Titanium Dioxide Industry Set Off Another Wave of Price Increases

Since December, the titanium dioxide industry has set off another round of price increases. Following the industry leader Longbai Group’s announcement of price increases, companies such as China Nuclear Titanium Dioxide and Huiyun Titanium also followed suit.

On December 13, Longbai Group announced that according to factors such as market demand and rising raw material prices, starting from January 1, 2022, the sales price of various types of TITANIUM dioxide will be increased by RMB 1,000 to various domestic customers based on the original price. /Ton, the increase of US$150/ton for various international customers.

A day later, China Nuclear Titanium Dioxide and Huiyun Titanium also successively issued similar announcements, with the same price adjustments as Longbai Group.

What level has the price risen before this price adjustment? According to statistics from Zhuo Chuang Information, from the beginning of this year to November 30, the overall increase in titanium dioxide was obvious. Among them, the price of Sulfuric Acid rutile titanium dioxide rose from 16,300 CNY/ton to 19,700 CNY/ton, an increase of 20.86%. The average value for the year was 19210 CNY/ton, a year-on-year increase of 38.75%; the price of anatase titanium dioxide rose from 13,100 CNY/ton to 18042 CNY/ton, an increase of 37.72%. The average value for the year was RMB 16,846/ton, a year-on-year increase of 44.95%.

Reasons for the price increase: demand is improving, or are there other plans?
Titanium dioxide is an important inorganic chemical pigment. It has excellent properties such as high stability, good weather resistance, good whiteness and brightness, good tinting power and hiding power. It is the most widely used white pigment with the largest dosage. Ink, paper, plastics, chemical fiber, ceramics and other industries are widely used. Real estate and automobile industries are two more important terminal industries.

It is estimated that about 67% of titanium dioxide is used in the production of coatings, and architectural coatings, namely interior and exterior wall coatings (latex paint), account for 70% of the demand for titanium dioxide in coatings. In other words, the prosperity of real estate can be used as an important prospect for the downstream demand of titanium dioxide. index.

The concentrated price increase of titanium dioxide manufacturers this time is a continuation of the product’s one-and-a-half-year rising cycle: since the bottoming out at the end of June last year, the domestic titanium dioxide market has remained strong, especially since this year, except for the Spring Festival holiday, part of the production Manufacturers have adjusted upwards almost once a month.

In response to this price increase, the analysis by all parties boils down to two core reasons: cost promotion and better demand. For example, the above-mentioned listed company stated in the price increase announcement that it was "based on the market demand for titanium dioxide and the price increase of raw materials, etc.".

Let's look at the cost drive first. According to publicly inquired information, the upstream raw materials of titanium dioxide are mainly titanium concentrate and sulfuric acid, and the production cost mainly includes the following aspects:

Consumption of raw material ore and acid, ore = total output ÷ total yield × unit price of ore; acid = total output ÷ total yield × 1.65 (acid-ore ratio) × unit price of acid; 2. Energy consumption (coal, electricity), water Consumption; 3. Lime, iron powder, aluminum powder, flocculant and other chemical additives as auxiliary materials; 4. Product packaging and transportation costs.

According to statistics, from the beginning of this year to the end of November, the national average price of 46% titanium concentrate rose by 12.99%. The average year-on-year increase in the year was 57.75%; the national average price of 98% sulfuric acid, another raw material, increased by 104.93%. The average year-on-year growth rate for the year was as high as 296.18%.

The price increase of raw materials is a driving factor, and the decline in production capacity has further pushed up prices. Since the production of titanium dioxide is a high-energy, high-pollution project, some analysts say that since the third quarter, the production of domestic titanium dioxide enterprises has been restricted by environmental protection, power curtailment and other factors, and small and medium-sized enterprises that do not meet the requirements have been forced to shut down. Or limit production, the operating rate will drop, and the market supply will be tight.

Let's look at the demand again. The demand for titanium dioxide is specifically divided into export and domestic demand. Under the global economic recovery, downstream demand remains strong, while the operating rate of leading overseas titanium dioxide companies has declined due to the epidemic, and my country's epidemic has been well controlled. Therefore, my country's titanium dioxide exports have soared since the beginning of this year. According to customs sales data, as of October this year, the export of titanium dioxide has shown a year-on-year upward trend for seven consecutive months. The export volume has increased by 5.18% year-on-year. The cumulative export volume this year has reached 1.054 million tons.

The export is really good. But turning back to look at domestic demand, it's hard to tell. Insiders believe that market demand has not improved significantly, and the domestic titanium dioxide market in 2021 will not be strong every month.

This view can be verified from the statement of professional analysis institutions. Since July, the main data indicators of the domestic real estate market have declined, and terminal demand has been poor, which has led to a shrinking demand in the downstream coatings, plastics and other markets of titanium dioxide. Since November, the weather in the northern region has turned cold, and downstream demand has been weak.

International competitiveness after the price increase

Perhaps it is not surprising that Longbai Group took the Lead in raising prices in China. In fact, this round of price adjustment is not only the domestic titanium dioxide listed company’s plan to raise prices, some international titanium dioxide giants such as Chemours, Tronox, Venator, Kronos, etc. It was announced in November that from January 1, 2022, the price of titanium dioxide will be increased, ranging from US$300 to US$400 per ton.

According to the China Business Industry Research Institute, more than 50% of the world's titanium dioxide production capacity is currently concentrated in five companies including Chemours, Tenuo, Longbai Group, Connors and Fannto.

Chemours and Tenuo are the top two giants in the world. As the world’s third largest and Asia’s largest titanium dioxide company, Longbai Group’s price increase came after two foreign giants announced price increases.

At present, the average export price of domestic titanium dioxide is US$3,000/ton. At present, more than 70% of orders for the titanium dioxide products of Longbai Group are for export. After the two foreign giants raised prices, after Longbai Group raised the price this time, it is still competitive in the international market, especially in the Southeast Asian market.

How is the market outlook?

Under the turmoil of the foreign epidemic situation, domestic titanium dioxide manufacturers have benefited from exports and therefore "increased both volume and price"; and in the case of a downturn in the real estate market, the domestic downstream industries are under pressure, so what will the domestic titanium dioxide market look like? Woolen cloth?

At present, orders from major domestic customers of titanium dioxide are received until the end of the year. Customers with sporadic quarterly pricing have locked their orders in January next year. Small and medium customers have received orders until mid-to-late December, and the increase in domestic orders is limited. Before the Spring Festival, domestic downstream companies are in the off-season, with reduced production capacity or even cessation of production, and the demand for titanium dioxide is reduced.

From the raw material supply side, the current trend of titanium concentrate is weak. The latest price of Panzhihua National Titanium Technology is 2150 CNY/ton, which is about 300 CNY/ton lower than the high point during the year; while the price of sulfuric acid is currently around 430 CNY/ton. , Almost cut in half compared to when the price was high during the year. The price of raw materials continues to fall, and it is difficult to support the continued price increase of titanium dioxide.

Nevertheless, around the Spring Festival, there are still expectations of price increases for titanium dioxide. On the one hand, since the current domestic titanium dioxide prices are still cost-effective compared to foreign markets, it is expected that external demand support is expected to continue before the end of the first quarter of next year, and export volumes are not expected to shrink for the time being. On the other hand, domestic demand will remain stable. Therefore, short-term market prices around the Spring Festival may rise steadily, but it is difficult to reproduce the growth rate and landing intensity in the first half of 2021.