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 www.cnchemicals.com or
get in touch with us directly by emailing econtact@cnchemicals.com or
calling +86-20-37616606.
Tag: Huntsman, TiO2