Independent Titanium Dioxide Pigment Price Forecast Expects Continued Growth in 2011

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The global TiO2 sector ended 2010 on a strong note with price increases flowing through the market and substantial gains reported in 2011. Current pricing expectations are based on low inventory levels of pigment entering the northern hemisphere’s paint season and undersupply brought on by lack of investment throughout the value chain for several years.

The tight market conditions throughout the supply chain will cause rapid price escalation through 2012 and possibly 2013

The global TiO2 sector ended 2010 on a strong note with price increases flowing through the market and substantial gains reported in 2011. Current pricing expectations are based on low inventory levels of pigment entering the northern hemisphere’s paint season and undersupply brought on by lack of investment throughout the value chain for several years.

TZMI’s Pigment Price Forecast is the only independent forward-looking analysis of the prices for the titanium dioxide (TiO2) pigment and is published quarterly by TZMI. The newly released Pigment Price Forecast Q2 2011 (PPF11Q2) uses a detailed analysis of the global supply/demand balance forward to 2015 to develop its latest five-year regional price forecast. Regional price forecasts are also provided on a quarterly basis for 2011 and 2012. In addition, TZMI has included a scenario analysis with the latest report to illustrate potential changes that could occur during this very volatile market period.

PPF11Q2 further details TZMI’s opinion that 2011 price increases are accelerating faster than experienced during the second half of 2010 and are being adopted by the market. TZMI estimates that the global weighted average price for all TiO2 pigment sold during 2010 increased by 8% year-on-year, increasing the value of the sector by 21%, from US$10 billion to US$12 billion. Value growth will be more substantial in 2011, as widespread changes to pigment manufacturing costs, particularly titanium feedstocks, will be tempered by contractual conditions.

Inventory depletion and value chain supply tightness are key factors in the current pricing environment. Producers entered 2011 with low inventory levels and TZMI ascertains stocks were not adequately built during the northern hemisphere winter months. TZMI believes that long-term under investment in capacity and permanent shut downs during the last earnings trough will compromise the ability of producers to add to significantly stocks during 2011. TZMI expects some producers to be unable to meet production targets in 2011 and some TiO2 customers will likely be unable to source desired volumes as a result.

“The tight market conditions throughout the supply chain will cause rapid price escalation through 2012 and possibly 2013,” TZMI Senior Consultant Eric Bender said. “TiO2 producers and feedstock suppliers will increase margins in 2011, with the timing of future capacity expansions in both sectors largely controlling the balance of pricing power in the value chain over the next several years. TiO2 producers’ ability to add necessary capacity hinges on feedstock producers’ ability to increase output from existing and new mines and beneficiation plants.”

PPF11Q2 is developed concurrently with TZMI’s Global TiO2 Pigment Producers Comparative Cost and Profitability Study, the benchmark analysis of the leading industry producers. The study covers more than 60 pigment plants spread across 27 countries and covers in excess of 90% of the 2010 output. The study is an independent analysis built up from individual plant cost structures plus an analysis of global pigment trade during 2010. The forecasting of regional pigment prices included in PPF11Q2 is aligned to TZMI’s forecast for pigment plant cash costs.

The major producers of TiO2 pigment are: E.I. du Pont de Nemours & Co; Cristal Global, Huntsman Corporation, Tronox Incorporated, Kronos Worldwide Inc, Ishihara Sangyo Kaisha Ltd and Rockwood Holdings Inc. The major producers of TiO2 feedstock are: Rio Tinto Limited, Iluka Resources Limited, Exxaro Resources Ltd, Bemax Resources Limited, Eramet SA and Kenmare Resources plc.

For more information or to order a copy of the TZMI Pigment Price Forecast Q2 2011, visit http://www.tzmi.com.

About TZMI
TZMI is a global, independent consulting and publishing company with offices in Australia, the US, Europe, Africa and China. The strength of TZMI’s consulting services stems from extensive practical experience in the mineral sands, titanium dioxide and coatings industries and from a comprehensive database, which has been built up over many years.

TZMI has proven expertise gained from our consultants having many years of direct operating experience in the industry in chief executive, senior operational, analytical and marketing roles.
TZMI’s publications and data services support the consulting activities and ensure up-to-date, high quality and comprehensive data, analysis and information across the mineral sands, zircon and TiO2 pigment industries.

TZMI provides operational and technical expert advice on many areas including:

  •     Mergers and Acquisitions
  •     Market Assessments and industry analysis
  •     Due diligence
  •     Pre-feasibility studies incl. preliminary capital and operating cost estimation
  •     Competitive cost analysis and benchmarking
  •     Technical reviews and audits
  •     Resource assessments
  •     Physical separation test work
  •     Flowsheet development
  •     Customised data analysis and reporting

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Machiel Keegel
TZMI
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