Titanium dioxide industry integration speed will be accelerated

In the first quarter of this year, due to factors such as significant increases in raw material prices, the profit level of the titanium dioxide industry dropped to a historical low. More than 20% of small and medium-sized enterprises in the country are in a state of shutdown or intermittent shutdown, and some backbone enterprises are also reducing production. Except for enterprises that own pyrite based sulphuric acid production or have both phosphate fertilizer and phosphate chemical products, enterprises that only produce anatase products have suffered losses in the whole line, and rutile based product enterprises have seen their profits shrink significantly or have suffered losses. Entering the second quarter, raw material prices showed a downward trend. The titanium dioxide industry, struggling in difficulties, has finally seen a turnaround.

The supply and demand balance of titanium ore is surplus, and the price has significantly decreased

In the past two years, the supply and demand relationship of titanium concentrate has gradually become unbalanced with the excessive expansion of titanium dioxide production capacity. In 2007, the output of titanium dioxide products in China was 1 million tons. Except for 150000 to 170000 tons using titanium slag as raw material (about 200000 tons of imported titanium slag and about 70000 tons of domestically produced titanium slag, excluding high-grade titanium slag used for chlorination), all other materials are imported from titanium concentrate. The demand for titanium concentrate ranges from 2.3 million to 2.5 million tons. The main importing countries of titanium ore have shifted from traditional Australia to countries such as India, Vietnam, Indonesia, and Sri Lanka. Vietnam has become China's largest source of imports.

In recent years, the quality of imported titanium concentrates has declined, with TiO2 grades dropping from 48% to below 40%, and some even dropping to 30%, posing great difficulties for normal production. The tension between supply and demand has led to a rapid surge in titanium ore prices. From 500 to 600 yuan/ton a year ago, the price surged to a historical high of 1700 to 1800 yuan/ton in the second quarter of this year, with a price increase of 1000 to 1200 yuan/ton. According to the actual grade, the consumption of titanium ore per ton of titanium dioxide product is close to 3 tons, which is equivalent to a cost increase of 3000-3600 yuan/ton.

Since the second half of last year. The new production increase of domestic titanium dioxide is much lower than expected, and the operating rate of enterprises is severely insufficient, fundamentally changing the supply and demand relationship of titanium ore, while the import volume of titanium ore continues to remain high. At the end of the second quarter of this year, although the price of titanium ore was still at a high level, with an average price of 1300-1500 yuan/ton, it had decreased by 200-300 yuan/ton compared to the previous period. From January to June this year, a total of 560000 tons of titanium ore were imported, which is equivalent to the same period last year. The supply and demand balance of titanium ore is slightly surplus, and prices will continue to decrease.

After the price of sulfuric acid surged, it fell back

Sulfuric acid is another important raw material in China's titanium dioxide industry, consuming approximately 3-4 tons (100%) of sulfuric acid per ton of titanium dioxide products. At the beginning of this year, the sulfuric acid market continued to extend the momentum of last year's sharp price increase. Between March and April, the price of sulfuric acid production from sulfur reached 1800-2000 yuan/ton, while the prices of sulfuric acid production from pyrite and sulfuric acid production from smelting flue gas are relatively lower.

Similar to the titanium ore market, the market price of sulfuric acid in China also dropped significantly after May, and by the end of the second quarter, the market price fell by 200~400 yuan/ton. The reasons are multifaceted. Firstly, due to the Olympic Games, chemical enterprises in the surrounding areas of Beijing have been restricted or discontinued, as well as transportation restrictions; Secondly, the main user of sulfuric acid during this period - the fertilizer industry production was in the off-season; The third is the production restriction or shutdown of titanium dioxide enterprises, which has led to a decrease in titanium dioxide production and a decrease in demand for sulfuric acid.

