Roskill forecasts growth in world PCC industry

World demand for precipitated calcium carbonate (PCC) is forecast to grow by an average of 4%py from around 13Mt in 2007 to nearly 16Mt by 2012. Growth rates will be highest in the paint (6%py) and rubber (4%py) industries though the largest increases in terms of tonnage will be in paper and paint. Much of the increase in demand will take place in Asia, especially in China, with much lower rates of growth forecast for North America and Europe. Forecast growth in Chinese PCC consumption reflects rising domestic demand for paper, for paints and plastics in the construction industry, and for rubber. Although growth rates for 2008/09 have recently been downgraded, the Chinese governments plans to invest US$570B in an infrastructure investment programme, and the reduction in interest rates in late 2008, are expected to stimulate demand in markets consuming PCC fillers. Chinese PCC consumption is forecast to rise by 6%py to reach 8Mt in 2012, around half the estimated world total. The largest regional market for PCC is in Asia, followed by North America and Europe. Asias domination of the world PCC market is due both to recent growth in the regional paper and plastics industries, and to the smaller market share for fillers held by GCC in China. GCC production did not start in China until the 1990s and prior to that all demand for calcium carbonate fillers was met by PCC.

Paper and plastics industries are largest PCC consumers

The paper industry is the largest consumer of PCC. Using an estimated 5.5Mt in 2007, this market accounted for over 40% of world PCC consumption. Use was divided between Asia (1.8Mt), Europe (1.6Mt) and North America (1.5Mt). The traditional application for PCC in paper has been as a filler, but demand for coating grades including blends of PCC and GCC, is increasing. The main market for PCC fillers lies in woodfree uncoated paper, which accounts for around 40% of total printing and writing paper capacity. Mechanical or wood-containing grades, such as super-calendered paper, are becoming increasingly important markets for PCC. Plastics are the second largest market for PCC. Consumption worldwide in this market totalled 3.5Mt in 2007. Asia dominates consumption, accounting for some 85% of the 2007 world total. Four resins - polyvinyl chloride (PVC), polypropylene, unsaturated polyesters and polyethylene - account for more than 90% of filler mineral consumption in plastics. The main use for PCC lies in rigid PVC and to a lesser degree flexible PVC.

Top three companies in global PCC represent around 40% of world capacity

The global PCC industry is characterised by a few large multinational corporations that operate satellite and merchant capacity, and hundreds of small companies that often have only a single merchant plant. The three main international producers are MTI of the USA, Omya of Switzerland and Imerys of France. Together these three companies account for some 40% of world capacity and for over 90% of capacity operating on a satellite basis. Smaller companies that operate in more than one country include Schaefer Kalk of Germany, Okutama Kogyo of Japan and Solvay of Belgium.

Structural changes in the PCC industry

A possible change in the future structure of the PCC industry is the potential sale by Solvay of its PCC operations. The company currently controls 209,000tpy of PCC capacity, all located in Europe and nearly all (apart from 14,000tpy) operating on a merchant basis. The Chinese PCC industry was traditionally characterised by a large number of merchant plants with small capacity, many of which produced lower purity PCC with relatively poor dispersion. Since 2000, 0.9-1.0Mtpy of PCC capacity has been opened, including 100,000-240,000tpy operated on a satellite basis. Overseas producers such as MTI, Okutama Kogyo and Schaefer Kalk have all invested in Chinese PCC capacity. Three Chinese producers - Guangxi Guilin Jinshan Chemica, Dujiangyan Calcium Carbonate and Guangdong Enping Jiawei Chemical - are now ranked in the worlds top ten, although all Chinese companies just operate domestic plants. Recent changes in the regional pattern of PCC capacity reflect trends in world demand. In Asia, over 1.4Mtpy (0.9Mtpy of merchant and 0.5Mtpy of satellite) capacity has opened since 2000, to meet rising demand from the regional paper and plastics industries. China alone accounted for around 75% of this total. In contrast, in North America capacity declined by 0.2Mtpy as a number of paper mills and their satellite PCC plants closed. Elsewhere, capacity rose by 0.6Mtpy in Europe and by 0.2Mtpy in South America. Plans for the construction of 400,000tpy of new capacity in China had been announced by late 2008. Capacity for fine and superfine grades of PCC doubled from 300,000tpy in 2006 to 600,000tpy by 2008 and ShengdaTech, the largest producer, plans to raise capacity by a further 120,000tpy in 2009.

Future for PCC prices

PCC prices are forecast to continue to rise in line with energy, transportation and environmental compliance costs. Energy costs are an important constituent of production costs as they raise both the direct cost of processing PCC and the cost of lime raw materials. In the USA, Mississippi Lime announced plans to raise prices of its merchant PCC by up to 30% from January 2009 due to unprecedented increases in electricity rates. Prices of satellite paper grade PCC are also forecast to rise significantly as long term contracts expire and new contracts are negotiated. These price increases may make some paper mills uncompetitive. Higher operating costs at a time of economic downturn may result in more paper mill closures, and perhaps satellite PCC plants, in the future.