PERTH, Australia – The $10 billion titanium dioxide industry improved profitability in 2009 compared to 2008, as variable costs reduced at a faster rate than selling prices. Leading producers also idled high-cost plants during the year, leading to improved asset portfolios. A rebound in demand in the second half of 2009 had plants winding back to full production rates. TZ Minerals International Pty. Ltd. (TZMI) announced that, according to its independent analysis of the global TiO2 sector, the weighted average manufacturing cash cost decreased by 11 percent in 2009, while at the same time sector revenues contracted by only 4.5 percent on a U.S. dollar basis. The net result was a further rebound in the industry revenue to cash cost (R/C) ratio to 1.21, taking the sector back to profitability levels last seen in 2006.
On average, industry profitability expanded by over $100 per ton in 2009 relative to 2008. Manufacturing cash costs dropped substantially relative to 2008 costs on the back of declines in raw material and energy input costs. Producers managed to hold fixed costs flat, but production rates were down in the first half of 2009 and therefore, fixed cash costs per ton increased.
North American plants were the most profitable in 2009, followed by those in Asia-Pacific and Western Europe.
There was a significant decrease in the number of plants operating in a negative cash-margin position in 2009. In 2008, TZMI calculated that 27 percent of the output that year was operated with negative cash margins; in 2009, that had decreased back to 11 percent, or 16 plants.
In 2009, global pigment demand was estimated at 4.68 million tons, down 3.0 percent from 2008. Regionally, the main consuming markets for TiO2 pigment are the major industrialized economies of North America and Europe, with an increasing role for China.