The price of by-product ferrous sulfate has significantly increased

Ferrous sulfate (ilmenite is used as raw material for production), a bulk by-product of titanium dioxide produced by sulfuric acid process, can be used to produce water purification agents and iron oxide pigments. The amount of ferrous sulfate produced per ton of titanium dioxide is 3-4 tons. Two years ago, the selling price of ferrous sulfate was less than a hundred yuan per ton. With the development of environmental protection and iron based pigment industry, the price of ferrous sulfate has skyrocketed, reaching 300-500 yuan/ton by the end of the second quarter of this year, and even reaching 600-800 yuan/ton in some regions. This to a considerable extent compensates for the profit losses caused by the increase in raw materials and energy prices in titanium dioxide production, and also affects the enthusiasm of titanium dioxide enterprises to use high titanium slag as the main raw material.

Titanium dioxide production and demand for titanium ore will decrease for the first time

After a 10-year continuous growth period starting from 1998, the national production of titanium dioxide is expected to decline to below 900000 tons this year. As a result, the demand for titanium ore will correspondingly decrease, and the supply and demand relationship of titanium ore will reverse. Against the backdrop of maintaining a high level of import volume, while the price of titanium ore continues to decline, suppliers will undoubtedly do more to improve and stabilize quality, which is of positive significance for titanium dioxide enterprises.

Import volume continues to remain high and export volume significantly decreases

In the first half of this year, the import volume of titanium dioxide in China remained basically at the same period last year, with a total of 131600 tons imported from January to June, an increase of 677 tons compared to the same period last year. During the same period, China imported 560000 tons of titanium concentrate, a decrease of only 7505 tons compared to the same period last year.

From January to June. The national export volume of titanium dioxide continues to follow the sluggish pattern of the second half of last year. The export volume decreased by 31%, 57%, 56%, 54%, 53%, and 58% year-on-year, respectively. In the first half of the year, China exported 42000 tons of titanium dioxide, a year-on-year decrease of 52%.

The price of titanium dioxide increases first and then decreases

Under the pressure of comprehensive increase in raw material and energy prices, enterprises are forced to increase the prices of titanium dioxide products. In the first half of the year, the product price range after multiple rounds of price increases was 13000-14000 yuan/ton for the Ruiti type. Rutile is 15500~16500 yuan/ton, but their manufacturing costs have reached 10000 yuan/ton and 14000 yuan/ton respectively, and they are still at or near the edge of loss. Since last year, the international market has experienced multiple price increases for titanium dioxide, but the prices of imported products in the Chinese market have hardly changed. Two years ago, the price difference between domestic rutile products produced by sulfuric acid process and imported products of the same type was about 5000 yuan/ton, but by the end of the second quarter of this year, it had narrowed to less than 2000 yuan/ton. It is very difficult to further increase the price of domestic titanium dioxide products without substantial improvement in quality.

In the second quarter, due to significant price reductions in major raw materials, the industry's operating rate has increased, and the increase in production has brought about increased market pressure, leading to a decline in the prices of titanium dioxide products (mainly sharp titanium) at the end of the second quarter. The southern region has dropped by over 1000 yuan/ton.

The speed of industrial restructuring and integration will accelerate

Small and medium-sized enterprises do not have the scale of modern production economy and lack products with market competitiveness, making the situation particularly difficult for titanium dioxide enterprises in Guangdong, Guangxi, and Panzhihua regions. In addition, the severe environmental situation has forced some small and medium-sized enterprises to stop production, and in the future, more enterprises will gradually fade out of the titanium dioxide industry. Affected by market downturn. In the past year or two, newly established enterprises have been in a dilemma, with project progress greatly affected and some have been forced to step down. At the same time, companies with relatively strong capabilities are waiting for opportunities to benefit from integration.

Since last year. The country has continuously introduced a series of restrictive policies for industries such as titanium dioxide, including the "two high and one capital" category: canceling export tax refunds, prohibiting processing trade, and being included in the "Catalogue for Stopping Low level and Repeated Construction", with the aim of optimizing industrial structure, limiting and eliminating outdated production capacity. This will further accelerate the integration progress of China's titanium dioxide industry.