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TiO2 China Monthly Report Vol. 2 Issue 09 Supply & Demand

1

China’s TiO2 import hits monthly record high in July

1

China supports titanium ore import

3

TiO2 demand in cosmetics remains strong

4

Company Dynamics

6

Bluestar New Materials curbs loss with profits from TiO2

6

Ningbo Xinfu benefits from innovation

7

Jinan Yuxing suspends production

7

TiO2 post-treatment capacity on the rise

8

Hengyang to build 100,000t/a TiO2 plant

9

Panzhihua Dingxing resumes production

9

Sichuan Lomon remains strong despite IPO failure

10

Upstream

11

Sluggish sulfuric acid industry benefits TiO2 production

11

China VTM Mining eyes HK listing in October

12

Downstream

13

Booming automotive sales drives coatings demand

13

Price Update

14

Price updates in Sep. 2009

14

DuPont Titanium raises TiO2 price in China

15

JNMC acquires Tiomin Kenya

15

Competitive Analysis

16

DuPont postpones chloride TiO2 plant in China

16

TiO2 industry announces declaration of environmental protection

17

Redundant capacity expansion continues in Yunnan

18

Special Report

20

China’s TiO2 industry to enter new growth cycle

20

Latest reports related to TiO2 from CCM

- Production and Market of Masterbatch in China Made in July 2008

- The Survey of Titanium Dioxide in China-3rd Edition Published in April 2009

- The Future of Carbon Black in China The second edition was made in June 2008.

- Production and Market of Pigment in China The second edition was made in June 2008.

Trade Report of product related to TiO2 from CCM: - Titanium Dioxide Production and Trade in China 2007 June.2009

- Commodity Titanium Dioxide in China The third edition was made in June 2008.

CCM Newsletter related to TiO2 - Inks China News

- Specialty Titanium Dioxide in China The third edition was made in June 2008.

Contact us for details of the researches in year 2009 from CCM.

I

September 2009


TiO2 China Monthly Report Headlines of TiO2 China Monthly Report 0909 Editor’s note: China’s TiO2 trade rebounded rapidly in July with monthly Welcome to August issue of China TiO2 Monthly

import volume hitting a record high.

Report. TiO2 demand from cosmetics is less threatened by economic China’s economy stimulus measures have

recession compared with other downstream sectors.

gradually taken effect, as demonstrated in the growing industrial production. China has taken

Bluestar New Materials gained profit of USD1,003,710 from

over the US to be the largest automobile market

TiO2 business in H1 2009 with gross profit rate of 6.93%,

in 2009 with the implementation of automobile

which partly offsets its huge loss in other segments.

industry revitalization plan. Besides, the country’s GDP growth rate is expected to exceed 8.5% in Q3

China’s TiO2 post-treatment capacity has kept increasing in

2009, among the highest in the world, showing its

recent several years, which promotes the division of TiO2

fast recovery amid global recession.

production.

With the fast increasing demand for TiO2, both

Sichuan Lomon still enjoys strong market competitiveness

domestic and foreign TiO2 manufacturers have

with its low production cost and strong R&D capacity, despite

initiated the second round of price hikes in Q3

the failure in IPO application last month.

2009, marking the gradual market recovery.

By Sep. 2009, China’s sulfuric acid industry has remained

Besides, China’s TiO2 import breaks a new record

sluggish with low price, which is beneficial to many Chinese

in July 2009, promoted by domestic end users’

TiO2 producers to lower production cost.

rising TiO2 inventory to avoid possible price hike in the future. And the export volume also posts

China’s record-high automotive sales have greatly boosted

large increase with the enlarging price gap between

the demand for automotive coatings, thus promoting TiO2

import price and export price.

demand rebound in H1 2009.

With the recovery of macro economy, China’s TiO2

DuPont announced to delay construction of its chloride

industry is to enter a new period of rapid growth

process TiO2 plant in China due to its high environmental

in the coming four or five years. With strong

risks.

government support, chloride TiO2 capacity is expected to expand rapidly in the next industrial

Fumin County’s TiO2 capacity expansion is expected to

cycle.

intensify market competition and tighten titanium ore supply.

Attracted by higher profit margin and huge market

China’s TiO2 industry is to enter a new growth cycle in the

potential of rutile TiO2, many anatase TiO2

next four or five years.

manufacturers are shifting to produce rutile TiO2 or embark on rutile TiO2 post-treatment, which promotes the product structure adjustment and facilitates the division of TiO2 production.

II

September 2009


TiO2 China Monthly Report Supply & Demand China’s TiO2 import hits monthly record high in July

C

hina’s monthly import volume hits a historical

a new record, breaking 30,000 tonnes, largely attributed

high, reaching 31,035 tonnes in July 2009, and the

to the potential price hikes in H2 2009. Promoted by the

monthly export volume also hits a record in recent two

fast recovering macro economy, China’s TiO2 monthly

years, amounting to 15,505 tonnes (FIGURE 1).

import volume has been increasing sharply in the first seven months.

China’s TiO2 trade has rebounded rapidly since Q2 2009 with the recovering downstream sectors. With the first

Owing to the depressed real estate market and the

round of multinationals’ price hikes having been effective

continuously sluggish export of textile, TiO2 import

in July, the gap between average import price and export

volume for papermaking (mainly decorative paper) and

price is larger compared with that in the same period last

fiber reduces obviously compared to that in the same

year.

period last year. However, industries of cosmetic and food

FIGURE 1: China’s TiO2 trade situation, Jan. 2007-July 2009 35,000

3,000

30,000

2,500 2,000

20,000

1,500

15,000

USD/t

tonne

25,000

1,000

10,000

500

5,000

0

Ja n-

07 M ar -0 7 M ay -0 7 Ju l-0 7 Se p07 N ov -0 7 Ja n08 M ar -0 8 M ay -0 8 Ju l-0 8 Se p08 N ov -0 8 Ja n09 M ar -0 9 M ay -0 9 Ju l-0 9

0

Im port

Export

Im port price

Export price

Source: China Customs, CCM International

Facing the recovering but still sluggish market, domestic

seem to have suffered less from the economic crisis, hence

manufacturers and foreign companies adopted different

TiO2 import in these sectors has kept increasing in 2009

measures to maintain their profitability--foreign

(TABLE 1).

companies announced price hikes while domestic manufacturers reduced price to stimulate sales.

As the US levies higher tariffs on Chinese tires, China’s tire output is predicted to reduce to certain extent, thus

Import hits new record

lowering TiO2 demand from rubber as the exported tires usually adopt imported TiO2.

Domestic end users imported the largest amount of TiO2 in history because of multinationals’ possible price hikes

As to origins of China’s imported TiO2, Taiwan and

in the future and rapidly developing end use sectors in

Australia are still the leading sources, followed by the US

the second half of this year. In July, the import volume hit

and Japan.

1

September 2009


TiO2 China Monthly Report However, with the

TABLE 1: China’s TiO2 import volume by end use sector, 2007-Jul.2009, tonne

increasing shipping cost

End use sectors Coating Plastic Rubber Fiber Papermaking Ink Polymer Cosmetic Food other Anatase, not sure of

and rising import price, domestic consumers will import more from neighboring countries or regions. Hence, the import volume from the US, Germany and Mexico declined obviously compared to the same period of the previous year (TABLE 2). Export rebounds stably

Jan-Jul'07 Aug-Dec'07 Jan-Jul'08 Aug-Dec'08 38,392 25,676 37,092 19,221 15,328 11,517 15,181 7,970 3,807 3,500 6,020 3,180 8,967 6,036 9,710 6,260 8,675 7,482 10,046 3,477 619 542 812 535 894 778 1,088 908 154 99 159 115 111 74 31 44 1,547 1,091 1,813 1,196

application Rutile, not sure of application

5,160

2,574

2,253

1,461

1,879

84,158

67,066

84,260

50,841

70,597

Source: China Customs, CCM International

TABLE 2: China’s TiO2 import situation by origin, 2007-Jul. 2009, tonne

However, unlike the

Origin Taiwan Australia US Japan Germany Mexico Malaysia Saudi Arabia Singapore UK Others

import volume, TiO2

Source: China Customs, CCM International

With the recovering global economy, China’s TiO2 export also rebounds stably with the export volume recording a new high in July.

