After 2011, the explosive grow of China’s real estate industry halted and the
golden development period for TiO2 ended. In spite of this, TiO2 capacity still
expanded uncontrollably. The consequences of severe low-end product overcapacity
were exposed in the second half of 2015 (H2 2015). A major imbalance between
supply and demand caused a collapse of the TiO2 price in China’s market.
Fluctuations in the market price of TiO2 in China in 2015
- H1 2015:
After market adjustment during Chinese Lunar New Year, the declining trend that
was initiated at the end of 2014 finally abated and the market price remained
stable before increasing during March and May, stimulated by Shandong
Doguide Group Co., Ltd. and Shandong Dawn Group Co., Ltd, and rising from
USD1,830.97/t (RMB12,000/t) to USD1,907.26/t (RMB12,500/t).
- H2 2015:
As a consequence of the long-term imbalance between supply and demand, the
market price collapsed entering the second half of the year and even the traditional
peak sales season (Sept. & Oct.) could not save the market, with the price
continuing to fall.
In Dec., the transaction price of the major sulfate
grade rutile TiO2 product dropped to below USD1,449.52/t (RMB9,500/t), almost
equal to mainstream producers’ production costs. The rate of decrease reached
24% compared to that in H1 and plummeted by over 50% compared to the peak of
USD3,051.62/t (RMB20,000/t) in 2011.
The collapse in price has directly led to the successive suspension of
production by many small-and-medium-sized enterprises, such as Jiangxi Tikou
Titanium Co., Ltd. and Luohe Xingmao Titanium Industry Co., Ltd. (Luohe
Xingmao). Even large scale enterprises, like Henan Billions Chemicals Co., Ltd.
(Henan Billions) and Shandong Doguide Group Co., Ltd. (Shandong
Doguide), reduced their operating rates slightly at the end of the year.
As a result, China’s total TiO2 output in 2015 (2.32 million tonnes) fell for
the first time in 17 years, the last time being 1998, with a YoY decrease of
4.6% compared to some 2.44 million tonnes in 2014, according to the TiO2
Sub-center of the Chemical Industry Productivity Promotion Center of China.
Of the total output of TiO2, 1.72 million tonnes was rutile TiO2, decreasing by
2.4% year on year and accounting for 73.8% of the total; 417,000 tonnes was
anatase TiO2, accounting for 18% of the total; 128,000 tonnes was non-pigment
grade TiO2, accounting for 5.5% of the total and 629,000 tonnes was denitrating
TiO2 or nano TiO2, accounting for 2.7% of the total.
From the perspective of market price and output, China’s TiO2 industry has
bottomed out in 2015. Despite this, CCM believes that this was just a period of
industry structure adjustment that had to be faced after going through a period
of high overcapacity.
From another point of view, compared to the deathly stillness and lack of
movement and innovation in the past two years, the hopeless market conditions of
2015 have, in fact, become a great catalyst for reform in the industry. A
market price that was almost equal to production cost was just like a sudden
clap of thunder, waking up speculators who were expanding capacity regardless
of what it took during the peak period.
With obsolete capacity being forced out of the market, CCM believes that a
highly dispersed industry will enter a period of consolidation and the
structure of capacity will tend to balance out, which will help China’s TiO2
industry to return to the right track within 3-5 years.
On the other hand, what is comforting is that good performance was still
achieved during a period of industry restructuring and under such depressed
conditions.
1. Domestically produced chloride grade TiO2 began to gain international recognition
In Nov.-Dec. 2015, Henan Billions vigorously marketed its chloride grade
TiO2 at the ChinaCoat Exhibition. Its long-term partner, international coating
magnate PPG Industries, Inc., announced on its official website that they had
begun to use chloride grade TiO2 produced by Henan Billions to produce coatings
and thought highly of the product quality.
On 12-14 Nov., 2015, at the annual meeting of TiO2 producers, CCM learnt from
Li Mao’en, the president of Luohe Xingmao, which is the only privately operated
chloride grade TiO2 company in China, that their chloride grade TiO2 products
had been selling abroad widely and even their TiO2 exclusively for use on plastics
had gained a good reputation.
On 30 Dec., 2015, Pangang Group Vanadium Titanium &
Resources Co., Ltd. released an announcement, revealing that they planned to
invest USD16.78 million (RMB110 million) to build a chloride TiO2 project and
to become the fifth Chinese company to enter the field.
2. First international level Chinese TiO2 giant to be born
On 5 May, 2015, Henan Billions announced that it was acquiring Chinese leading
TiO2 company, Sichuan Lomon Titanium Co., Ltd. (Sichuan Lomon). Currently, the
TiO2 capacity of Sichuan Lomon reaches 300,000 t/a and that of Henan Billions stands
at 220,000 t/a, ranking No.1 and No.2 respectively in China.
After the marriage
between the two, a total capacity as high as 520,000 t/a will make it the
fourth largest TiO2 company in the world. At that time, the international
competitiveness and global market share of China’s TiO2 industry will be
improved significantly.
Ex-works price of rutile TiO2 in China by region, mid-Jan. 2015 to mid-Dec.
2015
Source: CCM
Ex-works price of anatase TiO2 in China by region, mid-Jan. 2015 to mid-Dec.
2015
Source: CCM
China's TiO2 output, 2010-2015
Source: TiO2 Sub-center, Chemical Industry Productivity Promotion Center of
China
This article comes from Titanium Dioxide China Monthly Report 1602, CCM
About CCM:
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and trade data to industry newsletters and customized market research reports.
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Tag: TiO2 chloride