Statement on Commission Implementing Regulation (EU) 2024/1923 of 10.6 2024 imposing a provisional anti-dumping duty on imports of titanium dioxide originating in the People’s Republic of China
Teknos Group has submitted following statement on July 25. to EC.
Anti-dumping duties for titanium dioxide (TiO2) from China would conflict with the EU’s Green Deal objectives, social sustainability, and competitiveness
Teknos expresses its sincere concern regarding the planned anti-dumping duties on the import of TiO2 from China. TiO2 is the second biggest raw material in the paints and coatings industry, and the imposition of duties would significantly impact emissions and industry profitability and potentially entice the companies to invest outside of the EU. Moreover, these proposals would have a notable social impact, affecting EU’s ability to meet the Green Deal targets, and weaken EU’s competitiveness. More production capacity and TiO2 supply availability needs to be developed within the EU to fulfill the consumption needs and therefore no additional duties should be implemented on TiO2 from China.
We want to point out that the European Commission (EC) has underestimated the consequences of establishing provisional anti-dumping measures on the paints and coatings industry, focusing only on the producers of the raw material, i.e. TiO2 and not on the producers of final products containing TiO2. The paint and coatings industry uses more than 50% of the global TiO2 supply and this is critical raw material in paint formulations.
The paint and coatings industry represents 5-6% of the EU’s innovation-focused chemical industry and is the largest user of TiO2. There is no adequate substitute for TiO2 since no other white pigment has the physical properties for achieving comparable results or can be utilized cost-effectively.
1. This duty would impact on the EU Green Deal CO2 objectives regarding emissions, as the EU would rapidly fall 10% short on TiO2 availability.
The duty suggested by EC would harm a major industry in Europe, paints and coatings standing for 5-6% of the €760 billion chemicals industry.1,2
Currently there is not enough raw material capacity for TiO2 in Europe.3 We anticipate that it would take a minimum of five years to build the required production capacity. With the suggested 39,7% duty level, this would encourage companies to consider importing finished paint from outside of the EU instead of raw material, leading to an increase in CO2 emissions from transportation by land, sea and air.
As 95% of decorative paints contain TiO2, this would increase the quantities of finished products being imported into the EU market significantly, even without considering the additional volume from packaging. Importing ready-made products results in approximately ten times higher emissions than importing raw materials as TiO2 is on average 10% of paint composition.4
2. Social impact by unemployment as EU paint and coatings production becomes unprofitable
The paints and coatings industry supports approximately 110,000 direct jobs in Europe.
With the scenario of a significant TiO2 price increase due to anti-dumping duty and shortage of own raw material and production capacity, the EU Paints and Coatings industry would turn unprofitable and be forced to resort to importing finished paint. This would impact specially the countries with manufacturing located in e.g. neighboring UK and Turkey. This could lead to plant closures and a significant increase in unemployment.
The duties would particularly impact Small and Medium-sized enterprises (SME), driving down their competitiveness and leading to significant economic repercussions and supply uncertainties due to reduced TiO2 availability.
3. Anti-dumping duties harm EU’s competitiveness and risk investments.
In the current geopolitical situation, the EU cannot afford to risk its attractiveness for investment and developing industry profitability. The proposed anti-dumping duties would risk both the SME capacity to innovate and increase the overall investment gap in European locations in the paint and coatings industry.
The paint and coatings industry accounts for significant innovations regarding durable, safe, anti-corrosive, and antimicrobial surfaces in critical infrastructure and green energy production, and these duties would also affect the security of the supply of these products within the EU. If the proposed anti-dumping duties put further burden on updating existing recipes, overall future innovation will be negatively impacted.
The EU is already losing competitiveness on global chemical industry markets. With over 1.2 million workers, a €760 billion turnover and €11 billion of RD&I investments, the European chemical industry is a wealth-generating sector of the economy and a significant contributor to building a sustainable future for Europe.5 This sector is the largest investor in EU 27 manufacturing, in addition to which the EU remains the second-biggest producer of chemicals after China.6
The paint and coatings industry in Europe contributes notably to the EU’s manufacturing and GDP and accounts for 5-6% of the overall chemicals industry, Cefic estimates the EU’s 2023 fall in chemical output at 8% 5. Teknos has identified the risk of the paint and coatings industry being encouraged to invest elsewhere, outside of the EU, for the manufacturing of final product, due to the increased costs and availability of TiO2 within the EU.
Furthermore, EU’s SMEs have reduced leverage possibilities when it comes to absorbing raw material costs. SMEs have a crucial role in bringing alternative solutions to the market. However, this can only be achieved with sufficient profitability.
Finally, the EC period investigating EU material injury did not represent a typical volume period due to geopolitical factors and is thus questionable as to whether this could be considered fair. Therefore, it plays down the significance of Chinese TiO2 for the EU’s paint production.
In conclusion, we would like to recommend that the Commission takes the above comments, especially with regard to environmental and social impact, into consideration when proceeding to the next stage of their investigation.
Paula Salastie
CEO, Teknos Group
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