Jan-Jul'09 31,751 17,660 4,411 3,750 3,060 885 853 348 182 923

Jan-Jul'07 Aug-Dec'07 Jan-Jul'08 Aug-Dec'08 45,021 35,145 43,816 21,561 34,537 23,461 36,294 15,173 21,985 18,177 25,093 23,975 25,450 16,602 25,441 9,618 8,883 6,873 8,309 4,191 3,619 3,390 6,160 4,940 5,979 3,605 4,869 2,186 6,643 5,151 5,979 3,084 4,619 3,944 1,965 2,565 1,940 1,659 3,241 3,561 9,136 8,427 7,298 4,354

Jan-Jul'09 37,559 33,465 18,703 16,142 5,129 5,040 4,777 4,032 3,947 3,847 3,659

export volume has increased moderately due to slow recovery of TiO2

Though the US is still the most important export

demand in foreign countries. Moreover, Chinese TiO2 is

destination, China’s TiO2 export are shifting to developing

losing attractiveness to foreign consumers, especially in

countries with fast economic growth, especially in Asia

developed countries, due to its inferior quality despite the

Pacific. For example, even though India continues to levy

lower price.

anti-dumping duty on Chinese anatase TiO2, China’s TiO2

TABLE 3: China’s TiO2 export by destination, 2007-Jul.2009, tonne Jan-Jul'07 Aug-Dec'07 Jan-Jul'08 Region

Aug-Dec'08

Jan-Jul'09

Volume

Share

Volume

Share

Volume

Share

Volume

Share

Volume

Share

Africa

1,691

1.33%

986

1.92%

1,688

2.57%

1,183

3.70%

2,010

2.51%

Asia Pacific

52,244

41.17%

22,840 44.56%

28,777

43.73%

14,613

45.71%

40,769

50.95%

Europe

28,980

22.84%

9,913 19.34%

13,308

20.22%

4,766

14.91%

7,657

9.57%

North America

20,332

16.02%

8,735 17.04%

10,279

15.62%

6,671

20.87%

14,669

18.33%

South America

8,767

6.91%

4,276

8.34%

5,318

8.08%

2,155

6.74%

6,950

8.68%

Middle East

14,894

11.74%

4,508

8.79%

6,431

9.77%

2,583

8.08%

7,969

9.96%

Source: China Customs, CCM International

2

September 2009


TiO2 China Monthly Report export volume to India in Jan.-Jul. 2009 still increased by

as Guangxi Jinmao and Guangxi Yazhao, etc. and post-

67.25% over the previous year. Most of China’s exported

treatment companies like Wuxi Haopu (TABLE 4).

TiO2 to developing countries is anatase TiO2 (TABLE 3). As global TiO2 price will keep rising in the near future, Besides, it is noteworthy that China’s TiO2 export volume

China’s TiO2 import is likely to drop in the following

to Europe decreased obviously, with its volume share

months. Meanwhile, with the rapid recovery of Chinese

decreasing from 22.84% in the first seven months in

economy, domestic manufacturers will further consolidate

2007 to 9.57% in the same time period in 2009, mainly

their domestic market shares and actively expand the

attributed to the implementation of REACH regulations

overseas markets at the same time.

in Europe, which has heightened the entry threshold for foreign

TABLE 4: Export situation of China’s TiO2 manufacturers, 2007-Jul.2009, tonne

development. The leading

Exporter Sichuan Lomon Henan Billions Shandong Dongjia Guangxi Jinmao Wuxi Haopu Guangxi Yazhao Pangang group Shanghai Jianghu Pinggui Feidie Zhenjiang Titanium Others

exporters include rutile TiO2

Source: China Customs, CCM International

TiO2 manufacturers. Though reduced price shrinks export profit, domestic TiO2 manufacturers still actively participate into global competition for long-term

Jan-Jul'07 Aug-Dec'07 Jan-Jul'08 Aug-Dec'08 Jan-Jul'09 16,819 8,638 5,676 1,902 12,537 5,465 2,759 10,779 6,711 11,552 18,433 4,160 3,458 1,307 7,646 3,803 1,578 4,193 1,032 5,560 1,305 766 1,211 324 3,897 5,737 2,133 5,241 1,620 3,627 8,776 3,116 2,130 735 2,935 2,225 1,061 2,616 935 2,873 3,572 1,700 2,612 1,713 2,798 7,942 2,108 1,385 673 2,709 52,831 23,238 26,503 15,020 23,890

manufacturers such as Sichuan Lomon and Henan Billions, anatase manufacturers such

China supports titanium ore import

Development and Reform

The subsidy is expected to further

Commission (NDRC), Ministry

reduce the production cost of

of Commerce and Ministry of

TiO2. Early in the beginning

Finance of the People’s Republic

of 2009, Chinese government

n Aug. 31st 2009, China’s

of China jointly promulgated

has adjusted the import tariff of

government released the

this catalogue. According to the

titanium slag from 6.5% to zero

Catalogue for Technologies and

announcement, the government

and that of sulfuric acid from 5.5%

Products Encouraged to Import

will subsidize import of resource

to zero.

in 2009 (Catalogue 2009), which

products and key technologies

encourages titanium ore import

via interest payment. However,

At present, about half of China’s

(HS Code: 26140000).

it does not disclose the subsidy

titanium ore demand relies on

amount. The resource-based

import. With strong governmental

To encourage import of

products include titanium ore,

support, the import volume of

resource-based products and

copper ore, lead ore, etc.

titanium ore will see further

O

key technologies, National

increase.

3

September 2009


TiO2 China Monthly Report TiO2 demand in cosmetics remains strong

T

iO2 demand in cosmetics is less threatened by

Generally, 50% of cosmetic products are solid products,

economic recession thanks to the stable growth of

and most of them contain TiO2.

Chinese cosmetic industry. TABLE 5: Share of imported TiO2 for cosmetics in total import volume, 2007-Jul.2009, By July 2009, TiO2 import volume from cosmetics industry this year has exceeded the total volume in 2008. Besides, many domestic TiO2 manufacturers indicate that TiO2 demand in cosmetics has kept increasing despite impact from economic downturn. With China’s recovering

tonne Item

in 2008 due to slacking downstream sectors affected by global financial crisis, TiO2 import for cosmetics has kept increasing stably since 2007 (TABLE 5).

