Market Update: Titanium Dioxide

By Cynthia Challener,  CoatingsTech Contributing Writer

Over the last decade, the titanium dioxide (TiO₂) market has been a bit turbulent. Dramatically reduced demand during the economic crisis of 2008/2009 led to plant curtailments and shutdowns. These, in turn, led to low availability—and dramatic price increases—in the following years when worldwide demand surged. By mid-2012, however, the cyclic TiO₂ market declined and prices nearly returned to their pre-economic crisis levels. The market was once again boosted starting in 2016 when China took actions to eliminate and replace inefficient and highly polluting small plants, with Western companies filling the gap. By mid-2018, however, softening demand was again observed, dampening the industry outlook. Publicly traded TiO₂ companies have seen their stock valuations drop by 40% to 50% from 52-week highs, reflecting pessimism about future earnings expectations, according to Joseph Maas, a director with consulting firm The ChemQuest Group.

Current State of the TiO₂ Market

“Demand for TiO₂ is highly correlated to GDP growth over the long term. In the short term, however, market demand has historically been affected by concerns around security of supply—as well as inventory positioning throughout the cycle—rather than just due to fluctuations in customer demand,” observes Bryan Snell, president of Chemours Titanium Technologies.  The market for TiO₂ is known for its volatility, agrees Jon Fedders, North America marketing director, Dow Coating Materials, with supply and demand fundamentals really driving TiO₂ pricing in the market.

Chemours estimates TiO₂ market demand in 2017 was roughly 6.1 million tons, served by approximately 7.1 million tons of realizable supply capacity. “Today,” says Snell, “there is adequate supply to cover most end-use demand. However, not all titanium dioxide is interchangeable.” Over the past 15 years or so, the cost and quality of TiO₂ capacity has revealed differential segments with clear quality separations as one moves across the spectrum of applications. In addition, he notes that the performance and affordability of TiO₂ delivers a substantial value separation when compared to not-in-kind alternatives.

There are other ingredients in a can of paint that influence its price, but none so much as TiO₂.

Maas expects 2019 will be a difficult year, with additional unhelpful complexities introduced, such as tariffs that have an uneven impact on producers and are nearly always a negative influence on demand from customers. Beyond 2019, the likely market conditions are difficult to discern. Maas stresses, however, that recent forecasts from the International Monetary Fund indicate a growing possibility of recession by 2020. “The U.S. economy is in its 10th year of expansion, and with interest rates on the rise and further tariff applications, it could make for a very difficult environment for the next several years,” he comments. He does add, however, that at its core TiO₂ is an “essential commodity” with no viable substitutes and is expected to rise again.

TiO₂ finds use in many different applications. The largest consumption is in paints and coatings. Other end uses include plastics, paper, cosmetics, sunscreens, and food. Currently the availability for paint grade TiO₂, which is primarily chloride process pigment, is plentiful and prices have moderated, according to Maas. “Increasing demand from the construction and automotive sectors are key drivers for the coatings industry, and both are showing signs of weakening primarily due to rising interest rates, thus taking pressure off TiO₂ supplies,” he says.

Maas notes that historically TiO₂ has been priced to reflect its function as an “irreplaceable backbone” of paint products. “Despite the fluctuation in TiO₂ pricing, only its upward movement is typically reflected in the price of paint and almost never its downward movement,” he observes. “Surely TiO₂  prices have a direct impact on the bottom line of paint producers, but paint consumers nearly always experience price increases.” To be fair, he adds that there are other ingredients in a can of paint that influence its price, but none so much as TiO₂ . “So, despite a lot of hand wringing by paint company purchasing managers, the reality is that TiO₂ is a remarkable product produced through an incredibly complex and costly value chain and sold for a price that is directly related to its value to make a paint efficiently and its supply/demand balance,” Maas asserts.

If GDP-type demand growth continues, global demand will increase between 1.5–2 million tons by 2028, according to Snell. Market research firm Technavio anticipates a slightly faster growth rate of 4% from 2018 to 2022.

Snell notes that even at a GDP-like growth rate, publicly announced TiO₂ capacity additions are insufficient to serve demand growth over the next decade. “It is our opinion that as the demand for TiO₂ grows relatively in line with GDP, the supply of TiO₂ similarly needs to increase over time. We plan to participate in this growth with regular capacity expansions, through process technology improvements and low-capital-intensity investments. Over the longer term, we would expect to continue to make large-scale investments in new lines, and not just time capacity growth to market cycles,” he states. The company will incrementally increase its production capacity by approximately 10% over the next few years (through 2021) via technology-enabled de-bottlenecking processes, essentially adding a new production line while using significantly less capital to do so. “Our approach is grounded in our confidence in the growth of the marketplace and in our ability to leverage our unique capabilities to add capacity consistently over time. We will make decisions to add capacity based on the quality of the investment and the value of the products they will make—without a focus on market-cycle timing,” Snell adds.

