In
the year 2016, China’s titanium dioxide industry experienced enormous price
rises and high demand. The year was a large rebound from the quite depressive
year 2015. CCM has analysed the main factors for the booming of China’s TiO2
industry.
Source: Baidu
China’s
TiO2 industry showed many and large price increases throughout the year 2016.
This trend was quite the opposite of the overall depressed market situation in
2015. The last price rise in 2016 was quoted by the Henan Billions, the company
that merged with Sichuan Lomon earlier the year. The enterprise raised the
prices of all products for its overseas clients as well as for domestic demand
on December 6.
The
price increase took place many times during the year, which led to a recovering
of China’s TiO2 industry after 2015, resulting in high profits and in greater
output in 2016. However, not only the Tio2 price showed a large price boost in
that year, but also many of the raw materials for TiO2, which actually kept the
profits of Chinese producers in some limits. CCM states the profits of two of
the most important TiO2 manufacturer in China with USD10.22 million by Henan
Billion in H1, 2016 and USD0.58 million by Anhui Annada Titanium Industry.
According
to CCM, the main reasons for the strong rise of the TiO2 industry in China can
be found in high overseas demand and market manipulation by some manufacturers.
The
overseas demand for Chinese TiO2 and the resulting export value rose up 17.30%
in November 2016, compared to the year before. Looking at the monthly output of
China’s TiO2 industry with about 200,000 tonnes, the export share of the
production reaches almost a third of all products. This strong export
orientation is a good base for manufacturers to keep pushing their prices.
The
main downstream industry for TiO2 products is the coating industry. Therefore,
the boom of the TiO2 industry is inevitably bound to the performance of this
industry, accountable for the highest demand of TiO2. As a fact, the real
estate industry in China was able to increase their sales by 25.5% from January
to August 2016. Following the growth of China’s real estate industry, the
related coating industry was also able to see a year on year rise of 6.92% from
January to July 2016. Hence, the fast-growing real estate industry is driving the
coating industry, which is the main demander of TiO2 and leads to the
good results if the business.
At
last, some of China’s suppliers have manipulated the market, according to CCM.
One of the common measures was to limit the production with no need to
artificially shorten the supply and raise the prices. This behaviour of Chinese
manufacturers reveals, that there is still need to improve some regulations in
China’s market, to reduce the bargain space to some extend between agents and
large customers.
What’s
more, the high prices are likely to continue in 2017, due to the environmental
inspections in China and the resulting short supply of TiO2. It is even
possible, that some minor companies have to shut down their production
completely in the future because they are not able to implement expensive waste
disposal preventing or cleaning solutions.
About
CCM
CCM
is the leading market intelligence provider for China’s agriculture, chemicals,
food & ingredients and life science markets.
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