Jan.-

Dec.’07 126,435 99 0.08%

Jul.’08 168,465 159 0.09%

Aug.Dec.’08 95,208 115 0.12%

Jan.Jul.’08 136,300 348 0.26%

Source: China Customs, CCM International

TABLE 6: TiO2 import situation of main cosmetic companies, 2007-Jul.2009 Year

Volume, t

Value,

Main origin

Main importer

USD 2007 2008 Jan-Jul. 2009

fast increase. Despite the depressed overall TiO2 import

Aug.-

Jul.’07 167,812 154 0.09%

Total import TiO2 for cosmetics Share, %

economy, TiO2 demand in cosmetics has seen

Jan.-

253

1,626,415

274

1,685,574

348

1,453,911

Japan, Finland, Australia, Avon (China), Guangzhou US, Taiwan Finland, Taiwan, Japan,

P&G, Avon (China), Guangzhou

Australia, US Malaysia, Finland,

P&G, Guangzhou Unilever Avon (China), Guangzhou

Germany, Japan, US

P&G, Guangzhou Unilever

Source: China Customs, CCM International

TABLE 7: TiO2 export situation of Chongqing Xinhua, 2007-Jul.2009 Item

2007

2008

Jan.-Jul.2009

Total Cosmetic Destinations

499.48 6.78 Australia, Iran,

331.20 7.20 Australia,

184.70 6.70 South Korea,

Singapore

Malaysia, Iran

Germany, Iran, etc

Aug.-

Jan.-

Dec.’08 95,208 115

Jul.’08 136,300 348

0.12%

0.26%

Source: China Customs, CCM International

The stable increase in cosmetics industry’s TiO2 import is mainly attributed to China’s fast developing cosmetic sector and huge market

Both general and nanometer TiO2 can be added in

potential.

cosmetics. And the TiO2 added in cosmetics requires good whiteness, strong hiding power and excellent

China is to become the largest cosmetic OEM base of the

weatherability. As to purity, cosmetic grade TiO2 has

world, with its output value expected to reach USD12

strict requirements on heavy metal content.

billion by 2010. Many cosmetic multinationals have set up their plants in China, thus pushing up China’s TiO2 import

Currently, most of China’s high-end cosmetic grade TiO2

for cosmetics (TABLE 6).

relies on import.

Besides, with the improving living standards, Chinese

Although there are thirteen nanometer TiO2

people have been paying much attention to personal

manufacturers in China with total capacity of 2,250t/a,

care, especially facial make-up, which promotes cosmetic

only several of them, like Chongqing Xinhua Chemical

consumption and indirectly drives TiO2 demand to rise.

Plant (Chongqing Xinhua) and Shanghai Jianghu

4

September 2009


TiO2 China Monthly Report Titanium White Products Co, Ltd

Commission (FCC), E171 and

only shares a small proportion of its

(Shanghai Jianghu), etc. produce

European Directorate for the

total consumption volume, cosmetic

cosmetic grade TiO2.

Quality of Medicines & HealthCare

industry has become a stable

(EDQU) standards.

consumption sector of TiO2 with fast

Among the above manufacturers,

development. In the coming months,

Shanghai Jianghu arranges

With high product quality,

TiO2 consumed in cosmetics will

production by order while

Chongqing Xinhua’s cosmetic grade

continue to witness increase with

Chongqing Xinhua runs production

TiO2 is popular both at home and

the fast recovery of economy.

regularly and claims that its

abroad (TABLE 7).

product quality has complied with the Federal Communications

Though TiO2 consumed in cosmetics

5

September 2009


TiO2 China Monthly Report Company Dynamics Bluestar New Materials curbs loss with profits from TiO2

I

n H1 2009, Bluestar New Chemical Materials Co, Ltd

short term as its TiO2 production is still of small scale

(Bluestar New Materials) gained profit of USD1,003,710

with low operation rate.

from TiO2 business, with gross profit rate of 6.93%, which partly offsets its huge loss in other segments.

At present, TiO2 capacity of Guangxi Plant is only 36,000t/a. And its operation rate is estimated at less than

On August 31st, 2009, Bluestar New Materials announced

65% in H1 2009, a little higher than about 40% in H1 2008

losses of USD29.71 million in H1 2009 owing to slumping

with soaring raw materials prices.

sales of its main products during the

TABLE 8: TiO2 profit situation of Bluestar New Materials, 2007-H1 2009, USD

financial crisis, according to its semi-

Sales

Year

annual report. Though TiO2 business shared only 3.42% of the total profits in

2007 H1 2008 H1 2009

H1 2009, it has become the star business for Bluestar New Materials, with growth

income 16,430,781 8,648,091 14,491,676

Cost 15,790,040 8,400,772 13,487,966

Profit margin 640,741 247,319 1,003,710

Gross

Share in

profit rate total profit 3.90% 1.62% 2.86% 1.36% 6.93% 3.42%

Source: Bluestar New Materials

rate of 62.11% over the same period last year (TABLE 8). With the demand rebound, Guangxi Dahua has raised According to Ms. Feng, secretary of Bluestar New

its operation rate after Q2 2009. And TiO2 business is

Materials, the company’s TiO2 sales income all comes from

expected to continue to be the rising star of Bluestar New

its Guangxi plant, namely Guangxi Dahua Chemical Co,

Materials in H2 2009.

Ltd (Guangxi Dahua). Currently, this plant only produces anatase TiO2 and most of its products are exported to Asia

About Bluestar New Materials

Pacific countries (TABLE 9). The high growth of TiO2 business is mainly attributed to the demand rebound this

Bluestar New Materials is a share holding subsidiary of

year and its poor performance in the same period last year.

China National Bluestar (Group) Co, Ltd (Bluestar Group). By 2009, Bluestar New Materials has been the largest

With the recovery of economy, TiO2 demand in both

manufacturer of organic silicon, bisphenol A, special epoxy

domestic and overseas markets rebounds rapidly, which

resin, PET engineering plastic and color imaging agent

drive the company’s TiO2 sales income to rise, Ms Fend

in China. In Nov. 2006, Bluestar New Materials acquired

adds. However, though TiO2’s share in the company’s

Guangxi Dahua Chemical Co, Ltd (Guangxi Dahua) from

total profit has doubled in the last three years, Bluestar

China National Chemical Corporation and embarked on

New Materials will not expand its TiO2 capacity in the

TiO2 production.

TABLE 9: TiO2 export situation of Bluestar New Materials, 2007-H1 2009 Year

Export

Export

volume, tonne value, USD

Value share of sales income

Destination

Share in total profit

2007

2,398

4,440,626

27.03%

India, Indonesia, Thailand, etc

1.62%

H1 2008 H1 2009

653 1,669

1,076,831 2,061,958

12.45% 14.23%

Indonesia, Thailand, Singapore, etc India, Indonesia, Singapore, etc

1.36% 3.42%

Source: China Customs, CCM International

6

September 2009


TiO2 China Monthly Report In February 2002, Bluestar Group has merged Jinan Yuxing Chemical Co, Ltd (Jinan Yuxing), marking the first example of TiO2 end user merging TiO2 producer. Jinan Yuxing is

Jinan Yuxing suspends production

J

inan Yuxing Chemical Co, Ltd

expected to expand capacity to 100,000t/a by the end of

(Jinan Yuxing) has been forced to

2009.

suspend production of sulfuric acid and TiO2 from Sep. 20th to the end of the 11th National Games (October 16-28)

FIGURE 2: Bluestar Group’s TiO2 holding share, 2009

due to its heavy environment pollution.

Bluestar Group

This is part of Jinan Environment Protection Bureau’s efforts to ensure

100%

high air quality during the 11th National

53.96%

Jinan Yuxing

Bluestar New Materials

TiO2 100,000t/a

Listed company

Games. Apart from production suspension, Jinan Yuxing plans to expand its total capacity to 100,000t/a

100%

by Dec. 2009 after relocation.

