Thanks, newtech.
Your comments about Asia, China and India are all correct. Just to provide you with some additional detail, let me add the following:
The global TiO2 demand is approximately 5 million metric tonnes (mt) per year.
To give you an idea where the demand is:
North America: 1,200,000mt
Latin America: 350,000mt
Asia Pacific: 1,800,000mt
Europe: 1,250,000mt
Middle East, Africa, Eastern Europe: 400,000mt
However, of the 1.8 million tonnes of demand in Asia Pacific, half of this is consumed in China and the other 50% in the rest of Asia Pacific / Oceania. So China is huge and the demand is growing the fastest.
Demand in India is still relatively small, less than 150,000mt today, but growing quickly. So, the emerging markets are where all the growth will be in the coming years. So what's new!
The interesting thing about China is that there are no global TiO2 producers with any capacity in China. The global players, like Tronox, import product into China. DuPont is closest with a plant in Taiwan and then ISK in Japan and Singapore.
Total TiO2 imports into China are only about 250,000 to 300,000mt per year. All the rest is supplied by small local producers in China. DuPont has been wanting to build a plant in China for years, however, to date they have failed to do so.
But Tronox, post-bankruptcy, will have a great global position, especially in Asia. Their Kwinana plant is a low-cost production facility, and currently undergoing an expansion of 40,000mt which will take their capacity to about 160,000mt per year. This would give them about 6% or the regional Asia Pacific supply position.
Ishihara, DuPont, Tioxide, Cristal, and a number of other small players have capacity in Asia as well, but none of them have capacity yet in China.
In North America, Tronox has shut down their high cost Savannah Plant, leaving only the low-cost Hamilton plant in operation. This is a big plant, making 230,000mt per year giving Tronox almost a 20% capacity position in North America with a great cost position! DuPont is the big player here with almost 50% of the capacity in North America and the lowest cost position in the industry.
In Europe, the Tronox Botlek plant only produces about 90,000mt per year, however, this still gives them a 6% to 7% capacity position in Western Europe. They have walked away from the high cost Uerdingen plant in Germany.
So, after all of the shutdown of high costs plants around the world last year, the industry is very tight on supply. This supply tightness and good TiO2 pricing could therefore last for quite some time..........good for Tronox share price.
DuPont will still be number 1 in the world with about 22% or 23% of the global production capacity. Cristal should be the number 2 player with about 14% or 15% global capacity share. Tioxide may now become the No.3 player with about 10% of the global capacity. Then, a close tie for No.4 will be between Tronox and Kronos, at about 8% or 9% capacity share.
But, it is not how big you are, it is about how profitable you are. And, with Tronox cleaning up all their cost structure, getting rid of environmental liabilities and high cost operations, and expanding capacity in Asia where it really counts, they will have a nice looking balance sheet in the near future. I still think they will then become an acquisition target which could happen not so long after they emerge.
So, that is all for now.
