Press Release (ePRNews.com) - Guangzhou, China - Jun 28, 2016 - 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.
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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