Guangxi Dahua TiO2 30,000t/a

Source: CCM International

Ningbo Xinfu benefits from innovation

I

n order to obtain more benefits and cope with the sluggish economic environment, Ningbo Xinfu Titanium Dioxide Co., Ltd. has cooperated with Ningbo Material Institute of the Chinese Academy of Sciences to set up a new material

engineering research center for titanium dioxide. The center has successfully made breakthrough in electronic grade titanium dioxide and multi-functional anatase titanium dioxide. By the end of this year, it is supposed to help Xinfu expand its capacity to 60,000 tonnes. When the production line is completed and put into operation, the company’s annual output value is expected to reach USD146 million. Besides, Xinfu is planning to invest USD9 million to develop new products by cooperating with Ningbo material institute. Its annual output value is expected to increase USD337 million when the new product goes into production.

7

September 2009


TiO2 China Monthly Report TiO2 post-treatment capacity on the rise

O

n Sep. 9th, 2009, Guangxi Jinlong Titanium Co, Ltd (Guangxi Jinlong, a company mainly engaged

The president of Shanghai Fopol Chem-Tech Industry Co.,

in TiO2 post treatment) started the pilot production of its

Ltd. (Fopol Chem-Tech) indicates that establishment of

first phase of 100,000t/a rutile production line in Nanning

Guangxi Jinlong helps to raise the concentration of TiO2

City, Guangxi Zhuang Autonomous Region.

capacity and upgrade the TiO2 industry in Guangxi as it had no rutile TiO2 production before. Moreover, it is likely

Guangxi Jinlong is a new TiO2 processing company jointly

to change the national TiO2 distribution structure.

founded by four TiO2 manufacturers in Guangxi, namely Guangxi Jinmao Titanium Dioxide Co, Ltd (Guangxi

Guangxi Jinlong is the second rutile TiO2 post-treatment

Jinmao), Guangxi Xingmeixiang Titanium Dioxide Co.,

project launched this year. Early on July 1st, 2009, Dawn

Ltd (Guangxi Xingmeixiang), Guangxi Baihe Chemical Co.,

Group also launched a post-treatment line with the first-

Ltd (Guangxi Baihe) and Wuzhou Guangxinhe Industry

phase capacity of 20,000t/a (See TiO2 China Monthly

Co, Ltd (Wuzhou Guangxinhe).

Report 0907, page 5). The difference between these two manufacturers is that Dawn Group produces crude rutile TiO2 (TiO2 without surface treatment) itself while

FIGURE 3: Guangxi Jinlong's open ceremony

Guangxi Jinlong adopts crude products supplied by its parent companies. With the increasing demand for rutile TiO2 and the inferior product quality of domestic products, China has to import large amount of rutile TiO2 annually. To satisfy the individualized demands from customers and enlarge profit margin, many domestic manufacturers, including anatase TiO2 producers, have launched many post-treatment facilities in the past few years (TABLE 10), which has partly improved the quality of domestic products. Source: OK-Pigment.com

Besides, the expansion of post-treatment capacity also According to Mr. Zhang, director of the marketing

helps to promote the division of TiO2 production.

department in Guangxi Jinlong, the new company focuses on rutile TiO2 post-treatment. And its products, with

Among the post-treatment companies, only Dawn Group

key product index approaching to those of Japanese

produces crude products itself, and the other companies

Ishihara Sangyo Kaisha, Ltd (ISK) and US-based DuPont, are especially suitable to be used in

TABLE 10: Manufacturers engaged in TiO2 post-treatment in China, Sep. 2009 No.

Company

Capacity,

Launch

t/a

time

Share in

Remark

total profit

papermaking industry. However,

1

Guangxi Jinlong

50,000

2009

Expand to 100,000t/a

1.62%

in the first-phase project with

2 3 4 5

Dawn Group Wuxi Haopu Shanghai Jianghu Shanghai Liangjiang

20,000 30,000 30,000 30,000

2009 2005 1980s N/A

Expand to 100,000t/a Expand to 100,000t/a

1.36% 3.42%

50,000t/a capacity, the product quality is still unstable, and the final products are expected to be

---

Source: CCM International

marketed next month.

8

September 2009


TiO2 China Monthly Report rely on their parent companies or

and product quality improvement.

products, anatase TiO2 manufacturers

other rutile TiO2 producers. With

Currently, most of the post-treatment

can adjust to produce crude rutile

the expansion of post-treatment

companies are formed by TiO2

products, which will not only enhance

capacity, the demand for crude TiO2

manufacturers or sales companies,

their profitability, but also fully utilize

products will largely increase, thus

so they usually have sufficient fund

the existing capacity and reduce

promoting the growth of specialized

to import advanced technology to

redundant construction.

crude TiO2 producers. For instance,

improve product quality. Take Dawn

Panzhihua Taidu Chemical Co, Ltd

Group as an example, it has imported

With the expanding processing

(Panzhihua Taidu) is specialized

Kronos’ technology to upgrade

capacity, China’s TiO2 post-treatment

in crude TiO2 production for post-

product quality.

will see fast growth in the following

treatment companies.

years, which can further promote Moreover, such division can prevent

the division of TiO2 production and

Division of TiO2 production is helpful

redundant construction. With the

promote the sustainable development

to accelerate the technology upgrade

increasing demand of crude rutile

of TiO2 industry.

Hengyang to build 100,000t/a TiO2 plant

H

engyang government will invite investment for

to attract USD324 million to build a chloride process

253 projects with large investment requirement,

titanium dioxide plant with capacity of 100,000t/

high returns and good market prospect this year,

a, which is expected to intensify the competition in

according to Xie Hongzhi, vice mayor of Hengyang City,

Chinese titanium dioxide market.

Hunan Province. In particular, the government intends

Panzhihua Dingxing resumes production

P

anzhihua Dingxing Titanium Co, Ltd (Panzhihua

quotation is around USD1,406/t.In June 2009, the

Dingxing, focuses on anatase TiO2 production

company has been forced to suspend production for

with capacity of 30,000t/a) resumes two-thirds of its

ineffective environmental protection measures.

production in Sep. 2009. Currently the ex-factory price

9

September 2009


TiO2 China Monthly Report Sichuan Lomon remains strong despite IPO failure

S

ichuan Lomon Titanium Co, Ltd. (Sichuan Lomon)

About 60%-80% of Sichuan Lomon’s titanium ore is

still enjoys strong competitiveness with its high

supplied by Sichuan Lomon Mining Co, Ltd. (Lomon

profitability, though it failed to pass the IPO issuance

Mining, another subsidiary of Sichuan Lomon

review last month.

Corporation), which owns titanium concentrate production capacity of about 200,000t/a. In 2008,

Sichuan Lomon originally planned to list on Shenzhen

Sichuan Lomon enjoyed a USD10/t discount in

Stock Exchange and issue 67 million shares to raise funds

purchasing titanium concentrate from Lomon Mining,

for its rutile TiO2 capacity expansion project, but it failed

which largely reduced its production cost.

at last owing to the poor performance of listed TiO2 companies and heavy pollution of the whole industry.

Recycling production

According to Mr. Li from Sichuan Lomon, the failure in

To reduce the heavy pollution and cut down production

listing application will not affect the company’s expansion

cost, Sichuan Lomon successfully developed a new

progress. As the second largest rutile TiO2 manufacturer

production model by integrating the production of

in China, Sichuan Lomon has achieved 80,000t/a TiO2

phosphor chemicals, sulfuric acid and titanium dioxide,

capacity currently, and plans to expand to 120,000t/a by

which not only saves much production cost, but also fully

Feb. 2010 and 140,000t/a by the end of 2010. Despite

utilizes sulfuric acid. This production model helps the

its failure in IPO application, it will expand capacity

company build a positive public image.

on schedule with self-raised funds from sales of highly profitable rutile TiO2 (TABLE 11).

