeks foreign direct investment The Indian Government’s budget for the year to end-March 2013 included
4
ON
PIGMENTS
a few significant changes in basic import duties. The duty on imported coal will be abolished altogether, which should result in an overall decrease in electricity costs, benefiting several sectors of the chemical industry. The duty on imported boric acid has been raised from 5% to 7.5%, while the duty on imported TiO2 has been reduced from 10% to 7.5%. According to ‘Chemical Weekly’, India currently imports 75,000 tonnes/y of TiO2 pigment and this is expected to rise to 100,000 tonnes/y by 2016. The country possesses abundant resources of good quality titanium mineral resources, notably in the provinces of Kerala, Tamil Nadu, Orissa and Andhra Pradesh. In fact, India has been a substantial net exporter of ilmenite for many years. The Government is apparently taking steps to encourage the multinational TiO2 pigment producers to invest in building a worldscale plant in India. ‘Chemical Weekly’ suggests that $130 M would be required for the establishment of a 50,000 tonnes/y plant on a greenfields site. In truth, the capital investment requirement would probably be at least $250 M. Original Source: Chemical Weekly, 10 Jan 2012, 144 & 27 Mar 2012, 128 (Website: http://www.chemicalweekly.com/) © Sevak Publications & Chemical Weekly Database P Ltd 2012
Freedonia sees world paint demand approaching 60 bn litres by 2015 As we have noted in previous issues of ‘Focus on Pigments’, there is a surprisingly wide range of assessments for world paint consumption cited by different industry analysts. (See also ‘Focus on Pigments’, Mar 2012, 1-2 & Feb 2008, 1-3). Freedonia, in its latest report published in February 2012, forecasts
growth in world paint consumption at 45.6 M tonnes in 2015, following average growth at a rate of 5.6% per annum. This implies an assessment of 34.75 M tonnes for the base year, 2010. Assuming an average specific gravity of 1.25 means that these figures translate to 43.4 bn litres in 2010 and 57 bn litres in 2015. Therefore, Freedonia’s assessment is significantly higher than the assessments from AkzoNobel, PPG Industries and Orr & Boss. In fact, it comes closest to the most credible and comprehensive ‘bottom-up’ assessment, published by Information Research Ltd (IRL) – 40 M tonnes or 50 bn litres, worth at least $125 bn in 2006. By contrast, the Orr & Boss study sponsored by the International Paint & Printing Ink Council (IPPIC) forecast global paint demand reaching only 33.5 bn litres by 2014. Freedonia notes that the Asia/Pacific region is already the largest regional market for paint demand and it believes that it will also be the fastest growing over the next five years. Nevertheless, Freedonia is anticipating a strong rebound in residential construction activity in North America and Western Europe, which should drive an upsurge in architectural paint demand within these regions. North American demand for architectural paint actually showed a fairly steep decline between 2005 and 2010, so there is plenty of scope for recovery. In a separate report on the US paint industry, published last November, Freedonia forecast that US spending on paint would increase by 7.8% per annum from just over $17 bn in 2010 to more than $25 bn by 2015. Freedonia also foresees healthy growth in global demand for automotive paints, for coatings used in the household domestic appliance (“white goods”) sector and for industrial maintenance coatings. The long-
World Paint Consumption Assessments, 2004 to 2011 Data Source
Year
Volume (bn litres)
Value ($ bn)
Information Research Ltd Freedonia AkzoNobel AkzoNobel PPG Industries Orr & Boss Orr & Boss Orr & Boss
2006 2010 2005 2011 2008 2004 2009 2010
50.0 43.4 27.0 na 26.6 na 27.2 na
125.0 na 85.7 98.0 87.0 73.0 86.6 90.0
JUNE 2012
Booming Chinese carbon black exports to the US & Asian markets Chinese suppliers dramatically increased their exports of carbon black to the US last year. According to
JUNE 2012
ON
PIGMENTS