EU Classification

One issue that may or may not impact consumer products containing TiO₂, including paints and coatings, has to do with a proposal in Europe for a harmonized classification (under the European Chemical Agency’s Classification, Labeling and Packaging Regulation, or CLP) forTiO₂ as a category 2 carcinogen based on inhalation. The Titanium Dioxide Manufacturers Association (TDMA) along with many other TiO₂ -consuming industry associations continue to voice concerns with this proposal.

This proposed classification of TiO₂ is recognized as being complex by many involved, including the European Commission, which is now weighing the proposal. Not only have questions been raised about the scientific relevance of the results of carcinogenicity tests on TiO₂  performed in rats for humans, the hazards proposed are not specific to TiO₂ , but also apply to hundreds of other poorly soluble, low toxicity (PSLT) compounds, and therefore may not be best regulated under the CLP regulation. In addition, establishing this classification could set a precedence for all other PSLTs, a classification that has no rational basis under the United Nations (UN) Globally Harmonized System for the Classification and Labeling of Chemicals (GHS) which has been adopted by national governments around the world, and as such may present a technical barrier to global trade.

An additional technical issue impacting the classification proposal is that the animal studies on titanium dioxide carcinogenicity being emphasized were done solely with exposure to nanoparticles.  Although some manufacturers of pigment grade TiO₂ also purposely produce nano-TiO₂ , the vast majority of TiO₂ made and sold is pigmentary grade. Pigmentary grade TiO₂ , according to Maas, is manufactured with a targeted particle size of 0.3 microns to maximize its light bending and scattering efficiency to enable maximum hiding of substrates in products such as coatings. In addition, the vast majority of TiO₂ applications entail incorporation of TiO₂ into a resin or liquid matrix, and therefore chances of inhalation are nil. The labeling protocol, however, does not take this fact into consideration and simply implies that the product is considered a human carcinogen. Maas does note that, from a practical viewpoint, if the proposal is adopted, it should not impact paint and coatings usage or the majority of other applications. It should also be noted that the European Food Safety Authority (EFSA) has not yet ruled, but is strongly leaning towards labeling only titanium dust as an inhalation hazard.

The European Food Safety Authority (EFSA) has not yet ruled, but is strongly leaning towards labeling only titanium dust as an inhalation hazard.

Chemours is an associate member of TDMA and its scientists sit on the subcommittee working on this issue. “We are committed to achieving the best possible outcome regarding the EU classification of TiO₂ through direct engagement with the TDMA as well as other scientific, regulatory, and policy avenues,” notes Snell. “Through TDMA,” he continues, “ongoing negotiations are underway with EU decision makers and influencers, specifically DG Grow and ECHA, along with engagement with Member State Competent Authorities and industry organizations.”

TiO₂ Technology Advances

No paradigm shifts in TiO₂ production technology have disrupted the market in the last several decades. Improvements of an incremental nature have been achieved, however. Most leading manufacturers use the chloride process, which was developed by DuPont in the 1950s. Until the Chinese government began closing inefficient and polluting plants, TiO₂ producers in that country used the much older sulfate process.

Canadian company Argex Titanium may be an exception. The company has developed a proprietary chemical process (the Argex CTL hydrometallurgical process) for the volume production of high-grade TiO₂ from ilmenite ore with as little as 15% titanium (often a waste material). High-purity ferric chloride is produced as a byproduct, and the HCl and solvents used in the process are recycled. The company claims the process provides a significant cost and environmental advantage over current legacy TiO₂ production methods. Argex has worked with PPG Industries to develop and optimize pigment grade TiO₂ for paints and coatings and is also developing pigment grades for other applications. In addition, Argex has raised funds and signed agreements for the supply of ore feedstock and off-take of product from a planned Technology Center and Commercial plant in Becancour, Quebec. It should be noted, however, that there are some questions as to whether the technology will ultimately be commercialized.

All global TiO₂ participants operate high-quality, world-class chloride processes, making it a very competitive environment. The chloride process of Chemours (which was previously the Performance Chemicals segment of DuPont) offers the capability to use a wide variety of feedstocks and the flexibility to operate both near capacity and at lower levels when customer needs warrant an adjustment to output, according to Snell.

 Optimization of TiO₂ in Paints and Coatings

The properties of pigment grade TiO₂ make it ideal for use in paints and coatings to provide opacity and durability to formulations. “A key benefit of any paint is its ability to hide, and titanium dioxide plays the primary role in that key performance attribute,” Fedders asserts. The cyclicality of the TiO₂ market can pose challenges to coatings manufacturers, however. When the TiO₂ demand cycle and prices rise, typically a number of TiO₂ replacements or efficiency enhancers are brought back to the market, according to Maas. He does note, however, that there are no real substitutes for TiO₂ . “Formulators assess whether the use of products such as specially designed resins that promote light scattering remain cost effective as the cycle turns downward and prices for TiO₂ pigments fall,” Maas says.