Through recycling production of phosphor-sulfur-

TABLE 11: Profit margin comparison among main TiO2 manufacturers, 2006-2008 Company Panyu Titanium

2008

2007

2006

-0.99%

17.42%

13.89%

CNNC Sichuan Lomon Industrial average

-38.94% 20.82% -19.96%

12.02% 36.45% 14.72%

19.71% 42.38% 16.80%

titanium, Sichuan Lomon can save 672 kWh electricity (valuing USD54) in producing one tonne TiO2. Besides, it also can reduce sulfuric acid consumption volume by 1.1 tonnes compared to the average industrial level of 4t/ t TiO2. Moreover, the new method also cuts the labor cost as it requires less staff with large scale effects (TABLE

Source: Sichuan Lomon, CNNC, Panyu Titanium

12). TABLE 12: Labor costs of Sichuan Lomon and two listed TiO2 companies, 2008

Sichuan Lomon’s profit margin has been among the highest in Chinese TiO2 manufacturers with its following

Company

advantages. Stable supply of titanium ore

Output, tonne

Staff

Labor

Unit labor

cost, USD cost, USD

Panyu Titanium

35,177

1,487

8,067,829

229

CNNC Sichuan Lomon

21,582 51,968

1,132 959

6,717,176 6,089,598

311 117

Source: CNNC, Panyu Titanium, Sichuan Lomon

Sufficient supply of titanium ore is one of the key advantages contributing to Sichuan Lomon’s high profitability.

R&D capacity

Generally, cost of titanium ore constitutes 20%-30% of

Apart from the low production cost and improved

total TiO2 production cost in China, thus stable supply

production process, Sichuan Lomon is also making efforts

of titanium ore is quite important. Bordering upon

to strengthen its research and development capacity to

Panzhihua City, Sichuan Lomon enjoys low transportation

improve product quality and set up good reputation.

cost of titanium ore.

10

September 2009


TiO2 China Monthly Report With large R&D input, Sichuan Lomon has built a good

in China’s TiO2 industry after capacity expansion and

brand image among consumers based on its excellent

launch of new products, which will facilitate its successful

product quality. Consequently, the company’s average

listing in the next IPO application.

sales price is USD73-293/t higher than those of the similar domestic products in the market, which also

TABLE 13: Labor costs of Sichuan Lomon and two listed TiO2 companies, 2008 Research

largely contributes to its high

Year

profitability.

Share in

funds, USD

With its sufficient titanium ore supply and strong R&D capability, Sichuan Lomon is to consolidate its leadership

Development item

income

2006

166,604

0.22%

LR-951:new product specific for paper, undergoing;

2007 2008 H1 2009

727,635 184,744

0.67% 0.17%

LR-971:new product specific for paint, undergoing;

178,781

0.28%

LR-108:new product specific for plastic, undergoing; R-996: quality improvement, undergoing.

Source: Sichuan Lomon

Upstream Sluggish sulfuric acid industry benefits TiO2 production

B

y Sep. 2009, China’s sulfuric acid industry has

In H1 2009, the booming nonferrous metal industry

remained sluggish with low price, which is beneficial

promoted the output of sulfuric acid made from smelting

to many Chinese TiO2 producers to lower production

gas, amounting to 27.22 million tonnes, up 4.9% over the

cost.

same period last year.

Currently, sulfuric acid sector still suffers recession with

Besides the increasing output and intensified

falling operation rates and low sales price, due to sluggish

competition, imported products also struck domestic

downstream demand and the competition from low-

producers. In H1 2009, China imported 1.72 million

priced imported products.

tonnes sulfuric acid, of which 53.8% was imported from South Korea and 43.5% from Japan. The cumulative

Though phosphate fertilizer industry, the main end use

import volume in H1 2009 has already increased 7%

sector that consumed over 65% of China’s total sulfuric

over the total import in 2008, driven by the low price of

acid in 2008, kept developing steadily in H1 2009 with

imported sulfuric acid, about USD22/t, even lower than

cumulative output about 6.73 million tonnes (converted

some domestic quotations.

into P2O5), increasing by 6.1% over the same period last year, sulfuric acid consumption has not seen large

Affected by the sluggish demand, sulfuric acid

increase despite its increasing output.

manufacturers have begun to reduce their operation

TABLE 14: Cost share of raw materials and utilities in

rates and lower the price to stimulate sales and reduce

TiO2 production in Sichuan Lomon, 2006-H1 2009

the rising inventory. For instance, Jinchuan Group

Item Titanium ore Sulfuric acid Coal Nature gas Electricity Water

H1 2009

2008

2007

2006

19.20%

21.88%

30.01%

20.00%

14.05% 8.52% 5.63% 5.56% 0.28%

23.33% 7.71% 6.76% 5.37% 0.23%

20.17% 6.82% 5.97% 5.10% 0.24%

18.23% 6.74% 7.10% 8.53% 0.30%

Limited (JNMC), one of the largest nonferrous metal companies in China, has started to cut output to release its 150,000 tonnes stored sulfuric acid in H1 2009. The average operation rate of sulfuric acid industry has gradually declined to about 60% by September. And the

Source: Sichuan Lomon

11

September 2009


TiO2 China Monthly Report average sales price has dropped to USD22-44/t, even

sulfuric acid facilities to cut down production cost.

lower than USD15/t in Northwest China, down nearly USD150/t compared to that in the same period last year.

Many TiO2 manufacturers indicate that the sluggish sulfuric acid industry will not affect the price uptrend

The low price of sulfuric acid helps reduce TiO2

of TiO2 with its relatively strong demand rebound.

production cost and thus enhancing some producers’

According to Zhenjiang Titanium Dioxide Co, Ltd

profitability. According to Sichuan Lomon Titanium Co,

(Zhenjiang Titanium), it has raised TiO2 price every half

Ltd (Sichuan Lomon), a 5% increase in sulfuric acid price

month in the past few months with the rising demand.

will reduce 2.16% of its profit rate. With sulfuric acid’s

Currently its ex-factory price has reached USD2,020/t

share in total cost decreasing from 23.33% in 2008 to

in September and is expected to keep the uptrend in the

14.05% in H1 2009, Sichuan Lomon’s profitability has

near future.

increased from 26.26% to 29.95% in the same period consequently.

With large import volume and domestic oversupply in the first half year, China’s sulfuric acid price is unlikely to

Besides, TiO2 manufacturers who produce sulfuric acid

fluctuate greatly as it did in 2008, and will maintain low

themselves can also benefit from the sluggish sulfuric

price level in the short term. Consequently, TiO2 industry

acid market. Owing to the depressed demand of sulfuric

will continue to gain benefits from the sluggish sulfuric

acid, the prices of its raw materials have remained low,

acid industry.

which is favorable to the manufacturers with self-owned

Co. Ltd (Sichuan Tranvic, a well-

China VTM Mining eyes HK listing in October

I

n Sep. 2009, China Vanadium

known private company in Sichuan

By pushing China VTM Mining to

Province focusing on mining and

get listed in Hong Kong, Sichuan

processing). Sichuan Tranvic

Tranvic aims to build a well-known

now is the second largest steel

international mining company.

manufacturer and one of the top

If China VTM Mining goes public

cement manufacturers in Sichuan.

successfully, Sichuan Tranvic can

Titano-Magnetite Mining

raise more funds to accelerate its

Company Limited (China VTM

As for mining business, Sichuan

development and optimize company

Mining) announced to launch an

Tranvic owns fifteen mines

management. Meanwhile, it can

initial public offering in Hong Kong

distributed in Sichuan Province,

utilize the rich mineral resources to

Exchange this October to raise

Yunnan Province and Indonesia

strengthen its competitiveness and

USD200 million.

with total resource reserves of over

capture more market shares.

