Metallurgy / Chemicals / Rubber & Plastics

Recently, a number of titanium dioxide manufacturers said that the global demand for titanium dioxide is strong and the supply is tight, and the market price may continue to rise. Major producers Chemours, Venator, Tenor and Kronos reported positive results for the first quarter and expect their performance to continue to grow for the rest of this year.

Increase in sales and decrease in inventory

“Chemours’ sales in the first quarter increased by 2% compared to the fourth quarter of last year. The demand for coatings, plastics and laminates for Chemours’ titanium technology business continued to increase in the second quarter.” On the 4th earnings conference call, “In the first half of this year, new houses and renovations in various countries are driving the rapid growth of demand for architectural coatings. Since 2020, the demand for DIY products has maintained a strong momentum.”

Tenor CEO John Romano said that the sales volume of titanium dioxide in the first quarter increased by 15% compared with the fourth quarter of last year. Demand in various regions was strong, but the largest growth was in Europe and the Asia-Pacific region. Simon Turner, chief executive officer of Pannergy, also said that market demand has grown unexpectedly and strongly. All industries and regions have strong demand for functional titanium dioxide. The demand for specialty titanium dioxide products has shown a good momentum of recovery, mainly in the textile and automotive industries. Fantuo's titanium dioxide sales volume has continuously increased by 14%. Compared with the fourth quarter of 2020, the device utilization rate has increased, and the inventory remains tight throughout the first quarter.

Demand is back on track

The overall demand for titanium dioxide has basically returned to the level before the epidemic. The Connors report shows that the sales volume in the first quarter of this year was 141,000 tons, an increase of 4% from 136,000 tons in the same period last year, and an increase of 14% from 124,000 tons in the second quarter of 2020. The total sales volume in the third quarter of last year was 136,000 tons, and in the fourth quarter it was 135,000 tons. Other manufacturers did not report sales, but their year-on-year sales growth data showed the same trend. Chemours' titanium dioxide sales in the first quarter of this year increased by 16% year-on-year, while the first quarter of 2020 increased by 19% year-on-year, and the second quarter of 2020 decreased by 9% year-on-year. Tenuo’s sales in the first quarter of this year increased by 16% year-on-year, the first quarter of last year sales increased by 6% year-on-year, and the second quarter fell by 27% year-on-year. The sales volume of Titanium Dioxide in the first quarter of this year was down 1% year-on-year, and in the second quarter of 2020, it fell 21% year-on-year.

Chemours Chief Operating Officer Mark Newman said: "The recovery in demand for titanium dioxide began in the second quarter of last year when DIY products were launched. Architectural coatings accounted for most of the company's titanium dioxide business, and the rest was laminate and plastics business. Then there is the demand for the construction industry, especially the demand for new housing, which is growing rapidly. Based on the current development trend, sales are expected to increase in the next three quarters."

Supply tends to be tight

After the collapse of demand in the second quarter of last year, titanium dioxide producers around the world have drastically reduced production, and then the slow recovery of production has resulted in a tight supply situation. Newman said: "Judging from the operation of our factory in March and April, our output in the second quarter will be higher than that in the first quarter. In addition, in terms of the supply situation of each factory, the supply of raw materials is restricted, but these are all It's only a temporary impact." Fantuo also expressed a similar view.

Although the price of titanium dioxide is rising in the first quarter of this year, it has not fully recovered. At the same time, production costs are also increasing. Hassan Ahmed, an analyst at Alembic Global Advisors, an American investment research firm, predicts that the price of titanium dioxide will continue to push up this year. He pointed out in a recent research report: “The current price of titanium dioxide is only slightly higher than the 16-year average level and the 2008-2009 crisis period, so the upward potential is greater.” The price of titanium ore continues to rise, which may further push. Pricing for high-titanium dioxide.

Turner pointed out that China's exports remained stable in the first quarter of this year, and the main export markets were other Asian countries and emerging markets. He said: “Due to the strong local demand for titanium dioxide in China, coupled with transportation restrictions, China’s exports to Europe and North America will fall, which will make customers even more hope that we can provide reliable supplies.” Due to rising raw material and transportation costs, Chinese titanium dioxide producers are also continuously increasing their sales prices, thereby continuing to narrow the arbitrage space.

According to data from IHS Markit, Chemours, Fennel, Tenor and Connors together account for 40% of the global titanium dioxide production capacity, with a total global production capacity of 8.4 million tons per year in 2020. Chemours has the largest production capacity, about 1.2 million tons/year; followed by Tenuo with 1 million tons/year; Fannto and Connors both have 500,000 tons/year. In the past 10 years, China's titanium dioxide production capacity has surged, from 2.1 million tons/year in 2011 to 3.7 million tons/year in 2020, accounting for 44% of the world's total production capacity. During the same period, China's annual net exports increased from 41,000 tons to 69,000 tons.