TiO₂: “The duty could lead to plant closures within the EU and a significant increase in unemployment”
The anti-dumping duties on titanium dioxide from China are not being received favourably in the paint and coatings industry. Paula Salastie, CEO at Teknos, talks about the risks that these measures pose to the competitiveness of European paint manufacturers. Her view of the current situation contrasts with the assessment of consultant Reg Adams, who expects the anti-dumping duties to have a much more positive impact in a previously published interview.
As a paint and coatings manufacturer, how do you rate the EU’s decision to implement antidumping duties on Chinese titanium dioxide for the coming six months?
Paula Salastie: Teknos is concerned about the planned anti-dumping duties on the import of TiO₂ from China, as they conflict with the EU Green deal, sustainability and competitiveness of the European paint and coatings Industry.
TiO₂ is the second biggest raw material in the paints and coatings industry, and the imposition of duties can be expected to significantly impact emissions and industry profitability – thus potentially encouraging the paint and coatings companies to invest outside of the EU. Moreover, these proposals would have a notable social impact, affecting EU’s ability to meet the Green Deal targets, and weaken EU’s competitiveness.
We do see that EC has underestimated the consequences of establishing these provisional anti-dumping measures on the paints and coatings industry, focusing only on the producers of the raw material, i.e. TiO₂ and not on the producers of final products containing TiO₂. We were disappointed in the way that some of the comments from our industry were addressed and dismissed by the authorities in their assessment summary.
How will this measure by the EU impact supply of and costs for titanium dioxide?
Salastie: Currently there is not enough raw material capacity for TiO₂ in Europe. The EU would rapidly fall 10% short on TiO₂ availability. We anticipate that it would take a minimum of five years to build the required production capacity.
The current duties imposed are very significant (up to 39,7%), so we anticipate that our purchased TiO₂ prices are likely to increase by a double-digit percentage from the current price, over the course of the coming months. In the short-term we have already seen single digit percentage price increases for European and Chinese TiO₂ for Q3, 2024. This raw material is in over 90% of our product portfolio and is usually a key constituent of our formulations, so the impact is wide-ranging and significant.
The paint and coatings industry uses more than 50 % of the global TiO₂ supply and this is critical raw material in paint formulations.
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To what extent is the antidumping measure a risk for competitiveness, innovation and employment of the European paint and coatings industry?
Salastie: In the current geopolitical situation, the EU cannot afford to risk its attractiveness for investment and developing industry profitability. The EU is already losing competitiveness on global chemical industry markets, Cefic estimating the EU’s 2023 fall in chemical output already at 8 %.
With over 1.2 million workers, a EUR 760 billion turnover and EUR 11 billion of RD&I investments, the European chemical industry is a wealth-generating sector of the economy and a significant contributor to building a sustainable future for Europe. This sector is the largest investor in EU 27 manufacturing, in addition to which the EU remains the second-biggest producer of chemicals after China. The paint and coatings industry in Europe contributes notably to the EU’s manufacturing and GDP and accounts for 5-6 % of the overall chemicals industry.
The duty could lead to plant closures within the EU and a significant increase in unemployment. The paints and coatings industry supports approximately 110,000 direct jobs in Europe. With the scenario of a significant TiO₂ price increase due to the proposed anti-dumping duty and shortage of own raw material and production capacity, the EU Paints and Coatings industry would turn unprofitable, and potentially be forced into taking more drastic measures e.g. importing finished paint from outside of the EU. This would impact especially the companies with manufacturing located in e.g. neighbouring countries such as UK and Turkey.
When it comes to investments, the proposed anti-dumping duties would risk Small & Medium Enterprise’s capacity to innovate and also increase the overall investment gap in their European locations. The proposed anti-dumping duty will drive down competitiveness and lead to significant economic repercussions and supply uncertainties due to reduced TiO₂ availability.
If the proposed antidumping duties come into force, they will put a further burden on SMEs as they will need to update existing recipes, overall future innovation will be negatively impacted. Our industry accounts for significant innovations regarding durable, safe, anticorrosive, and antimicrobial surfaces in critical infrastructure and green energy production, these duties would also affect the security of the supply of these products within the EU.
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What should be the next steps, from your point of view?
Salastie: Our industry relies heavily on TiO₂ and thus we require a stable and healthy supplier base. Much of the recent investment to cover future TiO₂ needs has been made by non-Western operators. This is not the only TiO₂ related challenge that EU paints and coatings manufacturers currently face. For example, the change in criteria for Nordic ecolabeling (Nordic Swan) is requiring further R&D activities on decorative paints.
The proposed anti-dumping duties are already causing considerable disruption, and we expect this to only become more apparent as the Commission moves on to consider the implementation of longer-term measures (5 years) against the Chinese suppliers. More production capacity for TiO₂ needs to be developed within the EU to fulfil existing consumption needs, therefore in our view no additional duties should be implemented on TiO₂ from China.
What measures would you recommend protecting the European paints and coatings industry without putting competitiveness at risk?
Salastie: To safeguard the European paints and coatings industry, which plays an important role in maintaining our critical infrastructure and enabling the green transition, it’s essential to strike a balance between protecting our market and ensuring competitiveness.
Imposing additional duties on imported raw materials, especially TiO₂, could undermine the very industry we aim to support. The reality is that the EU currently lacks sufficient supply of, and manufacturing capacity for, TiO₂. Restricting imports would therefore exacerbate supply shortages, leading to higher costs and reduced output, which could ultimately weaken the industry.
If duties are applied, the EC should understand that for maintaining the competitiveness of the paint and coatings industry, significant investment is needed to expand capacity for TiO₂.
More about TiO2
Reg Adams, titanium dioxide expert and managing director of Artikol, discusses the impact of the EU’s anti-dumping duties on Chinese TiO₂ for the paint and coatings industry. Read Adams’ views here.
Nicolas Dujardin, COO of Océinde, voices his concerns about the recently implemented anti-dumping duties on titanium dioxide from China, warning that these measures could undermine the competitiveness and environmental goals of the EU’s paints and coatings industry. Read the whole statements here.