600 million tonnes, among which Specialized in mining and safes of

there are about 400 million tonnes

According to Sichuan Tranvic, it will

iron ore concentrate and ilmenite

of ilmenite, 100 million tonnes of

realize USD2.93 billion sales income

concentrate, China VTM Mining is a

iron mine, one million tonnes of lead

in 2010.

subsidiary of Sichuan Tranvic Group

zinc ore, etc.

12

September 2009


TiO2 China Monthly Report Downstream Booming automotive sales drives coatings demand

C

hina’s record-high automotive sales in 2009 have

Besides, entry of multinationals has intensified the market

greatly boosted the demand for automotive coatings,

competition. For instance, Sherwin-Williams, a well-

thus indirectly promoting TiO2 demand rebound in H1

known US-based coating multinational, is building its

2009.

fourth coating plant in Asia Pacific region in Zhaoqing City, Guangdong Province, showing its great ambition in

In the first seven months in 2009, both of China’s

capturing China’s fast growing coating market.

automotive output and sales had set new historical records, which made China the largest automotive market,

The promising automotive coating production has

surpassing the US. During this period, China’s automotive

promoted the demand rebound of TiO2. It’s estimated that

output had increased by 20.23% over the same period last

TiO2 consumed in automotive coating is expected to reach

year, reaching 7,100,900 vehicles, and the sales volume

over 150,000 tonnes by 2012.

reached 7,184,400 vehicles, with annual growth rate of 23.38%.

Currently, China’s TiO2 demand from automotive coating still largely relies on import, and few domestic TiO2

According to Professor Guo, automotive expert from the

manufacturers can enter the high-end market due to their

Chinese Academy of Engineering, China’s automotive

inferior product quality. Generally, automotive coating

industry has increased with CAGR of over 20% in recent

manufacturers adopt rutile TiO2 with good weatherability,

years, and the output is expected to exceed 10 million

high hiding power and excellent dispersity.

vehicles in 2009 and 12 million by 2012. Based on this forecast, it will require about 500,000 tonnes of

It’s predicted that China’s reliance on imported TiO2 will

automotive coatings by 2012.

remain unchanged in the near future, but with the gradual quality improvement and cost reduction of Chinese

Benefited from the booming automotive industry,

manufacturers, homemade TiO2 will capture more shares

automotive coating has become the second largest coating

in this sector.

sector in China, only next to architecture coating. The total automotive coating output is estimated to reach 420,000 tonnes in 2008, and is expected to keep uptrend in the coming years driven by the fast growth of automotive sales.

13

September 2009


TiO2 China Monthly Report Price Update Price updates in Sep. 2009

P

rices of TiO2 and most of its raw materials except

China’s TiO2 price is predicted to keep uptrend with

high-titanium slag have continued to increase in

small fluctuations in the coming days.

Sep. 2009 in China, mainly attributed to the continuously recovering downstream demand. Ex-factory prices of TiO2 and sulfuric acid in September 2009, USD/t Area Southwest East China Central China South China

Rutile TiO2 August

Anatase TiO2

September

August

Sulfuric acid (98%)

September

August

September

1,858-2,121 1,873-1,931 1,800-1,975

1,903-2,167 1,904-1,976 1,830-1,980

1,375-1,873 1,390-1,463 1,435-1,494

1,391-1,902 1,430-1,464 1,463-1,522

29-66 12-44 15-51

29-66 22-47 29-51

N/A

N/A

1,390-1,492

1,406-1,520

38-54

42-57

Source: CCM International

Sulfuric acid TiO2

In Sep. 2009, sulfuric acid price has remained stable with

China’s TiO2 price has continued to go up quickly in

slight increase, mainly attributed to the slightly increased

September, because of the advance in prices of its major

demand from its downstream industries such as fertilizer.

raw materials such as titanium concentrate, as well as

But entering autumn, the off-season of chemical fertilizer

the increasing demand from two major end use sectors,

production, many fertilizer manufacturers are going to

namely coating and papermaking industry. Many

reduce their operating rates as well as the purchasing

manufacturers adjusted their prices every half month to

volume of sulfuric acid. Thus the continuous advance in

catch up with the market trends.

sulfuric acid price is likely to cease in the future.

Ex-factory prices of titanium ore concentrate and titanium slag in September 2009, USD/t Area

Titanium ore concentrate Grade

August

Titanium slag September

Sulfuric acid (98%)

Grade

August

September

Sichuan Hainan Yunnan Guangxi

40%-46% 45%-54% 45%-47%

75-119 89-116 83-98

78-124 95-116 85-99

74%-78% N/A 77%-92%

350-380 N/A 307-512

366-381 N/A 359-512

50%-52%

104-114

104-116

N/A

N/A

N/A

Liaoning

N/A

N/A

N/A

92%

512-556

527-556

Source: CCM International

In addition, with the recovering global economy, TiO2

Titanium concentrate

export has showed a fast growing trend. A large number

In general, titanium concentrate price has continued

of domestic enterprises like Dongjia Group have exported

upswing in Sep. 2009, mainly owing to the shrinking

titanium dioxide to overseas markets. Moreover, growth

inventory and gradually rising demand from TiO2

of titanium dioxide import has slowed down due to

manufacturers. The supply of titanium concentrate from

higher import prices, leading to domestic customers’

Vietnam is still tight, though Vietnamese government has

preference over homemade titanium dioxide. As a result,

announced to lift the ban of titanium export. At present,

TiO2 has faced short supply currently in China, which

titanium concentrate from Vietnam still cannot be shipped

further promotes its price rise this month.

to China, thus tightening the raw material supply for Chinese producers.

With rising demand and increasing raw material cost,

14

September 2009


TiO2 China Monthly Report With continuously increasing demand, titanium

demand from downstream products such as titanium

concentrate price is going to remain stable with slight

tetrachloride, but it is still far higher than that of titanium

increase.

concentrate. Its price is unlikely to rise in the short term due to sluggish demand.

Titanium slag In September, despite the market rebound, titanium slag price has stayed at a low level due to slacking

DuPont Titanium raises TiO2 price in China

O

n Aug. 27th 2009, DuPont Titanium Technologies announced a price increase for all DuPont™ Ti-Pure® titanium dioxide products sold in Asia Pacific region. Effective from Oct. 1, 2009 or as permitted by contract, prices for all

titanium dioxide grades will increase by RMB1/kg in China and USD150/t in the other parts of Asia. This is the second price increase of DuPont after the one announced on Jun. 3, 2009.

JNMC acquires Tiomin Kenya

Kwale Mineral Sands Project (Kwale) in Kenyathe. The transaction cost has not been disclosed. Besides buying

O

n Aug. 31st, 2009, Jinchuan Group Limited

the stock, JNMC will immediately invest USD25 million

(JNMC), one of China’s largest metal companies

in Kwale.

was reported to have signed an Investment Agreement with Tiomin Resources Inc (Tiomin, a Canadian mining

The Investment Agreement also formulates the

company), on acquisition of the latter’s mineral mine in

distribution principles of the profit from Kwale. Profit

Kenya.

generated by Kwale will be used to repay project debt first, and then 70% of the rest net profit will be

The singed agreement indicates that it has taken

distributed to JNMC and 30% to Tiomin.

a significant step forward for the transaction between JNMC and Tiomin. Early in July 2008,

Moreover, Robert Jackson, CEO of Tiomin, indicates

the two companies have singed a Memorandum of

that the transaction is expected to close in the next two

Understanding (See Issue 0905, page 14).

months. When the transaction is completed, the two companies

According to the Investment Agreement, JNMC will

will jointly produce 330,000 tonnes ilmenite, 77,000

buy 70% of the stock of Tiomin Kenya Limited (TKL),

tonnes rutile and 37,000 tonnes ziron each year in Kwale

a wholly owned subsidiary of Tiomin, which also owns

site.

