Wednesday, February 6, 2013

Review of the Chinese TiO2 industry in 2012: raw materials, price and backdoor listing

Recently, CCM has issued a comprehensive review of the Chinese TiO2 industry in its monthly newsletter, namely TiO2 China Monthly Report. Through the review, CCM hopes that readers can know information about TiO2 market in terms of raw materials, price and TiO2 companies’ dynamics.
Raw materials  
China produced more than 1.8 million tonnes of TiO2 in 2011, which made it consume around 5.2 million tonnes of titanium concentrate ore (46%). It is estimated that China's TiO2 output volume will grow at a CAGR of 10% in the foreseeable future. In fact, China could have produced around 2 million tonnes of TiO2 in 2012 and needs 5.8 million tonnes of titanium concentrate ore. With the soaring expansion of the industry, the shortage of titanium feedstock continued in 2012.   China's titanium resources rely on imports and this condition is becoming more serious. China imported 2.04 million tonnes and 2.27 million tonnes of titanium feedstock, respectively, in 2010 and 2011. During Jan.-Nov. 2012, China's titanium feedstock import volume surpassed that of last year and reached a new peak of 2.74 million tonnes. The whole year's titanium feedstock import volume in 2012 was over 2.8 million tonnes. More than half of titanium feedstock consumption in China relies on imports.   In order to relieve the pressure on titanium feedstock supply, China Customs adjusted the 2013 import tariff of titanium slag (TiO2>70%) imported from most-favoured nations from 6.5% to 0%. Although the cancellation of the import tariff has reduced costs only by a small amount, it has still stimulated titanium slag imports. As for titanium concentrate ores, the import tariff of titanium concentrate ores imported from both most-favoured nations and common countries will remain at 0%. Some Chinese companies have also invested in overseas mining projects. For example, on 13 Jan., 2012, Jinan Yuxiao Group Co., Ltd. (Yuxiao Group) and Guangxi Yinhe Group Co., Ltd. (Yinhe Group) signed a cooperative agreement on a project to jointly mine titanium and zircon in Mozambique. Shandong Lubei Enterprise Group General Company (Lubei Group) cooperated with China Electronics Technology Group Corporation (CETC) to invest in the construction of a 200,000t/a titanium concentrate ore plant in Sri Lanka. Domestic titanium feedstock producers have also enhanced their production. For instance, Pangang Group Steel Vanadium & Titanium Co., Ltd. (Pangang Group) reset their target for titanium concentrate ores output volume for the whole year from 4.9 million tonnes to 5.2 million tonnes in Sept. 2012. According to the latest statistical data, China produced 3.09 million tonnes of titanium concentrate ores in 2012. 

The domestic TiO2 price experienced a fluctuating trend in 2012, especially in respect of rutile TiO2. The rutile TiO2 price declined by 8.23% from USD3,051/t at the beginning of 2012 to USD2,800/t at the end of 2012. The anatase TiO2 price declined by 12.7% from USD2,684/t at the beginning of 2012 to USD2,343/t at the end of 2012. At the beginning of 2012, the TiO2 price continued its hiking trend of 2011. Entering March 2012, softening downstream demand took effect and caused TiO2 prices to drop. The implementation of the Vietnamese titanium resources ban worried domestic TiO2 importers and caused them to raise the titanium feedstock price. Raw material cost pressure was transferred to TiO2 producers and pushed up TiO2 prices. However, without the support of downstream consumption, TiO2 prices experienced a downtrend in July 2012.

Backdoor listing
Faced with the difficulties encountered in its IPO, Nanjing Titanium Dioxide Chemical Co., Ltd. (Nanjing Titanium) and Jinxing Titanium Chemical Co., Ltd. (Jinxing titanium) chose to go public by backdoor listing. Although TiO2 is the third major inorganic chemical in terms of productive value in the world (just listed after synthetic ammonia and phosphate), there are only four listed TiO2 producers in mainland China's stock exchange market, namely Henan Billions Chemicals Co., Ltd. (Henan Billions), Anhui Annada Titanium Industry Co., Ltd. (Annada Titanium), Pangang Group Steel Vanadium and Titanium Co., Ltd. (Pangang Group) and CNNC Hua Yuan Titanium Dioxide Co., Ltd. (CNNC). Some experts have even pointed out that the small number of listed TiO2 producers is constraining the development of the TiO2 industry. The backdoor listings of Nanjing Titanium and Jinxing Titanium are like sparks for this disappointing industry this year. Nanjing Titanium possesses two TiO2 plants with a combined capacity of 130,000t/a and Jinxing Titanium possesses three TiO2 plants (including its subsidiaries) with 115,000t/a total capacity. As listed companies, Nanjing Titanium and Jinxing titanium can raise funds from the public through financial equities, which will reduce their expenses.  

Table Contents of TiO2 China Monthly Report 1301:
TiO2 import volume rockets in China in Nov. 2012
Imported & domestic titanium feedstock analysis in Nov. 2012                                                                            
Price update in Jan. 2013                                                                                                                                               
Henan Billions expects a better performance of its TiO2 business in 2013                                                        
The CSRC requires applicants to perform strict self-financial verification                                                         
CCM conducts new TiO2 research project                                                                                                                  
SRL achieves excellent performance in 2012                                                                                                             
Iluka reports its 2012 performance                                                                                                                             
World's top 10 paints companies in 2012                                                                                                                 
PPG's financial performance in 2012                                                                                                                        
China produces around 19.3 million units of automobiles with YoY growth of 4.6% in 2012     

TiO2 China Monthly Report, issued by CCM on 25th, is mainly comprised of five columns of news and reports related to TiO2 market, including “Supply & Demand”, “Company Dynamics”, “Upstream”, “Downstream” and “Price Update”. You can find out more business opportunities through the latest and helpful information provided in the report.

About CCM
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