The Chinese TiO2 manufacturer Anhui Annada
Titanium Industry Co., Ltd. (Anhui Annada) published a great success in the
third quarter of 2016 regarding revenue and net profit. This result is mostly
based on the general prosper industry of TiO2 in China, according to CCM’s analysts.
Source:
Baidu
The biggest manufacturer of titanium
dioxide of Anhui Province, China, shows a big improvement in the financial
performance. In numbers, the revenue reached $28.35 million and the net profit
was $2.21 million in Q3 of 2016. This performance represents an increase of
36.44% and 136.56% year on year, respectively.
According to the analysis of CCM, the
results are mostly the outcome of the overall increasing price of titanium
dioxide in China. For example, the price of rutile TiO2 in China reached an
amount of $2066.91/t at the end of September 2016, which represents an overall
increase of 40% compared to last year. As a result, during the year 2016, Anhui
Annada did raise the price of TiO2 more than 10 times.
Due to the fact, that recently there is
frequently high-level pollution in provinces like Tianjin and Hebei, several
environmental authorities have ordered to temporarily limit the production of
high pollution industries like steel, chemicals, and casting industries. The
lower production output will keep the price of TiO2 high.
The positive results induced Anhui Annada
to predict an increase in the net profit by around 128% in the next year. This
forecast, backed up by the overall rising Tio2 price in China, led the company
to another rise of rutile TiO2 price by $73.82/t for the domestic market on 29
October 2016. Furthermore, the price of anatase TiO2 and rutile TiO2 was raised
for domestic and foreign buyers in an amount of $88.58/t and $80/t respectively
on November 26 the last time. The reasons, according to the members of the
Board of Directors, are sharply rising raw material prices, which result in
increasing costs of the company’s products.
Due to the fact, that Anhui Annada is only
a medium-size player in the Chinese TiO2 business, facing competitors like
Henan Billions and CNNC Hua Yuan Titanium Dioxide, the company already invests
in a new industry, namely new energy industry. Anhui Annada’s subsidiary,
TongLingNayuan, will get an investment of $3.10 million to expand the iron
phosphate business and double the output, that supports the lithium-ion battery
production for alternative energy vehicles.
According to CCM, the investment into the
booming Li-ion battery industry in China is a wise move, because it is unlikely
that the company can compete successfully in the TiO2 market in the long run.
Furthermore, the focus on the iron
phosphate industry has another benefit for Anhui Annada, because the company
already produces the needed raw material ferrous sulfate in the TiO2
manufacturing process, which can be used for the iron phosphate industry.
Nevertheless, the financial improvement of
Anhui Annada cannot compete with the improvement of some competitors. Henan
Billions, for example, stated, that they may achieve a net profit of around $60
million in the year 2016. That would represent an increase of 250% year on
year. Another manufacturer, CNNC Hua Yuan Titanium Dioxide, expects an increase
of 147.48% to 194.96%, according to CCM.
In fact, Henan Billions also announced the
completion of the acquisition of Sichuan Lomon by acquiring 100% of the stake.
The new company will be named Lomon Billions. The acquisition took place for
almost one and a half year. According to CCM, the new TiO2 giant will have a
huge impact on the development of the Chinese titanium dioxide market, which
will also affect the industry worldwide. Lomon Billions now has a share of
16.68% of the total TiO2 output in China, which gives them the power to dictate
the price to some extent.
Reflection this power of Lomon Billions, it
is comprehensible, that competitors like Anhui Annada are searching for new
industries to invest in, to become more independent from the threatening power
of Lomon Billions.
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Tag: TiO2