15

September 2009


TiO2 China Monthly Report Competitive Analysis DuPont postpones chloride TiO2 plant in China

O

n Sep. 2nd, 2009, DuPont announced to postpone the construction of its chloride process

Facing the criticism and suspicion, DuPont has built

TiO2 plant in China, which was expected to begin

a deep well for testing in Dongying City. However, the

production in the next three or four years, due to its

company is confident on its technological advantage

potential environmental risks and opposition from local

and is unlikely to change the original process. Dr. Gu,

competitors.

technical director of DuPont in Asia Pacific, indicates that DuPont will not give up the mature technology for

After having signed an agreement with local government,

oppositions, which casts a shadow on the prospect of its

DuPont’s chloride TiO2 plant in Dongying City,

Dongying plant.

Shandong Province, with designed capacity of 200,000t/ a and total investment of USD1 billion, has faced wide

DuPont’s postponement of Dongying project provides

opposition from China’s TiO2 industry and the public. In

a favourable environment for Chinese TiO2 players

Sep. 2009, DuPont’s Dongying project is still under the

to develop chloride process or expand chloride TiO2

second round examination and approval of the China’s

capacity. Enjoying strong governmental support, chloride

Ministry of Land and Resource.

TiO2 capacity is expected to expand rapidly in the next four or five years.

The Dongying plant is accused of high environmental risk as it plans to adopt 60% titanium slag for TiO2

As Chinese TiO2 industry has faced bottlenecks due to

production and utilized underground injection (UI)

the heavy pollution of sulfate process, the government

technology in waste treatment, which is believed to bring

has clearly supported the development of chloride

potential pollution to local environment.

process to reduce TiO2 industry’s pollution.

DuPont once adopted 60% titanium slag in four plants,

According to Mr. Liang from Jinzhou Titanium Chemical

two of which, including a plant in Taiwan, were forced to

Co, Ltd of Pangang Group (Jinzhou Titanium, the

utilize high-content raw materials due to the opposition

only chloride process adopter in China currently),

from the public. Most Chinese people believe that

through technology introduction and improvement,

chloride process adopting 60% titanium slag is less

Jinzhou Titanium has basically mastered the chloride

competitive than that adopting 90% one as it consumes

process technology and accumulated rich experience in

more chlorine and energy, and brings four times chloride

equipment maintenance, and plans to expand its capacity

waste of high radioactivity. The opponents believe that

in the following years to capture larger market shares.

DuPont’s behavior goes against the Basel Convention by transferring pollution to the developing countries.

Besides, many potential companies, especially the stateowned ones, planning to launch chloride process TiO2

Currently, there is only one plant adopting UI technology,

projects can gain financial supports from the government.

namely DuPont’s Delislle plant in Mississippi. The

For instance, both Yunnan Xinli and Jinzhou Titanium

opponents hold that the UI technology in Delislle plant

have gained subsidies from local authorities.

does not justify the safety of Dongying plant located at the estuary of Yellow River, so the wastes may pollute the

Enjoying bright market demand and governmental

underground water and nearby Bohai Sea.

supports, Chinese chloride process is predicted to see fast

16

September 2009


TiO2 China Monthly Report development in the next four or five years. TABLE 15: China’s current or potential chloride processTiO2 projects, by Sep. 2009 Company

Investment, million USD

Jinzhou Titanium Yunnan Xinli Luohe Xingmao Pangang Group Henan Billions

146 211 100 N/A 102

Designed capacity, t/a 30,000 60,000 30,000 100,000 30,000

Unit investment

Remark

4,880 Under operation, molten salt method 3,521 Under construction, with technology from Germany 3,319 Under design, with technology from Lurgi Group of Germany N/A Having signed contract 3,416 Inviting investment

Source: CCM International

TiO2 industry announces declaration of environmental protection

O

n August 18th, 2009, China’s TiO2 industry announced the declaration of environmental protection on a charrette held by China National Coatings Industry Association (CNCIA) Titanium Dioxide Branch.

On this charrette, some experts believed that the IPO failure of Sichuan Lomon Titanium Co, Ltd (Sichuan Lomon) is largely attributed to terrible environmental protection and unsustainable development model of Chinese TiO2 industry. To gain more support from the government, such as tax rebate, the experts group announced the declaration of environmental protection, which suggested domestic TiO2 manufacturers to strengthen self-consciousness and enhance sense of social responsibility, make efforts to improve environmental protection and comprehensively utilize titanium resources to realize sustainable development. Moreover, TiO2 manufacturers are advised to upgrade the production technology, optimize the production processes and enhance cooperation with upstream companies and end users to raise their competitiveness. Finally, prohibit unprincipled expansion and promote industrial concentration to reinforce the intensification of China’s TiO2 industry. It can be seen that domestic TiO2 manufacturers have realized the importance of sustainable development. And the declaration of environmental protection is to help TiO2 industry rebuild a positive public image. Besides, CNCIA Titanium Dioxide Branch indicated that it would strive for more governmental support for TiO2 manufacturers and serve TiO2 manufacturers better through the expert group.

17

September 2009


TiO2 China Monthly Report Redundant capacity expansion continues in Yunnan

R

edundant capacity expansion is continuing in

has been surplus for many years.

Fumin County, Yunnan Province, due to lack of

comprehensive planning, which will intensify the market

Furthermore, development of TiO2 industry in Fumin

competition and tighten China’s titanium ore supply.

will tighten China’s titanium ore supply. Fumin’s Investment Promotion Bureau expresses that the above-

Sharing about 14% of provincial titanium ore reserves,

mentioned five TiO2 manufacturers have shared almost

Fumin County was the first region to develop TiO2

all the exploitation rights of local titanium ore reserves,

industry in Yunnan Province. At present, Fumin County

but they are still facing insufficient ore supply for long-

is continuing to expand its TiO2 capacity, most of which

term development. Assume that producing one tonne

is anatase TiO2 facing overcapacity, showing the risk of

TiO2 requires 2.5 tonnes titanium ore, the remaining 4.53

redundant construction (TABLE 16).

million tonnes titanium ore reverses in Fumin can only

TABLE 16: TiO2 manufacturers in Yunnan Province, Sep.2009 Company

Location

Yunnan Dahuatong Fumin Longteng Fumin Zechang Fumin Longyuan Yunnan Xinli

Fumin County Fumin County Fumin County Fumin County Wuding County

Designed capacity TiO2, 30,000t/a TiO2, 20,000t/a TiO2, 30,000t/a TiO2, 50,000t/a TiO2, 60,000t/a

Remark Anatase TiO2, launched in 2002 Anatase TiO2, equipment installation, will be launched in 2010 Rutile TiO2, equipment installation, will be launched in 2010 Anatase TiO2, infrastructure building Chloride process, infrastructure building

Source: CCM International

The current TiO2 capacity in Yunnan Province is

satisfy the demand for less than 15 years.

