TiO2 manufacturing costs up double digits while margins contract 7% in 2022

In its 20th edition, leading industry consultancy TZMI presents its annual TiO2 Pigment Comparative Cost & Profitability Study (PCS23) of 95 titanium dioxide (TiO2) plants. In this detailed analysis of 2022 global manufacturing costs, it was determined conversion costs (manufacturing cash costs minus feedstock) increased 18% year-on-year. The latest study covers 98% of global production in 2022 and 100% of chloride process capacity. All plants above 15,000tpa capacity are included.

The year was a tale of two halves and averaged the lowest profitability, measured as revenue-to-cash cost (RC) ratio margin since the study began. Costs and pigment price movements varied greatly between regions during the year. Margins compressed as the year continued, with Q4 being particularly devastating to producers' profitability. Three plants identified for closure in 2023 outside China all have RC ratios under one, the cash breakeven point.

In 2022, sulfate manufacturing cash costs rose 31% year-on-year, driven by rising feedstock, sulfuric acid and energy costs. Chloride manufacturing costs rose by 22% year-on-year, driven by rising feedstock, chlorine and fixed costs as a result of production turndowns in Q3/Q4 in the face of a weakening market. Even with the accelerated cost expansion, sulfate plants commanded an 11% cost discount to chloride plants in 2022.

According to the analysis, long-time industry leader Chemours' lost its historical low-cost position, coming in close to the midpoint of the industry cash cost position. However, the company sells its high-quality products into higher priced markets and therefore has a first quartile margin position for all plants except Kuan Yin in Taiwan, which it recently announced would close. LB Group from China has some of the lowest-cost plants in the world, but its margins are near the industry midpoint due to lower average selling prices in the Chinese market. As this company continues to expand into global markets, it is expected to capture more margin from high prices.

Venator, which is currently in Chapter 11 bankruptcy proceedings, was significantly impacted by its large weighting to the European markets. Its plants have manufacturing cash costs in the upper half of the industry curve, but margins were in the first and second quartiles for three of its plants. Margins at its two German and one Italian plant were calculated to be negative, primarily due to very low throughput in the second half of the year. Two of these plants are identified for closure by the company.

PCS23 provides a detailed arms-length insight into this opaque industry, of which the products are critical for many consumer goods. As the sector faces increasing cost and margin pressures, large customers and investors should use this resource to identify key future risk issues in the changing industry. The full study provides a 120-page summary report analysing the key trends, with an appendix of detailed manufacturing cost and margin statements for each of the 95 operations. The study comes with an MS™ Excel workbook of all calculation inputs and outputs that can be interrogated by the user in a confidential customised manner.

Latest edition available here - https://www.tzmi.com/services-2/publications/annual-studies/global-tio2-pigment-producers-comparative-cost-profitability-study/

More about TZMI here - https://www.tzmi.com/

TZ Minerals International Pty Ltd
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David McCoy
Executive Chairman
Markets and Strategic Services
TZ Minerals International
Mobile: +61 437 049 757
Email: dmccoy@tzmi.com

TZMI is an independent consulting and publishing company, operating since 1994, that works with a wide range of global clients to provide insight and expert advice on the opaque mineral, metal and chemical sectors. TZMI is unique in that it has technical and operational experience, together with strategic and commercial competency, to provide a full service offering to clients. As trusted advisors, TZMI's reputation is underpinned by having an experienced cross-section of technical specialists around the globe. TZMI partners with clients from the private and public sectors to provide bespoke solutions across markets and strategic services as well as specialised technical and engineering services. Clients range from the world's 500 largest companies through to mid-sized companies and small businesses. TZMI regularly releases market reports and periodicals on relevant subject matters which support its primary consulting activities with up-to-date, high-quality and comprehensive data, analysis and information. TZMI has continued to grow and expand over the years by adding business units operating in Shanghai, China (TZMI Management Consulting (Shanghai) Co., Ltd) and Houston, US (TZMI, Inc.) as well as taking full ownership of Allied Mineral Laboratories Pty Ltd (AML) based in Perth, Western Australia.

This release was published on openPR.