Titanium dioxide (titanium dioxide) is an indispensable key raw material in many industrial fields such as coatings and plastics. In July 2024, the European Commission imposed a temporary anti-dumping duty on titanium dioxide originating from China, based on the fact that the Chinese government's subsidies to the titanium dioxide industry led to abnormally low market prices, constituting unfair trade practices. The tax rate was as high as 39.7%, which aroused deep concern from the European paint and coatings industry, and many stakeholders expressed concerns about the long-term impact of this series of measures.

1.Voice of stakeholders

The European Coatings Association (CEPE): strongly opposes anti-dumping duties and emphasizes the adverse impact it may have on the European coatings industry. CEPE believes that the price of titanium dioxide, which accounts for up to 40% of the raw material costs of coatings manufacturers, will rise sharply, especially to the detriment of small and medium-sized enterprises that rely heavily on competitively priced Chinese titanium dioxide. CEPE warned that European manufacturers may be less competitive than competitors who can continue to obtain cheap titanium dioxide worldwide, and rising production costs may also weaken European exports and further weaken its global competitiveness.

Teknos: Finnish coatings manufacturer Teknos expressed concern about the sudden implementation of tariffs. Although it acknowledged the existence of dumping issues, it called for a more gradual tariff adjustment strategy to give the industry time to adapt. Teknos pointed out that titanium dioxide producers in the EU are struggling to meet market demand, making China a key supplier. The company also worries that anti-dumping duties may prompt investment to flow outside the EU and weaken the local industrial base.

Paula Salastie, CEO of Teknos: Criticized the EU's approach to titanium dioxide issues, arguing that anti-dumping measures may conflict with the EU's Green Deal goals. The increase in titanium dioxide costs may cause greater environmental damage in the production process, as companies may seek inefficient and highly polluting alternatives to offset higher material costs. At the same time, focusing only on production within the EU ignores the wide-ranging impact of the entire value chain, especially in the current situation of insufficient local production capacity.

Reg Adams, titanium dioxide expert: From a pragmatic point of view, it is acknowledged that anti-dumping duties may lead to a 2-4% increase in titanium dioxide prices, affecting the profits of coatings manufacturers. But he also sees potential opportunities for European manufacturers and believes that tariffs will help them regain market share from Chinese suppliers. Rising costs could help European manufacturers by driving more local production. However, for small paint producers that rely on low-priced imported titanium dioxide, price increases could erode profitability or even lead to business closures.

Other concerns from industry experts: Nicolas Dujardin, COO of paint producer Océinde, expressed further concerns about anti-dumping duties. He noted that higher tariffs could significantly increase the cost of titanium dioxide from 2.5 euros per kilogram to 3.5 euros. This price increase will have a significant impact on small and medium-sized enterprises, as titanium dioxide accounts for up to 30% of production costs. He warned of the growing risk of bankruptcy and the possibility of production shifting outside the EU, especially considering that Europe faces a shortage of 250,000 tons of titanium dioxide per year, and reliance on Chinese imports in the short term is unavoidable. In addition, Dujardin also stressed that tariffs could disrupt supply chains and increase reliance on unreliable or expensive sources, further increasing production costs. He also pointed out that if European companies are forced to import finished products containing titanium dioxide instead of raw materials, it will increase transportation emissions, which is contrary to the EU's climate goals.

2. Potential consequences

Imposing anti-dumping duties on Chinese titanium dioxide is a complex decision that could reduce competition from Chinese suppliers and help European producers, but could also hurt European coatings manufacturers, especially small and medium-sized enterprises, due to rising costs, and even lead to job losses. The shift of production to non-EU countries could also undermine the EU's environmental goals and reduce its global industrial competitiveness. Given that it is difficult for Europe to replace the supply of Chinese titanium dioxide in the short term, price increases could lead to a shift to more expensive or unreliable alternatives, exacerbating cost pressures.

3. Recommendations for a balanced solution

Dujardin advocates a cautious approach to anti-dumping duties and recommends a phased implementation to give companies time to adapt. Other potential solutions include:

Financial assistance: Providing financial support or tax incentives to help companies transition to more expensive titanium dioxide;

Investing in local production: Encouraging the establishment of titanium dioxide production facilities within the EU through subsidies or public-private partnerships;

Innovation grants: Supporting research on more efficient and environmentally friendly methods of titanium dioxide production;

Supply chain diversification: Encouraging companies to purchase titanium dioxide from multiple regions (not just China) to reduce dependence on one supplier;

Price monitoring mechanism: Implementing a system to monitor and stabilize prices to prevent excessive price increases that harm consumers.

4.Conclusion

The imposition of anti-dumping duties on titanium dioxide imports from China is both an opportunity and a risk for the European paints and coatings industry. While the intention behind these measures is to protect local producers, the wider economic and environmental impacts must be carefully considered. A sudden increase in titanium dioxide prices could lead to higher costs, reduced competitiveness and job losses in the European coatings industry. A gradual implementation of tariffs, supported by investments in local production and innovation, would provide a more balanced solution, ensuring the long-term sustainability of the industry while maintaining the EU's competition and environmental objectives.