2009 Titanium Feedstock Industry Performance

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TZMI releases its 9th edition of Titanium Feedstock Producers : Comparative Cost Study, the essential benchmarking publication for all industry participants including producers, new industry entrants and the financial community analysts.

Titanium feedstock producers poised for market recovery as difficult year ends.

TZMI has just released its 9th edition of the annual Comparative Cost Study featuring 25 titanium feedstock operations in 2009, accounting for 82% of global titanium mineral production and 88% of zircon production.

The major performance parameter, the revenue to cash cost ratio (R/C ratio), decreased by 6% from 1.55 in 2008 to 1.45 in 2009. This ratio has fluctuated within the range of 1.42 to 1.55 since 2003.

The performance of the titanium feedstock industry in 2009 can be summed up as follows:

  •     The fall in the average price of pig iron had the largest impact in lowering the average cash margin for the industry, specifically that of slag producers. The revenue generated by co-products had the reverse effect from that experienced in 2008.
  •     In an early response to the suppressed market demand for TiO2 feedstock, major operations curtailed high cost production in an attempt to cut operating costs.
  •     There was less benefit achieved from exchange rate effects as major currencies on average showed some weakening to the US dollar. Most major currencies however strengthened against the US dollar during the second half of the year.
  •     As a result of positive exchange rate effects and the shutting down of high cost operations, synthetic rutile producers managed to achieve higher operating cash margins for the year.
  •     Co-product revenue continued to subsidise the titanium feedstock industry with most operations not being able to cover their operating cash costs with revenue generated from titanium feedstock production.

In its medium term forecast, preliminary comments regarding the industry in 2015 include:

  •     The overall profitability of the industry is expected to improve with the weighted R/C ratio for the industry expected to be around 1.72. This improvement is forecast to be driven by increases in the price of titanium feedstock.
  •     Rising energy and metallurgical coal prices will continue to negatively impact ilmenite beneficiation operations, particularly slag producers, in the medium term.
  •     Ilmenite producers are expected to achieve the most benefit from titanium feedstock price increases as the supply of both chloride and sulfate ilmenite is forecast to be in considerable deficit by this time.

ABOUT TZMI
Headquartered in Australia, TZMI operates a team of expert consultants from global locations including Australia, South Africa, China, United States and Europe. With over 100 years of accumulated experience, TZMI’s principals have been closely involved in the mineral sands and TiO2 pigment industries since the 1970s. TZMI specialises in confidential consulting services for the titanium minerals, zircon, titanium sponge and TiO2 pigment industries as well as publishing specialised market studies and reports based on its comprehensive database of production and market data. http://www.tzmi.com.

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Zayn Marlowe
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