TI02 Global Titanium Dioxide Pigment Industry has Strongest Year in Two Decades
PR Web
(PRWEB) October 28, 2012
The US$17 billion global titanium dioxide pigment industry improved profitability in 2011, with figures that TZ Minerals International Pty Ltd (TZMI) believes are the strongest in two decades.
In the 8th edition of the Global TiO2 Pigment Producers Comparative Cost and Profitability Study 2012, TZMI announced that, according to its annual independent in-depth analysis of the global TiO2 sector, manufacturing cost is expected to increase dramatically in the next two to three years as legacy ore contracts roll off and are replaced by contracts that strongly favour feedstock producers. Good for Argex. As the legacy synthetic rutile contracts expire and raw material costs go up we will be in a good position to take advantage of higher margins.
In 2008, the TiO2 pigment industry operated in an environment of depressed profitability with record high raw material and energy costs resulting in an oversupply of TiO2 in western markets. With the onset of the Global Financial Crisis (GFC), inventories were drawn down and capacity idled, making it difficult to re-start the supply chain when the market recovered.
The tight supply situation started in 2010 and continued through 2011, with price increases announced regularly during the two-year period. As a result, global pricing increased by 8% in 2010 and almost 40% in 2011. The EBITDA margin for the industry increased from a level of 11% entering 2010 to 32% exiting 2011 (based on reporting companies).
In 2011, production (pro forma basis) increased 3.5% after demand increased out of the global recession, consumers re-stocked their supply chains, and some producers – due to lack of available product – bought ahead of needs to de-risk availability in future months. Chinese producers led the production growth with a very bullish 14.5% year-on-year increase in output.
Growth during the last five years has been led by major emerging economies – most notably China, the emerging economies of Asia-Pacific (Indonesia, Thailand, Vietnam, Philippines, etc.), Brazil, Turkey, Russia, and India; whilst the mature economies of Western Europe and North America have remained flat or declined slightly in consumption. Good business case for Argex.
In 2011, profitability gains are as a result of improved sales pricing resulting from strong demand, limited supply, and low inventories. In 2011, all chloride plants were profitable according to TZMI’s independent analysis. E. I. du Pont de Nemours and Co (DuPont) held the lowest cost position with its 340,000 tpa plant in DeLisle, Mississippi. Plants operated by all five of the major global producers (DuPont, Cristal Global, Huntsman Corporation, Kronos Worldwide and Tronox Inc) were in among the 20 lowest cost facilities. Half of the 20 lowest cost plants were located in China.
DuPont’s DeLisle plant was again the most profitable facility in this year’s study, with the company’s other four chloride facilities ranking among the world’s top 10 most profitable for 2010. Sichuan Lomon’s 160,000 tpa Mianzhu operation was the most profitable sulfate plant, coming fourth in the global rankings.
TZMI’s annual release of its Global TiO2 Pigment Producers Comparative Cost and Profitability Study is the benchmark analysis of the leading industry producers. In the 2012 edition, 22 chloride process plants are reviewed, representing 100% of the global chloride output in 2011. Another 35 sulfate process plants, representing 89% of global sulfate output, are also analysed. Most of the plants excluded are smaller operations in China.
The global TiO2 pigment industry is extremely opaque, with cost and production information tightly controlled by most producers, at a time when the industry is encountering significant cost pressures. This study is an independent analysis built up from individual plant cost structures plus an analysis of global pigment trade during 2011, providing a comparative analysis of the industry, using a consistent standard methodology. I think we should get this copy to evaluate our own internal targets and be sure we are working of comparisons for each item by world leaders. Bench marking is a good way to make sure the ideal targets are being set internally for being the best or matching leaders in the industry.