Titanium dioxide: “We do not expect the imposition of further restrictions

The Court of Justice of the EU (the Curia) has ruled that titanium dioxide has been wrongly classified as carcinogenic. Can the coatings industry therefore use the pigment as before or are further restrictions to be expected?

Reg Adams: The regulation on the labelling of paint and virtually all TiO₂-containing products marketed in the EU, which came into force on 1 October 2021, has been repealed. This is the consequence of the verdict of the General Court (one of the two branches of the Curia), sitting in Luxembourg and presided over by Judge Maria José Costeira. The verdict was delivered on 23 November 2022. There were three lawsuits, the first of which was filed with the General Court of the EU on 12 May 2020 by CWS Powder Coatings. The second was filed by Brillux and DAW. The third was filed by various TiO₂ manufacturers.

The Court’s key finding was that TiO₂ could not be justifiably classed as a Class 2 carcinogen (by inhalation) because such a classification can relate only to a substance with the intrinsic property of causing cancer. As a consequence of this annulment, EU paint suppliers are not obliged to put TiO₂ cancer-warning labels on any of their products. Because most TiO₂ pigments on the market did not qualify for Regulation 2020/217, very few cans of liquid paint carry such labels anyway. But, several types of powder coatings, artists’ colours and laser-printer toners were affected by the Regulation and suppliers are already preparing to modify their labels following the verdict. There had been very few cases of manufacturers switching to the use of substitutes for TiO₂ and there will be very few cases of switching back.

So, to answer your questions directly. Yes, the industry will continue using TiO₂ pigments for optimum opacity in formulations of both white and coloured paints. And we do not expect the imposition of further restrictions in this particular context.

How has the situation on the TiO₂ market been recently?

Adams: The health of the global TiO₂ pigment industry and the health of the world paints industry are inextricably linked. And the health of both industries is greatly affected by broader economic trends, especially trends in the production of vehicles, consumer durable goods and the entire range of manufactured products and equipment. Spending on TiO₂ pigment purchases typically represents 15 to 30 % of cash costs for a manufacturer of paint, at the higher end of the scale for architectural paint and at the lower end for automotive and industrial paint. The paints industry accounts for about 55 % of total world consumption of TiO₂, while the plastics industry accounts for about 27 %. Thanks to its high refractive index, TiO₂ is unrivalled as the opacifier of choice for both white and coloured paints.

Over the past three years, the TiO₂ market and the wider global economy have experienced a series of Black Swan events – highly unpredictable happenings, way beyond the range of what would have been normally expected and which have had potentially severe consequences. These events include the Covid-19 pandemic and associated lockdowns; logistics dislocation and higher freight costs; extreme weather events, causing economic damage and supply disruption; the Russian invasion of Ukraine, the imposition of economic sanctions on Russia and the sudden curtailment of natural gas supplies to the rest of Europe; and the slowdown in China’s economy, resulting from the debt crisis in the real estate sector, sporadic drastic lockdowns in pursuance of a stringent zero-Covid policy and acute drought conditions in the Yangtze Delta. In 2022, the TiO₂ demand boom came to an abrupt halt. For the first four or five months, there was practically zero year-on-year growth. Pigment production was hampered by a growing shortage of TiO₂ feedstocks and ongoing logistics difficulties.

In North America, chlorine availability was an added problem. Thus, pigment demand was constrained. During the second half of the year, European economies were exposed to an energy crisis, mainly caused by a sudden cutback in supplies of Russian natural gas. As a consequence, European TiO₂ consumption fell by more than 25 % in H2 2022, compared with H2 2021. The manufacture of paint and plastics in China was disrupted by sporadic localised lockdowns, especially during Q3 2022. Whereas China’s TiO₂ demand had been expanding at an average rate of 5 % per annum between 2015 and 2021, it fell by 1.5 % in 2022. Net demand growth in the rest of the world was relatively weak. For the world as a whole, TiO₂ consumption fell by 6.2 % to 6.8 million tonnes in 2022.

What trends do you think will dominate the titanium dioxide segment in the near future?

Adams: Some niche TiO₂ end-use sectors are likely to grow rapidly – pollution control catalysts and batteries for electric vehicles, for example. But, for the foreseeable future, the paints and plastics industries will account for the overwhelming majority of TiO₂ consumption. Demand growth from these industries will continue to be strongly influenced by general macroeconomic trends. In the medium-term (up to 2030), Artikol forecasts global TiO₂ demand growth in the range of 2.5-3.0 % per annum. This is actually slightly faster than the 2.34 % per annum recorded for the 2010-2020 period, and is a reflection of the increasing contributions from markets in Asia, the Middle East and Latin America.

However, in the near-term (2023/24) economic growth is expected to be weaker than average, due to ongoing warfare in Ukraine, tight monetary controls aimed at curbing inflation and a tendency towards protectionism rather than trade globalisation. World TiO₂ consumption is not expected to surpass the 2021 peak until 2025, when it should be around 7.5 million tonnes. On the supply side, the most prominent feature will be the addition of a lot of new TiO₂ capacity in China, as Yansteel, Kuncai and others enter the industry, while the LB Group, Yibin Tianyuan and other established suppliers complete their expansion projects. China’s TiO₂ output is expected to rise from 3.87 million tonnes in 2022 to 4.4 million tonnes by 2025. With China’s own consumption rising at a more moderate pace, there will be a substantial excess available for export.

Outside of China, the four major multinational producers and the smaller single-plant producers are unlikely to add more than 150,000 t.p.a. in new capacity altogether. In fact, this may be more than offset by permanent plant and production line closures. Against this background, there is bound to be downside pressure on TiO₂ pigment prices in real terms, but this will be camouflaged to some extent by lingering general price inflation. Artikol is not anticipating any significant merger/acquisition activity in the TiO₂ industry, but there may well be changes in ownership of the existing producers within the next few years.