Titanium Dioxide Sector in China Faces Overcapacity

By Tang Wenqian and Wang Pei, CNOOC Shandong Chemical Engineering Co., Ltd.

Titanium dioxide (TiO2) is a white inorganic pigment with no toxicity, strong covering power, great whiteness and high brightness. It is the white pigment with the best properties. Titanium dioxide is extensively used in the coatings, plastics, papermaking, pharmaceutical, inks, ceramics and cosmetics sectors. In terms of output value, it is the third major class of inorganic chemical products after ammonia and phosphorus chemical products. The total capacity to make titanium dioxide in China was 2.60 million t/a in 2012 and the output was 1.89 million tons, both firmly holding the first place in the world. With rapid development, there are also some problems in the titanium dioxide sector such as capacity surplus, serious product homogenization, and narrow profit margins or even losses for producers.

Declining Utilization

The titanium dioxide sector in China was started in the mid-1950s. Products in the initial years were non pigment-grade varieties used in ceramics and welding rods. In the years before the 1970s, a great deal of R&D and trial production was done in the production processes for anatase and rutile pigment-grade varieties, but only slow advances were made. By the end of the 1970s, China’s capacity to make titanium dioxide amounted to less than 20kt/a. In the 1980s, Guangzhou Titanium Dioxide Plant took the lead and teamed up with six other enterprises to introduce the sulfuric acid process for titanium dioxide production from Australia. Efforts for the dissemination and application of the technology were also made.
In the 1990s, China introduced several complete titanium dioxide units using a sulfuric acid process from Czech and Poland in Eastern Europe. These units each had a capacity of 15kt/a and were located in the 404 Titanium Dioxide Plant of the Ministry of Nuclear Industry, Chongqing Titanium Industry Co., Ltd. and Jinan Yuxing Chemical Plant. The completion of these units promoted the development of the titanium dioxide industry in China. Starting from 2011, China turned from a net titanium dioxide importer to a net exporter. Table 1 shows the production of titanium dioxide in China during 1998-2012.
It can be seen from Table 1 that before 2006, the capacity utilization rate  was more than 80%, except for 1998 and 1999 in which utilization dipped to 72.2% and 69.5%, respectively. the highest was 93.3% in 2005. Utilization gradually came down  below 80% during 2007-2012, dipping to 57% in 2008. According to statistics, titanium dioxide projects using the sulfuric acid and the chlorination process that can be completed in 2013 include a 50kt/a unit of Ningbo Xinfu Titanium Dioxide Co., Ltd., a 60kt/a unit of Panzhihua Dongfang Titanium Industry Co., Ltd., a 100kt/a unit of Hubei Xiangfan Lomon Titanium Industry Co., Ltd. and a 30kt/a unit of CITIC Jinzhou Titanium Industry Co., Ltd. The capacity to make titanium dioxide in China will increase to 2.84 million t/a by the end of 2013.

Table 1   Production of titanium dioxide in China, 1998-2012 (kt, kt/a, %)

Year     Import volume    Export volume    Total capacity    Total output    
Apparent consumption    Capacity utilization rate
1998    79      32    194       140      188      72.2
1999    109      42    260       181      247      69.6
2000    142      56    340       289      376      85.0
2001    147      56    390       330      400      84.6
2002    188      69    470       390      500     83.0
2003    230   79      600    480      630      81.7
2004    251   94      720    600    757     83.3
2005    228      157    750       700      771      93.3
2006    257      193    1 000  850      913      85.0
2007    276      138    1 300  1 000  1 139   76.9
2008    251   75      1 380  787      963      57.0
2009    245   104    1 800  1 047  1 188      58.2
2010    269   266      2 430  1 472  1 475      60.5
2011    229   398    2 500  1 755  1 586      70.2
2012    163      385    2 600  1 890  1 668      72.7


Table 2   New and expansion titanium dioxide projects in 2013 (kt/a)

