In
the beginning of November, China’s titanium dioxide (TiO2)
giant Lomon Billions announced that its TiO2 factories, along with
other production lines, need to be stopped for maintenance. The
measurements will take place in the months of November and December in order to
enhance the efficiency and stability of the company’s business. According to
the announcement, the TiO2 production, specifically, will be stopped for a
period of 10 days in the middle of December.
According
to market intelligence firm CCM, Lomon Billions' production halt is
mainly due to an announcement of the government of Jiaozuo City, the location
of the affected factories, to further strengthen environmental and atmospheric
pollution prevention measurements.
Previous
to this, another production base in Jiaozuo City had planned to reduce
production by 30% from November 15, 2017, to March 15, 2018. The production
suspension in Jiaozuo City and Deyang City are predicted to decrease Lomon
Billions' TiO2 output by more than 35,000 tonnes combined. As a result of this
actions, the company added to the announcement to possibly reprice its products
on the basis of changing domestic supply and demand.
Penalty for
environmental damage
In
September this year, Lomon Titanium, a subsidy of the enterprise group, was
fined with a penalty of USD0.20 million for an excessive discharge of water
contamination. So far, Lomon Billions has required its subsidiary to
launch internal rectification and decided to sternly punish responsible
persons.
In
the context of the penalty, voices got louder that the management of Lomon
Billions over its subsidiary is not effective
enough. Lomon Billions’s officials counter the blames with the
statement, that the two companies just recently merged and more time is needed
to achieve a better integration into the new Lomon Billions Group. Notably, the
production capacity of the subsidiary Lomon Titanium is even bigger than of the
parent company Lomon Billions.
On
the other hand, Lomon Titanium attached less important to environmental
preservation than Lomon Billion because it had not listed yet. The
company promised more stringent management and supervision, as well as larger
investment into environmental protection equipment to counter such misbehaviour
in the future.
About the business of
Lomon Billion
On
October 14, Lomon Billions published its financial performance forecast of Q1
to Q3 in 2017, predicting a net profit of around USD300 million. The reasons
for the improvement can be found in surging TiO2 prices, financial statement
combination with Sichuan Lomon Titanium, and strengthened business management.
The
company published the last price hike announcement in October where it raised
its quoted price for sulphate process TiO2 by USD75.20/t due to recent
increases in raw material prices. This move was followed by a number of TiO2
companies.
As
a matter of fact, rising raw material prices are boosting TiO2 prices in China
these months. For example, the price of ilmenite is averaging USD218/t, which
is higher than its previous level. On top of that, TiO2 manufacturers have also
suffered due to soaring natural gas costs. As environmental protection inspections
have become increasingly severe, domestic TiO2 companies have been required to
replace coal-fired boilers with gas ones. Given this, demand for natural gas
has increased considerably in 2017, and domestic prices have surged since
September.
According
to market intelligence firm CCM, Lomon Billions now has a
sulphate-process TiO2 capacity of 200,000 t/a and a chloride-process TiO2
capacity of 60,000 t/a. In addition, the new 200,000 t/a chloride-process TiO2
project has started construction, which is estimated to be completed in 2018.
The operating rate of its chloride-process TiO2 production lines remains
stable, while that of sulphate-process ones has declined to approximately 60%.
Every
announcement in production and price changes of Lomon Billions is
very important for the Chinese and international TiO2 markets, given the fact
that the company is taking a large share of China’s TiO2 export volume, with
Sichuan Lomon accounting for almost 14% of the total share alone, while Henan
Billions has an export share of around 12%. Hence, together these two parts of
the enterprise Lomon Billion are accounting for around one-quarter of China’s
total exports of TiO2. Another notable exporter with a share of more than 11%
is Wuxi Haopu Titanium.
About CCM
CCM
is the leading market intelligence provider for China’s agriculture, chemicals,
food & ingredients and life science markets.
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