On 1 June, 2016, Chinese TiO2 enterprises,
including Ningbo Xinfu Titanium Dioxide Co., Ltd., Shandong Dawn Group Co.,
Ltd. (Shandong Dawn) and Guangdong Huiyun Titanium Industry Co., Ltd.,
announced a hike in their product prices by USD75.89-121.42/t (RMB500-800/t) in
the domestic market and by USD50-100/t in foreign markets. This is the 7th time
prices of TiO2 have risen in China since Jan.
2016.
Source: Bing
According to CCM, as of 8 June, 2016, major quotations for sulfate grade rutile TiO2 reached USD1,821.24/t (RMB12,000/t) and those for anatase TiO2 were
USD1,593.59/t (RMB10,500/t) in China.
Notably, Chinese leading TiO2 enterprises such as Sichuan Lomon Titanium Co.,
Ltd. (Sichuan Lomon) and Henan Billions Chemicals Co., Ltd. (Henan Billions)
have yet to raise their product prices in June and are biding their time in the
search for market opportunities.
According to CCM's research, many domestic
securities companies like Sealand Securities and Southwest Securities still
hold optimistic attitudes towards the market. Nevertheless, insufficient demand
from downstream markets has undoubtedly begun to take its toll in June due to
enterprises raising their operating rates gradually, and also because the
export market is expected to be flat in the near future.
1. Increasing operating rates may lead to imbalance in demand and supply again
The improved demand-supply relationship resulting from persistent low operating
rates in 2015 was the key factor behind the recovery of the industry in 2016.
However, currently, after a cumulative price rise of about USD379.43/t
(RMB2,500/t), domestic TiO2 enterprises are gradually raising their operating
rates. Given that demand for TiO2 from the domestic market has always been
stagnant, the demand and supply relationship may become imbalanced again.
At present, Chinese TiO2 giants such as Sichuan Lomon, Henan Billions and
Shandong Doguide Group Co., Ltd. are maintaining operating rates of about 90%,
and other leading enterprises, like Shandong Dawn and Yunnan Dahutong
Investment Group Company, are also holding their operating rates at over 70%.
As for demand for TiO2 from its biggest downstream markets (coatings and real
estate industries), summer has generally always been a slack season. "Most
downstream enterprises have stocked enough TiO2 for production from July
through Aug. Thus, demand from downstream markets will not be able to support
TiO2 price rise in the near future.' said Yang Xun, analyst from SunSirs, China
Commodity Data Group.
According to data from the National Bureau of Statistics of the People's
Republic of China, between Jan. and May 2016, the growth rate of new
construction projects of the real estate industry (6.17 billion m2) was down
0.9 percentage points over the first four months; growth rates of new
investment and sales for commercial housing also dropped.
2. Export market is expected to be flat in near future
The export business has always been an important means for Chinese TiO2
enterprises to destock. According to data from China Customs, from Jan. to
April 2016, China's export volume of TiO2 increased by 18% YoY, offsetting
stagnant demand from the domestic market and giving domestic enterprises the courage
to raise product prices.
However, the export market is expected to be flat in the near future as the
religious festival of Ramadan begins in Islamic countries in June this year,
and because the European market's traditional off-season is July-Sept.
In addition, on 20 May, 2016, The Chemours Company officially put its new
200,000 t/a TiO2 project at the Altamira site (known for its high efficiency
and low production costs), in Tamaulipas, Mexico, into operation, intensifying
market competition in the export market.
CCM predicts that enterprises that have not
raised their TiO2 prices yet will raise their prices by about USD75.88/t
(RMB500/t) to boost profits in mid-June; nevertheless, the TiO2 price in the
domestic market may maintain stability or even slide in July-Sept. due to worsening
oversupply.
This article comes from Titanium Dioxide China Monthly Report 1606, CCM
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Tag: TiO2