Annual Report 1999 - Kemira

of TiO 2
. The growth has thus been
even, but fairly modest. According to
estimates at the moment, worldwide
consumption of TiO 2
will grow over
the long term by 2-3% and will scarcely
rise at a faster rate later on, either. On
the other hand, there can be great annual
fluctuation in demand owing to
the cyclical sensitivity in this industry.
THE MARKET PICKS UP
Demand for titanium dioxide pigments
rebounded after the downhill slide a
year ago. The first part of the year was
slow, but towards year-end all producers,
Kemira Pigments included, were
hard pressed to satisfy the strong demand.
This was attributable both to the
trend in the TiO 2
cycle itself and also to
the fact that the main customers, i.e.
the paint, plastics and paper industry,
topped up their stocks to be prepared
for the millennium changeover.
Although the TiO 2
industry has become
increasingly global, the markets
nevertheless behave in different ways
in different parts of the world. In North
America there was good demand
throughout the year, and in Asia demand
improved markedly towards the
end of the year, whereas the Latin
American market was flat.
Price increases were carried out in
all the markets. The rises started off in
Asia in the summer, with Europe following
suit in the autumn and last of
all, at the beginning of 2000, prices in
the United States headed upwards. In
Latin America too prices are rising,
though slowly.
TITANIUM DIOXIDE PIGMENT
C&F NW Europe
DEM/
kg
4,0
3,0
2,0
1,0
CONSOLIDATION IN THE INDUSTRY
Consolidation is moving ahead in the
titanium dioxide industry. In the autumn
the Kemira Group announced its
change in strategy, according to which
the Kemira Pigments business no longer
belongs to the Group’s core business
areas. Ownership arrangements concerning
the Kemira Pigments business
are in progress, and it is believed that
they will be carried out during 2000.
A major acquisition was made in
the industry during the report year
when the world’s third largest producer
- Tioxide - was ultimately sold to
Huntsman Chemicals.
BOOSTING PRODUCTION EFFICIENCY
The structural transformation projects
under way at all sites moved ahead according
to plans. The objective of the
projects is to cut annual costs by a total
of EUR 44 million by the start of 2001
at the latest. The Pori plant will account
for about EUR 17 million of this
figure. The efficiency boosting programme
at Pori has already been largely
completed.
Debottlenecking at the Pori plant
was completed in December, raising
the plant’s production capacity to
120,000 tonnes a year.
Because sales of speciality products
have developed favourably, additional
investments have been made in the
UV-Titan business. Even though speciality
product capacity at the Pori plant
is currently being doubled, it was decided
to expand it further. The extension
works have progressed smoothly,
and the new capacity will come on
stream in the latter half of 2000. The
expansion of FinnTi production was
completed during the report year.
NEW PRODUCTS UNDER
DEVELOPMENT
Worldwide and local product development
programmes continued. Development
work on two new grades of titanium
dioxide pigment were completed
and the products were introduced to
customers. The products are a multipurpose,
high-gloss and high-durability
KEMIRA 635 pigment which the Rotterdam
plant manufactures for the paint
industry and KEMIRA UDA Prime anatase
slurry, which is produced by the
Savannah plant for the paper industry.
New products that are marketed to
the plastics and laminate paper industry
and came on to the market in the previous
year strengthened their position
on this market.
The division pushed ahead with development
work on pigmentary and
transparent titanium dioxide grades,
which are intended for uses in the plastics
industry. In addition to plastic
grades, the Speciality Products unit
concentrated on microfine transparent
titanium dioxide products that are used
in paints and cosmetics. Development
work was also done on titanium chemicals.
Test methods that are used in quality
control were harmonized at all three
production plants, promoting the communication
of more uniform information
to customers and further ensuring
product quality.
Introduction of an SAP R/3 system
went smoothly at all the Kemira Pigments
units, both at plants and in the
sales offices, during 1999. The changeover
to the year 2000 went without any
problems.
POSITIVE EXPECTATIONS FOR 2000
Sales of titanium dioxide pigment got
off to a brisk start during the current
year. In spite of the US producers’
stocks being larger than normally, fullyear
expectations for 2000 are positive.
The TiO 2
cycle is still in an upswing
and the market is expected to remain
good.
94 95 96 97 98 99
0
Source: ICIS–LOR Group Ltd.
TITANIUM DIOXIDE PIGMENT
ILMENITE
AUD/t
170
RUTILE
USD/t
700
USA Asia
US cts/
pound
120
100
80
60
40
20
0
94 95 96 97 98 99
150
600
130
500
110
400
90
300
94 95 96 97 98 99
70
94 95 96 97 98 99
200
Source: ICIS–LOR Group Ltd.
Source: Industrial Minerals
Source: Industrial Minerals
52