Hi Dhruv,
Thanks for sharing these notes. I am also adding my notes on TiO2 dynamics.
Basics of TiO2 : The principal natural source of titanium dioxide is mined ilmenite ore, which contains 45-60 percent TiO2 . From this, or an enriched derivative (known as titanium slag), pure TiO2 can be produced using the sulphate or chloride process.
Major producers : The Kerala Minerals and Metals, V V Titanium Pigments Pvt Ltd. Interestingly, both these cos also export TiO2.
Imports of TiO2 into India: 400’000 tons. China accounts for 50% imports of TiO2 to India. Prices of TiO2 increased from $1.6/kg in 2020 to $3.4/kg in 2022. Below, we can see how TiO2 prices have varied over time.
In last few months, there has been a large drop in TiO2 prices after a massive rise post covid.
Kerala Minerals and Metals: They make rutile form of TiO2 (capacity: 40’000 MTPA), have backward integration in form of access to a leased mine for raw material (ilmenite ore). They have four blocks of beach sand in Kollam for mining thus ensuring raw material availability. Apart from producing rutile-grade TiO2 pigment for various types of industries, it also produces other products like ilmenite, rutile, zircon, sillimanite, and synthetic rutile. The different grades are produced by TKMML under the brand name Kemox for uses in various industries like paints, paper, cosmetics, rubber, plastics, and ceramics. We can see their nos below.
FY18 and FY22 were good years, when TiO2 prices were high due to Chinese problems. However, during bad years their margins go into single digits which has already happened in FY23. Capacity utilisation declined in H2FY23 with reduced realizations from TiO2 leading to drop in revenues by 15% and EBITDA levels in the range of 8-9% for FY23.
They had announced enhancing TiO2 capacity from 40k to 60k MTPA in 2018, however they havent done anything around it. Since then, they went into a downcycle in FY20, an upcycle in FY22 and a downcycle now. Maybe the way PSUs work.
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