30,000t/a, sharing only 1.81% of the national total (See Issue 0908, FIGURE 4). The share will reach 9.79%

In order to secure its long-term raw material supply,

after all the above new plants have been launched, which

Yunnan Dahutong has built strategic reserve of titanium

will make Yunnan the fifth largest TiO2 production

ore in Fumin County and has set up a TiO2 plant and a

province and further consolidate the dominant position

titanium slag plant in Panzhihua City in 2007 to utilize

of Western China in TiO2 sector, with its capacity share

Panzhihua’s rich titanium resources. And the other three

being expected to reach 36.06% by then.

new TiO2 manufacturers, after being launched later, will also compete for titanium resources nationwide. The

However, anatase TiO2 capacity expansion in Fumin

newly added annual demand of about 250,000 tonnes

County without comprehensive planning is to intensify

titanium ore will certainly tighten the domestic titanium

the competition and tighten titanium ore supply from a

ore supply.

nationwide perspective. Besides, as there are few end users in Yunnan, the future According to Investment Promotion Bureau of Fumin

products have to be sold outside or exported, which

County, about 100,000t/a designed capacity is anatase

means local manufacturers will face many difficulties in

TiO2 due to inefficient technology, which will certainly

market exploitation and raw material sourcing.

intensify the domestic anatase TiO2 competition. By Sep. 2009, China’s total anatase TiO2 capacity has accounted

The blind expansion of TiO2 capacity in Fumin County is

for 43.95% of the total, amounting to 730,000t/a, which

shortsighted and goes against the development trends of

18

September 2009


TiO2 China Monthly Report this industry, namely more reasonable product structure

ore exploitation, with current mining capacity of

with rutile TiO2 taking larger shares. Currently, more

300,000t/a. Despite rich titanium resources, Yunnan’s

and more anatase TiO2 manufacturers have shifted to

ore supply still cannot ensure local TiO2 industry’s long-

produce rutile TiO2 since 2007 for the surplus anatase

term development.

capacity and shrinking profit margin. To prohibit unprincipled expansion and strengthen

FIGURE 4: Structure of titanium ore reserves by region in Yunnan Province

environmental protection, local authorities need to pay more attention to industrial development plan to avoid Others 19.06%

redundant construction.

Fum in 13.77%

Titanium resources in Yunnan Province Luquan 24.55%

Yunnan Province holds 55.61 million tonnes titanium

Wuding 32.37%

reserves, sharing less then 8% of national total. It

Xundian 10.25%

started to exploit titanium resources two decades ago and has become the second largest province in titanium

Source: CCM International

19

September 2009


TiO2 China Monthly Report Special Report China’s TiO2 industry to enter new growth cycle

C

hina’s TiO2 industry is to enter a new growth cycle in the coming four or five years with the promotion of fast GDP growth, rapidly developing end use sectors, upgrading technology and backup policies.

There are two clearly demonstrated cycles in China’s TiO2 apparent consumption over the past ten years (FIGURE 5). As shown in FIGURE, the first cycle emerged in 2001-2005 while the second cycle started from 2005 and has not touched the trough yet by now. These cycles were formed by the comprehensive promotion of GDP growth, end use sector development, technology upgrade and policy support. Fast GDP growth TiO2 demand evolution is closely linked to GDP growth. As shown in

FIGURE 5: Growth of China’s TiO2 apparent consumption and trade, 1999-2008 80% 60% 40%

FIGURE 6, the continuous uptrend of GDP is a strong driver for TiO2 demand growth. However, long-term influence of GDP is declining as China’s TiO2 is entering mature development.

20% 0% 1999

on average with every 1% growth in GDP. However, the rate had reduced to 2.5%

2001

2002

2003

2004

2005

2006

2007

2008

-40% -60% Apparent Consum ption grow th

During 1999-2000, TiO2 demand had grown by 5%

2000

-20%

Im port grow th rate

Export grow th rate

Source: CCM International

FIGURE 6: Growth of Chinese GDP and TiO2 apparent consumption, 1999-2008

in 2002-2004 and to 1.8% in 2006-2008 in the second

60%

cycle. It is expected to be

50%

further reduced to 1.0-1.5% in

40%

2010-2015. However, China’s TiO2 demand is expected to keep a 10% growth despite the weakening effect of GDP, since China will still lead the world’s development in the coming years with GDP growth rate of 7-10%.

30% 20% 10% 0% 1999

2000

2001

2002

GDP grow th rate

2003

2004

2005

2006

2007

2008

Apparent Consum ption grow th

Source: CCM International

20

September 2009


TiO2 China Monthly Report Development of end use sectors

With technology import since the 1990s, China’s TiO2 production capacity has seen fast expansion with more

TiO2 is widely used in coating, plastic, papermaking and

and more manufacturers having grasped the technology

ink, and so on, among which the former three share over

and made great progress in process optimization and

80% of TiO2 consumption volume in China. All the end

quality improvement. There have been over fifty TiO2

use sectors have developed rapidly over the past ten years,

manufacturers in China by 2009.

which largely boosted TiO2 demand. However, compared

FIGURE 7: Growth rates of major TiO2 end use sectors, 1999-2008

with process and quality improvement,

40%

TiO2 manufacturers

35%

made less efforts

30%

in environmental

25%

protection, thus

20%

Chinese government

15%

placed TiO2 industry

10%

as a high-pollution,

5%

high-energy

0% -5%

1999

2000

2001

2002

2003

2004

2005

2006

2007

2008

-10%

consumption and resource-dependent industry in 2005 and

Coating grow th rate

Plastic grow th rate

Paper grow th rate

abolished the tax rebate on TiO2 in 2007. As a result, TiO2

Source: CCM International

output declined in 2005 and its export reduced greatly in 2007. In 2001, the main end use sectors of TiO2 including coating and plastic suffered recession due to 911 crisis,

With the government’s preference of chloride process over

causing TiO2 demand decline that year. Besides, owing

sulfate process in TiO2 production, many manufacturers

to the financial crisis in 2008, almost all the end use

are planning to bring into chloride process, such as

sectors of TiO2 were seriously affected, which drove TiO2

Pangang Group (100,000t/a, is said to have signed a

demand to a new slid.

technology transfer contract with a foreign company) and Yunnan Xinli Nonferrous Metals Co., Ltd (Yunnan

However, with the effective implementation of China’s

Xinli, 60,000t/a, is building its chloride facilities with

active financial and monetary policies, Chinese economy

technology from Germany), etc.

has recovered fast from the recession since Q2 2009. The construction projects of Shanghai World Expo and

Besides, Chinese government has abolished the import

Guangzhou Asian Games as well as the recovery of real

tax of titanium slag and sulfuric acid and will give interest

estate will certainly need a large amount of coatings, thus

subsidy to titanium ore import since 2009 to protect

promoting TiO2 demand in the near future.

domestic resources, which helps to lower the TiO2 production cost.

Technology upgrade & policy support

21

September 2009


TiO2 China Monthly Report Forecast to the next five years

boost architecture coating demand. In addition, as China has become the largest automobile manufacturer, its

According to DuPont’s forecast, the emerging markets

demand for automobile coating will also see increase.

including China, India, etc. will contribute 70-80% of TiO2 demand growth.

With government’s support, the capacity of chloride process is expected to expand rapidly in the next

With fast economic recovery, China is expected to keep

development cycle and the production cost of TiO2 will

fast growth in the coming years, which will remain the

decline to some extent, which is helpful to promote the

main driver of TiO2 demand despite its weakening effect.

domestic consumption.

Moreover, coating will continue to be the largest

Accordingly, China’s TiO2 demand is expected to enter

consumption sector of TiO2. According to Fan Gang,

a new growth cycle in the next four or five years, which

director of China Reform Foundation of National

provides a good chance for strong players to expand or

Economics Research Institute, investment in real estate is

reinforce their market leadership.

expected to increase by 30% next year, which will greatly

22

September 2009


CCM Newsletter

TiO2 China Monthly Report

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