The global titanium dioxide industry has gravitated towards the Asia-Pacific region. In terms of supply, the titanium dioxide capacity has surpassed that of the US and hit more than 2 million tonnes. Apart from the new capacity of 350,000 tonnes contributed by DuPont, any increase in titanium dioxide capacity is expected to increase in the future.
The industry has been plagued with overcapacity since the 1990s. TiO2 pricing in real terms fell close to 50% between 1990 and 2009. Due to the high fixed cost structure of the business, in periods of overcapacity producers cut prices in a desperate attempt to use up excess capacity.
The last two decades have been marginally profitable at best for TiO2 producers, with plants often running at breakeven. However, overcapacity has persisted, in part due to the large environmental liabilities associated with decommissioning a TiO2 plant.
Titanium dioxide demand underwent a rare sequential decline in 2008-9, dipping by 8% globally and 16% in Western markets over those two years. Several producers responded by permanently shuttering higher cost plants constituting 7% of worldwide capacity. Additionally, many producers temporarily idled plants due to weak demand. These shutdowns, coupled with a rise in demand due to inventory restocking in the global recovery, led to tightening supply and sharply rising prices starting in the back half of 2009. Prices have risen consistently since then, with price increases for the third and fourth quarters of 2011 already announced by the major producers. While there is no uniformly agreed price index for the industry, based on industry data and public company reports prices have risen about 40% in the past year.