Titanium dioxide – today’s gold in the paint industry
Due to the global consolidation of the titanium dioxide industry and the change in strategy of the leading manufacturers in pricing policy, the prices for titanium dioxide have risen continuously since 2016. The titanium dioxide industry has recognized the dependence of the paint industry and is very purposefully pursuing a highly oriented rate of return in the double-digit range for its shareholders. According to the latest RND report, the global titanium dioxide market is expected to reach USD 30. 72 billion in 2028, with revenues of USD 22. 1 billion. That would be an average annual growth rate (CAGR) of 4.2%. The small and medium-sized enterprises have the disadvantage here, which are almost forced to pay 25-30% higher prices via distributors compared to large companies.
Allocation of titanium dioxide
The titanium dioxide industry is currently in a comfortable distribution function of its products. At the current high price level, they are aiming for long-term contracts, mainly with large customers, on the pretext of security of supply. The battle between large buyers in the paint industry and the smaller ones is already in full swing. Numerous large companies try to secure the quantities of titanium dioxide with hard bandages and without considering losses. Here we are talking about a large customer of e.g. more than 250,000 t / a of demand. This entails major risks in the supply chain for the medium-sized paint industry and significantly overpriced prices.
Hope for the Chinese manufacturers
A ray of hope for the smaller and price-sensitive companies is the intention of the Chinese titanium dioxide manufacturers to further increase their production capacities. However, the Chinese titanium dioxide industry is currently facing extremely rising costs. A price adjustment compared to the other global titanium dioxide manufacturers has already started. It can be assumed that nothing will change significantly in terms of pricing and availability in Q1 and Q2 / 2022. It remains very tense. As long as the demand in China remains at a high level, no price reductions and higher export shares are to be expected. The titanium dioxide prices of Chinese manufacturers, which were always somewhat cheaper in the past, were based on the lower domestic demand and the motivation to further increase the export volume share and thus the global market share.
Titanium dioxide – “The outlook into the future”
As a rule, the multinational titanium dioxide manufacturers have no interest in building up new capacities because this would weaken their share price. Instead, the manufacturers are looking for large titanium dioxide customers with long-term purchase commitments that are active in less price-sensitive markets. In return, they are offered security of supply and a certain price stability.
In fairness it should be mentioned that the producers of titanium dioxide also suffer from a certain cost pressure. The rapid rise in world market prices for chlorine and the increased prices for container and bulk freight as well as the significantly higher energy prices will lead to further price increases. The small and medium-sized paint companies that have to be at the back of the supply chain, pay the bill. This will inevitably lead to further market consolidation in the coatings industry. In conclusion, it can be said in summary that the TiO2 manufacturers have changed the “game” in their favor and are putting more and more pressure on buyers in the paint companies.