CCM: Huntsman to close TiO2 manufacturing facility in South Africa in Q4 2016 10-04-2016

Summary: On 6 July, 2016, Huntsman announced that it will be closing its 25,000 t/a TiO2 manufacturing facility based in Umbogintwini, South Africa in Q4 2016. CCM believes that this will not only improve the company’s profitability, but also help to boost the global TiO2 price. In addition, CCM is of the opinion that production capacity reductions from successive international TiO2 manufacturers are conducive to China’s export market.


Source: Baidu

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.


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 conditions 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 Earnings Before Interest, Taxes, Depreciation and Amortization (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 relationship 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 capacity 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.


About CCM:

CCM is the leading market intelligence provider for China’s agriculture, chemicals, food & ingredients and life science markets. Founded in 2001, CCM offers a range of data and content solutions, from price and trade data to industry newsletters and customized market research reports. Our clients include Monsanto, DuPont, Shell, Bayer, and Syngenta. CCM is a brand of Kcomber Inc.


For more information about CCM, please visit or get in touch with us directly by emailing or calling +86-20-37616606. 

Tag: Huntsman, TiO2

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