Project         Capacity      Production process
BlueStar Chemical New Material Co., Ltd. Guangxi Branch              55        sulfuric acid process
Jiangsu Jinpu Group Xuzhou Jiawang Titanium Dioxide Project          70        sulfuric acid process
Wudi Haixing Coal Chemical Co., Ltd. Titanium Dioxide Expansion Project    60        sulfuric acid process
CITIC Jinzhou Titanium Industry Co., Ltd.                           30        chlorination process
Luohe Xingmao Titanium Industry Co., Ltd.                           60        chlorination process
Yunnan Longyuan Titanium Industry Co., Ltd.                       60    
　　sulfuric acid process
Yunnan Metallurgical Group Xinli Nonferrous Metal Co., Ltd.       60        chlorination process
Panzhihua Taihai Technology Co., Ltd. Second-Phase Project Guangxi Jiahua Titanium Industry Co., Ltd.                                                   40        sulfuric acid process
Guangxi Jiahua Titanium Industry Co., Ltd.                            100      sulfuric acid process
Henan Wanji Holding Group Co., Ltd.                               100     chlorination process
Henan Billions Chemicals Co., Ltd.                                   100     chlorination process
Panzhihua Steel Titanium Industry Co., Ltd.                        100     chlorination process
Panzhihua Steel Titanium Industry Co., Ltd.                        10.0     sulfuric acid process
Panzhihua Steel Chongqing Titanium Industry Co., Ltd.                10.0     sulfuric acid process
Total                                                               1 035      


In addition, 14 companies in China are executing new and expansion titanium dioxide projects today. (See Table 2) If these projects are completed according to plan, the total capacity will increase sharply, reaching 3.875 million t/a in 2015.
Titanium dioxide is a basic inorganic chemical material extensively used in various sectors such as coatings, plastics, papermaking and inks. Its development is closely related to the entire economic environment in China and to both domestic and overseas markets and should therefore be basically synchronous with the GDP growth. Table 3 shows a forecast of titanium dioxide demand based on a future GDP growth of 8%.
It can be seen from Table 3 that the demand for titanium dioxide in China will likely increase to around 2.38 million tons in 2015. The capacity will however be 3.875 million t/a at that time. The capacity utilization rate will therefore be only 62%. Titanium dioxide production in China should be regarded as large-scale, so the ideal capacity utilization rate should be 79-83%. As can be seen from Table 1, however, the capacity utilization rate was has stayed below that range since 2007 and will likely drop to 62% in 2015. It is a trend of serious capacity surplus.

Efforts to Solve the Problem of Overcapacity

(1) Restrict the construction of new titanium dioxide units using the sulfuric acid process
The new version of the “Guiding Catalogue for Industrial Restructuring” in China started implementation on May 1, 2013. No revision is made to contents concerning the titanium dioxide sector. The titanium dioxide production using the sulfuric acid process is still restricted. The total capacity for all production processes is 2.60 million t/a today. The capacity using the chlorination process is only 15kt/a, 0.6% of the total. The restriction of new units using the sulfuric acid process can play an important role in constraining the total capacity.
(2) Formulate strict regulations
It is expected that the utilization rate of the titanium dioxide capacity in China will be only 62% in 2015. To ensure the healthy and sound development of the titanium dioxide sector, admission conditions should be formulated and upgraded to the status of regulations.  Admission factors should include production process, production scale, product energy consumption, TiO2 yield, environmental protection and industrial distribution.
Production process: Act in line with industrial policies of the state, encourage the construction of titanium dioxide units using the chlorination process and restrict the construction of new titanium dioxide units using the sulfuric acid process. All titanium dioxide units use the sulfuric acid process except for one 15kt/a unit using the chlorination process, owned by CITIC Jinzhou Titanium Industry Co., Ltd. No construction of new units using the sulfuric acid process will be allowed in the future unless it is the relocation and renovation of existing units. The development direction is to encourage the construction of titanium dioxide units using the chlorination process.
Production scale: The scale of units using the chlorination process should not be less than 60kt/a. The capacity of a single production line should be above 30kt/a. In cases of the relocation and renovation of existing units using the sulfuric acid process, the production scale should not be less than 60kt/a.
Product energy consumption and TiO2 yield: The product energy consumption in the titanium dioxide sector of China always takes DB37 standard as reference. That is to say, the energy consumption is 1.95 tons of standard coal per ton of rutile titanium dioxide. The titanium dioxide sector has made remarkable achievements in energy conservation and emission reduction in recent years. The product energy consumption norm and the TiO2 yield should be formulated according to the future development of the titanium dioxide sector.
Environmental protection: Wastes generated in titanium dioxide production, including waste acids, waste chlorine and waste residues, must be disposed of according to the “Standard for the Emission of Pollutants in the Titanium Dioxide Sector.”
Industrial distribution: The content of TiO2 in high-titanium slag as raw material for the titanium dioxide production using the chlorination process should be no less than 90%. The raw material is mainly imported. Such titanium dioxide units should therefore be distributed in coastal areas. Wastes should be treated on the basis of the pollutant volume in local areas. Production plants should be constructed no less than 2km away from villages.
(3) Strengthen enterprise merging and restructuring
The total capacity of titanium dioxide in the world (excluding mainland China) is 4.40 million t/a today. The total capacity of the top six producers is 3.657 million t/a, accounting for 83.1% of the world total. The capacity of each of these producers is 609.5kt/a on average. There are 34 production plants and the capacity of each production plant is 108kt/a on average.
The capacity of titanium dioxide in China was 2.60 million t/a in 2012. There were 48 producers and 57 production plants. The capacity of each producer was 54kt/a on average. The capacity of each production plant was 46kt/a on average. The average capacity of producers and production plants in China can in no way compete with the top six producers in the world. Table 4 shows the capacity of the top 10 titanium dioxide producers in China in 2012.
The total capacity of the top 10 titanium dioxide producers in China is 977kt/a, around 37.6% of the national total. The total capacity of the top 30 titanium dioxide producers was 1.76 million t/a, around 67.6% of the national total. There are too many titanium dioxide producers in China, the capacity of each production plant is too small and the production technology is outdated. To change the present status, producers with a capacity of below 20kt/a must be phased out as soon as possible. Merging and restructuring should be accelerated to reduce the number of producers from 48 to less than 10. The capacity of each production plant should be above 100kt/a. Efforts should be made to strengthen the titanium dioxide sector, shake off the burden of capacity surplus and ensure a foothold in global competition.