Chemours works closely with suppliers of new resin and additive technologies to provide its customers with the best overall solutions, according to Snell. “Knowing how these new materials work with our technologies is essential. Our technical and marketing teams work collaboratively with our customers to produce better quality paints that deliver more value to the consumer and return more value to Chemours and our coatings customers. As a result, newly formulated, high-quality paints are paired with a Ti-Pure™ or Teflon™ co-brand as an integral part of the consumer value proposition,” he says. In fact, Chemours has co-branded product sales in nearly 60 countries around the world.

BASF has developed a 100% acrylic latex that is APEO free, zero-VOC capable, and has been shown to reduce the titanium load by up to 30% for certain paint formulations, according to Chuck Johnson, market segment manager for Architectural Coatings at the company. “This highly versatile latex demonstrates strong performance characteristics, including superior hiding, tint strength, outstanding blister resistance, and scrub resistance, all of which enhance formulations for flat through gloss interior applications,” he notes. The company also offers an opaque polymer that improves TiO₂ distribution and scatters light, enabling formulators to reach the same level of opacity with less TiO₂ and achieve a lower total cost of formulation, according to Camilo Quiñones-Rozo, market segment manager for Architectural Coatings at BASF. He also notes that further savings can be gained by using the acrylic latex and opaque polymer in combination.

Additives can play an important role in optimizing TiO₂.

To help optimize TiO₂ usage, Dow Coating Materials has developed a proprietary resin technology for use in architectural coatings that, according to Fedders, has experienced increased demand over the last two years as TiO2 prices have once again been climbing. “The resin technology can facilitate TiO₂ savings in a formulation, while still being able to maintain equal wet hiding, dry hiding, and tint strength, and studies have shown that it offers improvements in barrier properties, including stain resistance and removal, corrosion resistance, nail head rust resistance, tannin stain blocking, and dirt pick-up resistance,” he says. The company also offers a range of other technologies to help formulators optimize TiO₂ usage without sacrificing performance, according to Fedders.

Additives, in fact, can play an important role in optimizing TiO₂ use, according to Katie Fagan, marketing manager for Formulation Additives with BASF. In particular, additives that improve the dispersion and stability of TiO₂ help provide better efficiency and hiding power. BASF offers a solvent-free, acidic polyether dispersing agent that, according to Fagan, provides excellent stabilization of TiO₂ in virtually all solventborne and solvent-free coatings and inks.

A key benefit of any paint is its ability to hide, and titanium dioxide plays the primary role in that key performance attribute.

In addition to being a smart approach to minimizing total costs, TiO₂ optimization also makes a lot of sense from a sustainability standpoint, according to Fedders. “Dow Coating Materials has conducted Life Cycle Assessments (LCAs) of our leading TiO₂ reduction technologies and found significant life cycle benefits across the LCA categories when using these technologies together to reduce TiO₂ levels in paint formulations,” he explains. “As we head in to 2019, given the current TiO₂ pricing dynamics in play, we fully expect the TiO₂ optimization trends to continue as a way to minimize overall formulation costs,” Fedders concludes.

New Business Approach from Chemours

The wide swings in the supply/demand and pricing cycles have made it difficult to plan for the future for both TiO2 producers and their customers, leading to uncertainty within long-term business planning and growth strategies. Chemours has recognized the need to do business differently to better address its customers’ needs.

In 2017, the company introduced its Ti-Pure™ Value Stabilization strategy, which is comprised of three different, but equally important pieces: 1) Ti-Pure commercial framework options; 2) new offerings; and 3) manufacturing and supply assurance. “We believe that with this strategy we can change the conversation with our customers to a longer-term, value-focused engagement and away from short-term volume fluctuations, providing security of supply for our customers and ensuring that Chemours can continue to invest in innovative offerings and incremental capacity,” Snell explains.

Chemours is taking a significantly different approach to sales contracts with its customers and expects the clear majority of Ti-Pure sales to be made under contracts with terms conducive to a more stable commercial relationship. A minority portion of the Ti-Pure TiO₂ sales will also be made under non-contracted transactions. The company also intends to grow the new offering capability in Ti-Pure pigment performance, as well as in service, brand, and technology, so that new value is continually found for both Chemours and its customers. A third component will, according to Snell, include improvement of the company’s supply chain so that it can operate with advantaged economics yet be able to rapidly respond to any short-term fluctuations in end-user markets. Continuous capacity enhancement is also part of the plan to support the future growth of Chemours’ customers.

“Our Ti-Pure Value Stabilization strategy is based in part on our ability to work closely with our customers to capture the strategic value-in-use of our Ti-Pure technology within their commercial offerings. We want our customers to have confidence that we will be there to support their growth, both with increased supply of Ti-Pure and with a sustained investment in product innovation. If our customers experience ups and downs in their need for Ti-Pure based on their market conditions, Chemours will support them on the upside, and we will absorb it on the downside; that is part of our relationship with our customers,” Snell says. Chemours will take its customers’ fluctuating demand as a volume variance rather than a price variance and price Ti-Pure to reflect its actual value in applications, he noted.

CoatingsTech  |  Vol. 16, No. 1 |  January 2019