European paint manufacturers want Brussels to review looming tariffs on China-sourced titanium dioxide before implementing them. The inorganic compound is used for everything from paints and food coloring to sunscreen, plastics, coatings and medicine.
Producers say the EU’s broad brush 39.7% anti-dumping duty, approved in July but yet to step into force pending bloc member countries’ approval, threatens to bankrupt smaller manufacturers, and force larger companies to relocate their manufacturing operations to countries outside the EU.
“This is a question of survival of these industries,” Nicolas Dujardin, COO of smaller French paint maker Oceinde told the Financial Times. “If all those investigations result in such high taxes in Europe, then there are going to be some bankruptcies,” he said, referencing Brussels’ ongoing probe into Chinese exports amid escalating trade tensions.
“If we’re unable to sell as much as we were expecting, then we need to cut jobs. We are looking with a very keen eye,” family-owned Finnish paint company Teknos chief Paula Salastie said, referencing the higher prices paint makers would have to introduce if Chinese titanium dioxide became inaccessible or intolerably expensive.
Big producers also expect the proposed measures to hurt their respective bottom lines. They’d “have a negative impact on the competitiveness” of European companies, Pedro Serret Salvat, a top executive from paint giant PPG, said, dubbing the tariffs “disproportionate,” and EU proposals to apply them retroactively “unacceptable.”
China has dramatically ramped up its titanium oxide production over the past decade-and-a-half to dominate the global market, with output of 6.1 million tons this year accounting for as much as 83% of global consumption (compared to a market share of 29%, or 1.4 million tons, in 2008). Over the same period, major European plants shut down their titanium oxide production, with the EU now scrambling to revive domestic output.
Domestic producers looking to revive titanium oxide production at home want the tariffs up as soon as possible. “We can’t operate with capacity utilization at 60%,” Jeffrey Neuman, general counsel with European titanium dioxide producer Tronox, said, highlighting China’s ability to outcompete European producers. It’s “a fundamental industrial resilience question,” according to Neuman.
Others fear regional EU competitors, including Britain and Turkiye, could take advantage of Brussels’ tariffs to sell their own paints for less, trouncing European producers, since they wouldn’t have to pay the hefty duties.
European industrial output has dropped dramatically over the past two-and-a-half years thanks largely to spiking energy costs triggered by a loss of access to cheap Russian pipeline-sourced natural gas after the escalation of the Ukrainian conflict into a full-blown proxy war involving NATO.
President Putin warned back in the spring of 2022 that the EU’s “absolutely political” decision to stop buying Russian energy would be “suicidal,” and “seriously, and according to some experts irrevocably – undermine the competitiveness of a significant part of European industry.”