“Entering May 2015, the peak demand season for Chinese TiO2 industry began to slip away, so China’s import volume of TiO2 in this month dropped slightly. On the other hand, market price of TiO2 in the Chinese market was still as high as in April and market demand from the downstream market was insufficient, urging Chinese TiO2 manufacturers to enhance their export business. As a result, China’s export volume of TiO2 presented a MoM increase in May. So the gap between import volume and export volume was widened from 27,118 tonnes to 32,020 tonnes and that between the prices was narrowed down from USD776/t to USD675/t in May 2015.
In May 2015, as the imported titanium ore at low prices from Africa still impacted Chinese imports severely, downs were recorded in Chinese imports of titanium placer and feedstock. As for the Chinese output of titanium concentrate ore, it maintained the same level as in April basically, though there was a slight drop in Sichuan Province in late May.
In July 2015, Chinese TiO2 industry entered its slack season and demand for TiO2 was weak. Under such circumstance, prices of TiO2 in China dropped significantly. Besides, influenced by TiO2, market price of titanium concentrate ore also slid slightly. Price of titanium slag remained its downward trend.
Since China’s TiO2 market turned down sharply at the end of 2011, M&A has occurred frequently among China’s TiO2 enterprises which have excess capacity. Against the background of low profit, the only two choices for enterprises are to seek financing by being listing on the stock market and grow bigger and stronger, or to withdraw promptly from the market before falling into serious losses. According to the CSRC, this year, China’s stock market will issue registration system reform, which may provide a fighting chance for China’s TiO2 entrepreneurs who are unwilling to withdraw from the market.
The year 2015 has witnessed many meaningful activities of the Chinese TiO2 industry, including the marriage between Henan Billions and Sichuan Lomon. However, the Chinese market for the TiO2 industry was not satisfactory in H1 2015. In this article, CCM reviews on the price fluctuation and the M&A of two Chinese TiO2 leaders and then make a forecast on the industry’s development in H2 2015.
Entering July 2015, demand for TiO2 from its downstream markets becomes more and more inadequate. Following Sichuan Lomon, many domestic TiO2 enterprises reduced their product prices in succession and Chinese TiO2 price tumbled shortly in a week. Besides, domestic insiders hold negative attitudes towards the TiO2 market and they believe that market price of TiO2 may slump to a historical low in 2015.
On 19 July, 2015, Henan Billions released a flash report on its performance in H1 201 5, according to which, the company gained a net profit of USD7.62 million (RMB46.58 million), soaring by 301 .3% year on year. Besides, its stand-alone debugging of the chloride-processed TiO2 production facility has been finished and the project is expected to be put into production in the near future.
On 14 July, 2015, CNNC TD released an update on its trading suspension which involves industry integration with a predicted transaction volume of over USD32.71 million. CCM analyzes that the merger target will be Shandong Dawn, but not Doguide Group that people said before.
In the first half of 2015, Chinese TiO2 market was in the doldrums. Under the circumstance of weak demand, import price of titanium ore kept sliding. Foreign titanium ore manufacturers were cutting their exports to China since they could not make enough profits. In Jan.-May 201 5, China’s total import volume of titanium ore dropped dramatically year on year. Considering that it is hard to recover the Chinese TiO2 market in the second half of 2015, CCM believes that China’s import of titanium ore will slump in 2015.
Since the beginning of 2014, with the Chinese government paying more and more attention to environmental protection, the Chinese coating industry suffers increasing pressure from environmental protection. This has accelerated the reform of the industry in China.
In this issue, CCM focuses on the imports & exports, prices up and down streams of the TiO2 industry as usual. Besides, CCM makes a brief review on the industry in H1 2015 and then analyzed how will the registration system reform that may be put into effect in 2015 effect the industry.
First of all, in May 2015, China’s import volume of TiO2 dropped slightly while the export market began to recover. May is the end of the peak demand season of the TiO2 industry in China in the first half of year and the demand was weak, leading to a MoM decrease in the import volume. The recovery of the market in the Asia Pacific Region and the Middle East region was the major reason for the MoM increase in China’s export volume of TiO2. Besides, in May 2015, the import volume of titanium placer and feedstock again fell again. It was mainly because the imported titanium ore imported from Africa at low prices has always been dragging down the overall price of imported titanium ore. With higher production costs, mine manufacturers from India and Australia began to cut their exports to China as the trading price kept falling down.
Secondly, CCM makes a brief introduction to the registration system reform that may be put into effect in 2015 and believes that it will lead to more listed TiO2 companies in China. As there are more and more financing channels, M&As will be more frequent in the TiO2 industry. Meanwhile, CCM makes a brief review on the industry in H1 2015 and then summarizes that demand is the key problem that hampers the development of the industry. CCM expects that it is less likely for the Chinese TiO2 industry to recover significantly in H2 2015.
Thirdly, CCM also pays attention to hot topics inside the industry: On 1 July, 2015, DuPont announced that it had completed the separation of its Performance Chemicals segment through the spin-off of The Chemours Company; On 14 July, 2015, CNNC TD released an update on its trading suspension which involves industry integration with a predicted transaction volume of over USD32.71 million; On 14 July, 2015, Jilin Gpro released an announcement, showing that the company had realized a significant growth in its performance in H1 2015; On 19 July, 2015, Henan Billions released a flash report on its performance in H1 2015, according to which, the company gained a net profit of USD7.62 million (RMB46.58 million), soaring by 301.3% year on year, etc.
The RMB/USD exchange rate in this issue is USD1 .00=RMB6.1149 on 1 July, 2015, sourced from the People’s Bank of China. All the prices mentioned in this newsletter include the VAT unless otherwise specified.
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