DuPont's Mexico TiO2 Plant Expansion Dominates Chemical Industry in North America

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Researched by Industrial Info Resources (Sugar Land, Texas)--Industrial Info is tracking 20 titanium dioxide (TiO2) projects totaling nearly $1 billion in North America, including four expansions valued at $640 million, and one brownfield plant valued at $248 million. However, the chief executive of one TiO2 producer says the industry in North America needs at least one of those expansions like it needs a "hole in the head."

TiO2 is used as a pigment in paints, plastics and paper products, but North American companies have been beset in recent years by lackluster prices.

DuPont (NYSE:DD) (Wilmington, Delaware) is expanding TiO2 production capacity at its Altamira site in Mexico, with a project valued at $500 million. Capacity will increase from 150,000 to 350,000 tons per year. Jacobs Engineering is serving as the engineering, planning and construction (EPC) contractor, and ICA Fluor as subcontractor.

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DuPont announced the expansion in 2011, saying it was part of a plan to add about 350,000 tons of global capacity to meet customer demand. DuPont initially planned to complete the project in the fourth quarter of this year, but now plans completion in third-quarter 2015.

DuPont plans to spin off its Performance Chemicals business, including TiO2, by mid-2015, but the spin-off will not affect the Altamira project schedule, according to company spokesman Greg Schmidt. DuPont is the world's largest producer of TiO2, with an estimated 20% of global capacity.

Not everybody in the TiO2 industry is thrilled by the Altamira expansion.

Speaking at the Jeffries Global Industrials Conference on August 13, Huntsman Corporation (NYSE:HUN) (The Woodlands, Texas) Chief Executive Officer Peter Huntsman said: "I did say some quarters ago that we needed the DuPont expansion--this industry--like we needed a hole in the head, and I wouldn't retract that statement."

Peter Huntsman indicated the industry already has more TiO2 production capacity than it needs.

According to Huntsman's company estimates, global TiO2 capacity will be 6.3 million tons in 2014, which is roughly 500,000 tonnes more than global demand. Global operating rates are expected to be more than 85% for the year.

In 2012, global capacity outstripped demand by 1.2 million tons, according to Huntsman, and operating rates for that year slumped to less than 80%.

Peter Huntsman noted that on a global scale, most new TiO2 capacity growth is in China, where it will be used to satisfy local demand.

Industrial Info is tracking 73 TiO2 projects globally, with an estimated total value of $11 billion. With 17 projects, totaling $4.3 billion in value, China stands head and shoulders above any other country, according to Industrial Info data.

Huntsman, which says it had 10% of global TiO2 production capacity in 2013, is in the process of acquiring the TiO2 and performance additives business of Rockwood Holdings, which has 5% of the global capacity. Following the $1.1 billion acquisition, Huntsman wants to eventually make its TiO2 business part of a spin-off, according to its chief executive.

Another North American TiO2 project being tracked by Industrial Info is Argex Titanium Incorporated's (Montreal, Quebec) Salaberry-De-Valleyfield Brownfield TiO2 Plant, valued at $247.6 million. Located in Quebec, the plant would use proprietary technology produce 50,000 tons per year of TiO2 from Ilmenite ore. Construction kick-off is expected in the fourth quarter of this year, with completion in fourth-quarter 2015.

View Project Report - 300100854

Two potential expansions in the U.S. involve Cristal USA Incorporated's (Woodridge, Illinois) 115,000-ton-per-year Plant 2 at its facility in Ashtabula, Ohio. Both expansions are still in their project justification stage and would increase capacity by an unspecified amount. The first phase of the expansion has an estimated total investment value of $35 million, with completion at the end of 2015. The second phase, valued at $90 million, could see completion in 2017. Cristal USA is part of Cristal Global (Jeddah, Saudi Arabia).

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Twelve of the 20 North American projects are in the construction stage, two are in engineering, and six are in planning.

Industrial Info Resources (IIR), with global headquarters in Sugar Land, Texas, three offices in North America and 10 international offices, is the leading provider of global market intelligence specializing in the industrial process, heavy manufacturing and energy markets. Industrial Info's quality-assurance philosophy, the Living Forward Reporting Principle™, provides up-to-the-minute intelligence on what's happening now, while constantly keeping track of future opportunities.