US-based Chemours will continue debottlenecking its titanium dioxide (TiO2) facilities, adding 150,000-200,000 tonnes/year of capacity through 2021.
“We are debottlenecking three of our large facilities. For TiO2, we are very confident about growth… The industry in the next three-to-five years is going to need new capacity,” said Mark Vergnano, CEO of Chemours, in an interview with ICIS.
“We haven’t seen anyone announce any new capacity over the next couple of years [other than China’s] Lomon Billions. With our debottlenecking and any capacity Lomon Billions brings on, the industry’s going to need it,” he added.
“We think there’s a very good balance from an industry standpoint of supply and demand as we look out over the next three years,” said Vergnano.
In a November 2018 presentation, Lomon Billions noted one 100,000 tonne/year chloride-based TiO2 line to start up in Q2 2019, and the other of the same size to start up in H2 2019. It expected to produce an additional 60,000-80,000 tonnes of chloride-based TiO2 in 2019.
Chemours has just over 1.5m tonnes/year of TiO2 capacity at four plants, Vergnano noted.
“We had a tremendous 2018… but a slowdown in the second half of the year in the TiO2 industry. But that’s going to rebound probably in the second half of this year… So as you get into 2020-2021, we’re going to need that capacity,” he added.
Chemours’ Titanium Technologies segment saw 2018 adjusted earnings before interest, tax, depreciation and amortisation (EBITDA) gain 22% to $1.06bn on 7% higher sales of $3.17bn. However, for Q4 2018, adjusted EBITDA plunged 24% year on year to $199m as sales fell 15% to $666m. For 2019, Chemours expects lower volumes of TiO2 in the second half of 2018 to continue into 2019, leading to lower overall 2019 results for the Titanium Technologies segment.
Volumes are expected to be weaker in Q1 versus Q4 with a recovery starting in Q2 through the year.
For all of 2019, Chemours expects flat pricing, aided by its TiPure Value Stabilization Program, but lower volumes.
“Destocking could extend into Q2, but the majority will be done in Q1. Then real demand should kick in,” said Vergnano.
The plastics and laminates end markets for TiO2 are expected to account for much of the weakness in early 2019, with “transitionary share loss as customers adapt to our TiPure Value Stabilization strategy”, said Vergnano on the company’s Q4 conference call.This share loss will largely be in the plastics end market amid difficult market conditions, he said.
“Volumes are down across the plastics industry, and because of that, they’re looking at advantages they can get on their pricing. We’re not meeting lower prices in that segment, and that’s why… we’ll see a little bit of share loss,” said Vergnano.
“We believe that’s going to be regained toward the second half of this year, just because as demand starts coming back up, there’s no new supply coming on. And it’ll make sense for people to migrate back, especially if prices in the industry start to rise in the second half,” he added.