Table 3    Forecast of titanium dioxide demand in China (kt)

Year    2013    2015    2020    2025
Demand    2 010    2 380    3 650    5 590


Table 4    Capacity of the top 10 titanium dioxide producers in China, 2012 (kt/a)

Place    Producer    Capacity
1    Sichuan Lomon Group Corporation                            180
2    Shandong Doguide Group Co., Ltd.                          145
3    Henan Billions Chemicals Co., Ltd.                          120
4    China National BlueStar Chemical Co., Ltd.                  105
5    CNNC Huayuan Titanium Dioxide Co., Ltd.                  104
6    Nanjing Titanium Dioxide Chemical Co., Ltd.              72
7    Yunnan (Panzhihua) Dahutong Titanium Dioxide Co., Ltd.      71
8    Panzhihua Steel Titanium Industry Co., Ltd.              63
9    Ningbo Xinfu Titanium Dioxide Co., Ltd.                  60
10    Shandong Dawn Titanium Industry Co., Ltd.                  57
Total                                                         977


(4) Adjust product structure and enhance product grade
The product structure of titanium dioxide and pigments in China has been constantly adjusted in recent years and remarkable achievements have been made. In the titanium dioxide structure, the consumption proportion of rutile titanium dioxide increased from 45.5% in 2008 to 69.9% in 2012. In the pigment structure, the consumption proportion of rutile titanium dioxide increased from 38.5% to 74.2%. The consumption proportion between rutile titanium dioxide and anatase titanium dioxide is usually 85:15 in the leading countries. China’s ratio is still considerably lower. Efforts should be made to expand the application sectors of rutile titanium dioxide and increase the consumption proportion of rutile titanium dioxide in pigment-grade titanium dioxide.
(5) Enhance the role of the industrial association
Experiences in advanced countries should be taken as a reference to enhance the role of the industrial association in management. In the application, examination and approval of titanium dioxide projects, opinions of the industrial association concerning bank lending should be heeded. The industrial association can offer professional guidance to avoid redundant construction and raise the development level.
Overcapacity in the titanium dioxide sector of China is also a good opportunity for adjusting industrial policies, eliminating outdated capacity and conducting transition and upgrading. It is a necessary path for China to develop itself from a big titanium dioxide production country to a strong titanium dioxide production country.