Sep 30 2010
TZMI’s Pigment Price Forecast, the only independent forward-looking analysis of the prices for the titanium dioxide (TiO2) pigment, is published quarterly by TZ Minerals International Pty Ltd (TZMI). A detailed analysis of the global supply/ demand balance forward to 2015 is used to develop the latest 6 year regional price forecast - Pigment Price Forecast Q2 2010.
In 2009, global pigment demand was estimated at 4.66 million tonnes, down 3.0% from a revised 4.81 million tonnes in 2008. The compound average growth rate (CAGR) of pigment demand over the five year period to 2009 has been well below the long-term average, owed in large part to the global recession of 2008-09.
The longer-term forecast for TiO2 pigment sees China, in particular, expected to remain the growth engine for the world, leading nearly all other countries in size and growth rate. The other emerging regions - Latin America, Middle East and Africa, and Central Europe - are not expected to grow as quickly as China but should outpace global GDP growth rates, starting from 2009 levels. The developed economies of North America and Western Europe are expected to resume growth after years of decline, but TZMI does not anticipate that these regions will achieve pre-recession demand levels during the forecast period.
Demand for pigment in the world’s largest market, Asia-Pacific, is expected to grow from 1.79 million tonnes in 2009 to 2.54 million tonnes by 2015, a CAGR of 5.9%. The Asia-Pacific growth forecast continues to increase over prior forecasts, as demand from China continues to outpace expectations, with plenty of upside potential before the market begins to mature. Longer-term, TZMI does expect Chinese demand to slow as per capita consumption approaches the range expected of a more mature economy, but this is unlikely to occur within the next 10 years.
China’s urbanisation push will continue to drive TiO2 demand. Currently, approximately 46% of China’s population is considered urbanised. Experts are forecasting this to increase over 50% by 2025, adding demand for construction and housing for another 50-100 million people which does not exist today. Economic forecasters are expecting the Chinese economy to expand by around 7-8% per annum over the next decade. As such, TZMI is forecasting TiO2 consumption in China to reach 1.46 million tonnes by 2015.
The weighted average global pigment price decreased 2.7% year-on-year in 2009. There is little chance of new unidentified investment in additional brownfields capacity during 2010 and early 2011, resulting in at least another two year period before significant additional capacity can become available. The result is likely to be a very strong rebound in pigment prices in all markets in 2010 and 2011, before some tempering in the rate of increase from 2012. TZMI is forecasting weighted average global pigment prices to increase in nominal US dollar terms around 3.7% CAGR to 2015.
“Forecasting pigment price during these periods of tight supply is extremely difficult” says David McCoy, Senior Partner with TZMI. “TZMI is predicting that recently announced price increases are likely to flow through in full to the market by year end. The longer term outlook will be highly dependent on the timing of any incremental capacity that can be added over the next two years, in combination with the rate of acceptance of Chinese material in wider global markets.”
The Pigment Price Forecast Q2 2010 includes an in-depth analysis of regional pigment trade for the period 2001 to 2009, extracted from TZMI’s proprietary database.
The Pigment Price Forecast Q2 2010 is developed concurrently with TZMI’s Global TiO2 Pigment Producers Comparative Cost and Profitability Study, the benchmark analysis of the leading industry producers. The study covers over 60 pigment plants spread across 27 countries and covers over 92% of the 2009 output. The study is an independent analysis built up from individual plant cost structures plus an analysis of global pigment trade during 2009.
The next edition (Q3) of the Pigment Price Forecast will be released in late November 2010.