data recently released by the US Department of Commerce, the US imported 22,344 tonnes from China in 2011, compared against only 701 tonnes in 2010. Imports from Canada fell by nearly 9% from 111,713 tonnes in 2010 to 101,731 tonnes in 2011. Imports from other countries increased from 38,897 tonnes to 48,249 tonnes. Total US imports of carbon black increased by 14% from 151,311 tonnes to 172,324 tonnes. Looking at the data on a month-bymonth basis, imports from China peaked at 4278 tonnes in May 2011 and then fell steadily during the second half of the year. In the early months of 2012, they fell further still, down to only 114 tonnes in February 2012. As well as boosting their presence in the US market last year, Chinese suppliers also increased their exports to India, Thailand, Indonesia, Japan, South Korea, and Vietnam. In fact, China was the world’s largest exporter of carbon black in 2011, whereas it had been in third place – behind Russia and Egypt – in 2010. Notch Consulting provides some interesting insights into this dramatic increase in Chinese carbon black exports. Chinese coal tar prices have been quite low compared to crude oil prices in recent years. This is because of a high level of activity on the part of Chinese steelmakers, most of which prefer to use coke in their blast furnaces. So Chinese carbon black producers using coal tar oil feedstock enjoyed a significant cost advantage over producers elsewhere in Asia using decant oil feedstock derived from crude oil. In addition, expansion in China’s carbon black capacity has outpaced the growth in domestic demand, prompting Chinese suppliers to seek attractive export opportunities. Original Source: European Rubber Journal, 9 May 2012, (Website: http://www.european-rubberjournal.com/) © Crain Communications Ltd 2012
India to impose anti-dumping duties on Chinese carbon black? In response to complaints from the Indian carbon black industry’s trade association, the All-Union Government announced on 18 December 2011 that the Directorate General of Safeguards (DGS) would commence an investigation into the import of Chinese carbon black into India to
determine if anti-dumping duties should be levied. Imports from China were less than 15,000 tonnes in 2008, but increased to more than 75,000 tonnes in 2011. According to the ‘ERJ’, India was the most important market for China’s exports last year. Total Chinese shipments to overseas markets soared from 224,900 tonnes in 2010 to 487,500 tonnes in 2011. In mid-January 2012, executives from three major companies (Jiangxi Black Cat, Hebei Bright and Shandong Gold) visited Indian carbon black and tyre manufacturers during a fact-finding mission sponsored by the Chinese Ministry of Commerce. They reported that India’s carbon black capacity is currently 910,000 tonnes/y. For 2011, output was 860,000 tonnes and exports were around 200,000 tonnes. They also reported that price is a major factor in the minds of Indian tyre manufacturers (such as Apollo Tyres and JK Industries), but so too is reliability of deliveries. They noted that Indian tyre manufacturers are likely to limit their purchases from Chinese suppliers to 25% of their total tonnage requirement. Original Source: European Rubber Journal, 9 Feb 2012 & 6 Apr 2012, (Website: http://www.european-rubberjournal.com/) © Crain Communications Ltd 2012. Original Source: Chemical Weekly, 6 Mar 2012, 136 (Website: http://www.chemicalweekly.com/) © Sevak Publications & Chemical Weekly Database P Ltd 2012
Huntsman challenges suspension of EU import duties on TiO2 pigments On 19 December 2011, the Council of the European Union officially declared that it was suspending the import duty on a number of products, including rutile grades of TiO2 pigment with a TiO2 content of at least 90%. The cost of TiO2 pigments had risen steeply over the previous 18 months and a number of European consumers were keen to encourage supplies from sources outside the EU, notably the US, Mexico, Ukraine and China. The European Confederation of Paint, Printing Ink & Artists Colours Manufacturers Associations (CEPE) actively campaigned for the abolition of the 6% duty payable on imports of TiO2 pigment. Thanks to the EU Council Regulation 1344/2011 enacted on 19 December 2011, repealing Regulation 1255/96, the import duty payable on TiO2 pigment has been reset to zero.
