On 6 July, 2016, Huntsman Corporation
(Huntsman) announced on its official website that it plans to close its 25,000
t/a TiO2 manufacturing facility based in Umbogintwini, South Africa in the
fourth quarter of 2016 (Q4 2016). According to the plan, Huntsman expects to
recoup roughly USD200 million in less than two years as a result of the closure.
Source: Baidu
Employing approximately 140 Associates, the Umbogintwini plant is the smallest
and oldest TiO2 manufacturing plant in the company’s Pigments and Additives
division. Under the proposed plan, production at the plant is to cease during
Q4 2016 after which Huntsman will meet demand from its customers in the region
with existing capacity from its European TiO2 facilities.
Peter R. Huntsman, president and CEO of Huntsman, commented: "This closure
increases the competitive positioning of our Pigments and Additives business
and is an important step in the process as we work towards a separation. The
separation of our Pigments and Additives business will come through either a
spin to our shareholders or other strategic transaction. We continue to
diligently work towards this objective."
This is actually the second time that
Huntsman has reduced its TiO2 production capacity over the past year. On 27
July, 2015, it announced the closure of its 100,000 t/a sulfate grade TiO2
production plant based in Calais, France.
Other international TiO2 manufacturers besides Huntsman, such as The Chemours
Company (Chemours) and Tronox Limited (Tronox), reduced their production
capacity in the second half of 2015 (H2 2015), bringing the total TiO2 capacity
lost through production facility closure to 345,000 t/a over the past year.
Judging from these enterprises’ financial performance reports, it's safe to say
that persistently declining profitability resulting from depressed market was
the major reason behind the reduction of production capacity. Enterprises in
that situation saw no choice but to cut production capacity and lay off
employees, measures which are believed to be the most direct way of reducing
production costs.
For example, Chemours Titanium Technologies, the world’s largest manufacturer
of TiO2, renowned for its outstanding profitability, recorded a YoY decline of
19% in revenue (USD2.39 billion) and a YoY slump of 121.70% in adjusted EBITDA
(USD326 million) in 2015.
According to CCM, successive reductions of
production capacity from international TiO2 manufacturers are conducive to
China’s export market. This is mainly because Chinese TiO2 manufacturers are
able to seize additional market share in the global market and also because the
market price of the product may increase due to the alleviation of
overcapacity.
In mid-Dec. 2015, four months after Chemours, Tronox and Huntsman announced
their plans to reduce production capacity, the TiO2 supply-demand relation
began to balance out and a string of international manufacturers began to raise
their product prices (by about USD150/t in general).
This has sparked a succession of TiO2 price rises around the world in H1 2016,
especially in China, which has recorded a cumulative price rise of as high as
USD375.96/t (RMB2,500/t). The majority of Chinese TiO2 industry insiders
believe that relief from inventory pressure as a result of the booming export
market has been the main driving factor behind these price rises.
With this in mind, it can be foreseen that further production capacity
reduction from Huntsman will yet again boost China’s TiO2 market, with exports
from China and the domestic price of TiO2 both expected to continue growing in
H2 2016.
Tioxide Group PLG, a subsidiary of
Huntsman, has a total of eight TiO2 production plants located in seven
countries (the US, the UK, France, Spain, Italy, Malaysia and south Africa),
the combined total production capacity of which exceeds 600,000 t/a, the fourth
highest in the world. All the TiO2 products Huntsman sells in the above seven
countries are of the Tioxide brand.
Huntsman mainly sells branded TiO2 products on the Chinese market, including
TR92, TR81, TR52, TR50, RTC90, TR28, R-TC30, R-FC5, RHD-2, A-HRF, A-HR, A-FN3
and APP-2. In 2015, it exported a total of 13,713 tonnes of TiO2 to China,
almost the same as in 2014, according to China Customs.
This article comes from Titanium Dioxide China Monthly Report 1607, CCM
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Tag: TiO2