Analysis of the anti-dumping duties on titanium dioxide (TiO₂) from China: impact on the European paints and coatings industry

The European Commission’s decision to implement anti-dumping duties on Chinese TiO₂ aims to protect European TiO₂ producers from unfair competition. China, being the largest global supplier of TiO₂, benefits from significant government subsidies, which allow its manufacturers to sell the product at lower prices than European producers. As a result, EU paint manufacturers, particularly small and medium-sized enterprises (SMEs), have raised concerns about the potential rise in raw material costs, which could harm their competitiveness both within Europe and in global markets.

Stakeholder Perspectives

CEPE’s (European Paint Association) Position

The European Paint Association (CEPE) strongly opposes the anti-dumping duties, highlighting the adverse impact they could have on the European paint industry. CEPE argues that the price of TiO₂, which constitutes up to 40% of raw material costs for paint manufacturers, will increase significantly, particularly harming SMEs that rely heavily on competitively priced TiO₂ from China. The association warns that such measures could make EU manufacturers less competitive compared to their global counterparts who continue to access cheaper TiO₂ supplies. CEPE also suggests that increased production costs could undermine European exports, further reducing the global competitiveness of EU paint manufacturers.

Reading tip: Titanium Dioxide

Teknos’ Concerns

Teknos, a Finnish paint manufacturer, expresses concerns about the abrupt imposition of these duties. While acknowledging the issue of dumping, Teknos calls for a more gradual introduction of the duties to allow the industry to adapt. A sudden increase in prices could lead to financial strain, especially for smaller businesses. Moreover, Teknos highlights that EU TiO₂ producers currently cannot meet the demand, making China an essential supplier. The company also fears that the anti-dumping duties could push investments in TiO₂ production outside the EU, weakening the regional industrial base.

Paula Salastie’s Critique of EU Decision-Making

Paula Salastie, CEO of Teknos, critiques the EU’s approach to the TiO₂ issue, arguing that the anti-dumping measures could conflict with the EU’s Green Deal objectives. The increased cost of TiO₂ could lead to more environmentally damaging production processes, as companies may seek alternative, less efficient methods to counterbalance higher material costs. Furthermore, Salastie points out that focusing solely on TiO₂ production within the EU overlooks the broader implications for the entire value chain, particularly given the current lack of sufficient local TiO₂ production capacity.

Reg Adams’ View on Economic Impact

Titanium dioxide expert Reg Adams takes a more pragmatic approach, acknowledging that the anti-dumping duties are likely to increase TiO₂ prices by 2-4%, which will impact the bottom line of paint manufacturers. However, he also sees a potential upside for European TiO₂ producers, as the duties may help them regain market share from Chinese suppliers. The higher cost of TiO₂ could drive increased local production, benefiting European manufacturers. However, for small paint producers who depend on cheaper TiO₂ imports, the increased prices could reduce profitability, potentially leading to business closures.

Additional Concerns from Industry Experts

Nicolas Dujardin, Chief Operating Officer at Océinde, a paint producer, shares further concerns regarding the anti-dumping duties. He notes that the higher duties could substantially increase the cost of TiO₂, pushing it from EUR 2.50 per kilogram to EUR 3.50. This price hike would significantly impact SMEs, where TiO₂ accounts for up to 30% of production costs. The risks of bankruptcy and the relocation of production outside the EU are growing concerns, particularly as Europe faces a deficit of 250,000 tonnes of TiO₂ annually, making reliance on Chinese imports inevitable in the short term. Dujardin also warns that the duties could disrupt supply chains, leading to increased reliance on less reliable or more expensive sources, further elevating production costs.

In addition, Dujardin highlights the environmental risks of the anti-dumping duties. If European companies are forced to import finished products containing TiO₂ instead of raw materials, transportation emissions will increase, which contradicts the EU’s climate goals.

Price index for coatings raw materials

Price index for coatings raw materials What’s the current trend for TiO2? What is the average price level for silicone resins these days? No need for guessing anymore! Check EC Price Ticker and get an instant overview of current market prices – based on the collective input from other industry insiders.

Potential Consequences

The imposition of anti-dumping duties on TiO₂ imports from China presents a complex challenge. On one hand, the duties may help European TiO₂ producers by reducing competition from Chinese suppliers. On the other hand, higher costs could harm European paint manufacturers, particularly SMEs, and lead to job losses. The shift in production to non-EU countries could also undermine the EU’s environmental objectives and reduce the competitiveness of European industries globally.

Additionally, as Europe lacks the capacity to replace Chinese TiO₂ supplies in the short term, the higher prices could result in a shift toward more expensive or less reliable alternatives, further exacerbating cost pressures.

Suggested Solutions for a Balanced Approach

Dujardin advocates for a more measured approach to the anti-dumping duties. He suggests a gradual implementation over several years to allow businesses time to adapt. Other potential solutions include:

• Financial Assistance: Offering financial support or tax incentives to help companies transition to higher-priced TiO₂.
• Investment in Local Production: Encouraging the establishment of TiO₂ production facilities within the EU through subsidies or public-private partnerships.
• Innovation Grants: Supporting research into more efficient and environmentally friendly TiO₂ production methods.
• Diversification of Supply Chains: Encouraging businesses to source TiO₂ from multiple regions, not just China, to reduce dependency on one supplier.
• Price Monitoring Mechanisms: Implementing systems to monitor and stabilize prices to prevent excessive price hikes that could harm consumers.

Conclusion

The anti-dumping duties on TiO₂ imports from China present both opportunities and risks for the European paint and coatings industry. While the intention behind these measures is to protect local producers, the broader economic and environmental implications must be carefully considered. A sudden increase in TiO₂ prices could lead to higher costs, reduced competitiveness, and job losses in the European paint industry. A gradual implementation of duties, supported by investment in local production and innovation, would provide a more balanced solution that ensures the long-term sustainability of the industry, while maintaining the EU’s competitive and environmental goals.