3
FOCUS On 12 March 2012, Tioxide Europe and a number of other companies within the Huntsman group filed a legal action against the EU Council. The action has been designated as Case T-116/12. The plaintiffs are seeking to have Regulation 1344/2011 annulled, so that the TiO2 pigment import duty regime can continue as before. They are also seeking reimbursement of costs incurred. In support of the action, Tioxide Europe is relying on three pleas: alleged failure to provide reasons justifying the enactment of Regulation 1344/2011; alleged manifest error of assessment; and alleged breach of the principle of proportionality. By their first plea, the plaintiffs submit that the EU Council has failed in its obligation to provide sufficient reasons for suspending the import duty in relation to the relevant products. By their second plea, the plaintiffs consider that Regulation 1344/2011 infringes Articles 31 and 32 TFEU since the EU Council, by basing itself on an unlawful proposal of the Commission without any further examination of the relevant facts, has committed a manifest error of assessment. By their third plea, the applicants further submit that the EU Council has breached the principle of proportionality by adopting a tariff suspension under the contested Regulation, as opposed to the less onerous measure available to it, ie a tariff quota, since “identical, equivalent or substitute products” were being manufactured within the European Union. Huntsman is the largest manufacturer of TiO2 pigments within the EU, operating: a 150,000 tonnes/y plant at Greatham (UK); a 95,000 tonnes/y plant at Calais (France); an 80,000 tonnes/y plant at Huelva (Spain); and an 80,000 tonnes/y plant at Scarlino (Italy). Original Source: Official Journal of the European Union C Information and Notices, 28 Apr 2012, 55 (C126), 25 (Website: http://eurlex.europa.eu/JOIndex.do) © European Union 2012. Original Source: TiO2 Worldwide Update, 20 (1), 48 (Website: http://www.artikol.com) © Artikol 2012
Indian Govt cuts duty on imported TiO2 & seeks foreign direct investment The Indian Government’s budget for the year to end-March 2013 included
4
ON
PIGMENTS
a few significant changes in basic import duties. The duty on imported coal will be abolished altogether, which should result in an overall decrease in electricity costs, benefiting several sectors of the chemical industry. The duty on imported boric acid has been raised from 5% to 7.5%, while the duty on imported TiO2 has been reduced from 10% to 7.5%. According to ‘Chemical Weekly’, India currently imports 75,000 tonnes/y of TiO2 pigment and this is expected to rise to 100,000 tonnes/y by 2016. The country possesses abundant resources of good quality titanium mineral resources, notably in the provinces of Kerala, Tamil Nadu, Orissa and Andhra Pradesh. In fact, India has been a substantial net exporter of ilmenite for many years. The Government is apparently taking steps to encourage the multinational TiO2 pigment producers to invest in building a worldscale plant in India. ‘Chemical Weekly’ suggests that $130 M would be required for the establishment of a 50,000 tonnes/y plant on a greenfields site. In truth, the capital investment requirement would probably be at least $250 M. Original Source: Chemical Weekly, 10 Jan 2012, 144 & 27 Mar 2012, 128 (Website: http://www.chemicalweekly.com/) © Sevak Publications & Chemical Weekly Database P Ltd 2012
Freedonia sees world paint demand approaching 60 bn litres by 2015 As we have noted in previous issues of ‘Focus on Pigments’, there is a surprisingly wide range of assessments for world paint consumption cited by different industry analysts. (See also ‘Focus on Pigments’, Mar 2012, 1-2 & Feb 2008, 1-3). Freedonia, in its latest report published in February 2012, forecasts
growth in world paint consumption at 45.6 M tonnes in 2015, following average growth at a rate of 5.6% per annum. This implies an assessment of 34.75 M tonnes for the base year, 2010. Assuming an average specific gravity of 1.25 means that these figures translate to 43.4 bn litres in 2010 and 57 bn litres in 2015. Therefore, Freedonia’s assessment is significantly higher than the assessments from AkzoNobel, PPG Industries and Orr & Boss. In fact, it comes closest to the most credible and comprehensive ‘bottom-up’ assessment, published by Information Research Ltd (IRL) – 40 M tonnes or 50 bn litres, worth at least $125 bn in 2006. By contrast, the Orr & Boss study sponsored by the International Paint & Printing Ink Council (IPPIC) forecast global paint demand reaching only 33.5 bn litres by 2014. Freedonia notes that the Asia/Pacific region is already the largest regional market for paint demand and it believes that it will also be the fastest growing over the next five years. Nevertheless, Freedonia is anticipating a strong rebound in residential construction activity in North America and Western Europe, which should drive an upsurge in architectural paint demand within these regions. North American demand for architectural paint actually showed a fairly steep decline between 2005 and 2010, so there is plenty of scope for recovery. In a separate report on the US paint industry, published last November, Freedonia forecast that US spending on paint would increase by 7.8% per annum from just over $17 bn in 2010 to more than $25 bn by 2015. Freedonia also foresees healthy growth in global demand for automotive paints, for coatings used in the household domestic appliance (“white goods”) sector and for industrial maintenance coatings. The long-
World Paint Consumption Assessments, 2004 to 2011 Data Source
Year
Volume (bn litres)
Value ($ bn)
Information Research Ltd Freedonia AkzoNobel AkzoNobel PPG Industries Orr & Boss Orr & Boss Orr & Boss
2006 2010 2005 2011 2008 2004 2009 2010
50.0 43.4 27.0 na 26.6 na 27.2 na
125.0 na 85.7 98.0 87.0 73.0 86.6 90.0
JUNE 2012