The TiO2 industry, like the rest of the world, finds itself coping with the coronavirus epidemic in China. Any unfortunate economic news impacting China is not good for the global economy. Yet, disrupted Chinese production is welcomed by other global producers. Transportation and logistics are a nightmare. Getting any supply chain to function properly is very difficult. TiO2 feedstock producers are mostly located in Sichuan, while TiO2 and coatings production is focused on the east coast. Products and workers are limited in travel.
Chinese production comes into question. Estimates are that industrial production in China is currently in the 50-60% range. In 2019, China was a net exporter of TiO2 of 775k tonnes. Chinese producers account for approximately 2.4Mtonnes of the estimated 6Mtonnes sold in 2019. The net impact appears favorable for producers outside China.
TiPMC estimates that 2020 feedstock imports into China will be reduced by nearly 700k tonnes vs. 2018, an approximate 30% reduction, as production from mines is declining. Assuming Chinese plants can operate, procuring local feedstock will be extremely difficult, and anything that is available will be priced at a premium. Global demand is still driven from Asia. The impact of the coronavirus is really going to test the dependency on Asian and European economies on China. Slower economies mean slower TiO2 demand.
The U.S. is much more insulated, as housing in the U.S. is strong. Germany, for example, will feel a stronger economic impact from decreased Chinese economic activity as they rely on exports of high-end equipment and auto sales to the Chinese market to help drive their economy.
As part of the Tronox acquisition of Cristal, Tronox is now the second largest, vertically integrated global producer. As part of the acquisition, they now operate a sulfate TiO2 plant in China, in Fuzhou, with reported capacity of 45k tpa. Tronox has stated its intention to expand from this base in China. The impact on local producers, particularly those less competitive, will be closely watched. Recent rapid increases in sulfate feedstock costs for these producers have stressed earnings, with no relief in sight.
As Chinese chloride grows, sulfate producers outside China, particularly those in Europe, are likely to come under intense pressure. Reports of potential assets being closed are prevalent, while the competitiveness of several assets come into question. TiPMC estimates that nearly 210k tpa was closed in the last decade outside of China. This trend is likely to continue through the 2020s.
The timing of Chinese chloride growth seems to be more in question than if it will occur. The rate of growth will likely mirror the experiences of the MNPs, over 30 years ago. Lomon Billions is without question the most progressed chloride producer, with the progress of others still in question. What is certain is that Chinese chloride growth will be a major focus of the industry, its suppliers, and customers, in the coming decade.
Original Source: Paint & Coatings Industry, 23 Mar 2020. (Website: http://www.pcimag.com), Copyright BNP Media 2020.