With this letter we intend to inform you about the newest TiO2 market development and the actions we need to take jointly.
Global TiO2 Market:
These background information arerelated to the whole TiO2 market, not only concerning fibre anatase since the global view has an great impact on our fibre business:
Installed TiO2 capacity worldwide is approx. 5.5 mio. Tons in whichTop 5 players representing above 70% of total capacity, mainly US based.
TiO2 demand is growing approx. 2-3% per year on a global basis.
As you know there are two manufacturing routes (sulphate andchlorine process) but the trend is going towards chlorine process due to a better cost position and sufficient quality for applications like coatings, papers and partially plastics. In the last yearsmore and more sulphate capacity, especially in Europe and US, was shut down with a total capacity decrease of 250KT. Existing profit margins in the entire TiO2 industry do not justify investments innew capacity and on top of the TiO2 producers reduce their R+D activities which plays still an important role within Sachtleben.
The TiO2 market is very tight in all applications and in all areasdriven by steady high demand and limited raw material supply like IImenite and Ti slag. This affects all TiO2 producers and lead to an extraordinarily strong increase in raw material costs. This upwardtrend will last for the next 18 – 24 month and in effect the validity of delivery contracts with raw material suppliers will rather be 3 to 6 months than 12 to 24 months as in the past. Priceadjustments will take place quarterly as already well known in the iron ore business.
In this respect we recognize a clear shift to commodities. First through the shift from sulphate to chorine process...