Titanium Dioxide: Export Crisis Intensifies, Industry May Face New Round of Adjustment

As the world's best-performing white pigment, titanium dioxide has long been regarded as a barometer of economic development. Since last year, the price of titanium dioxide has been relatively stable, without significant fluctuations. However, starting in the second quarter of this year, titanium dioxide prices have begun to show a clear downward trend.

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In the short term, the supply-demand balance for titanium dioxide is unlikely to change, and anti-dumping measures have intensified the export crisis and competitive landscape within the industry. Historically, the downturn for titanium dioxide typically lasts 5 to 6 years. Therefore, it appears that the downward cycle that began in 2022 may continue. Companies producing titanium dioxide may face a challenging period ahead.

1. Weak Demand, Price Decline

Beginning in the second quarter, the price of titanium dioxide in China has been steadily declining, primarily due to weak demand.

The main downstream market for titanium dioxide is the coatings industry, which accounted for 58% in 2023; followed by plastics and paper industries, with shares of 24% and 10%, respectively. As an intermediate product, the demand for coatings is closely tied to the health of downstream consumer markets, particularly the automotive and real estate sectors. The sluggish real estate market, coupled with the impact of high temperatures, has pushed the coatings market into its traditional off-peak consumption season, leading to sustained weak demand.

On the supply side, the situation remains relatively stable, with operating rates continuing at high levels seen in recent years. However, in recent weeks, there has been a decline in operational enthusiasm among suppliers, resulting in lower operating rates. Meanwhile, the enthusiasm for capacity expansion in the titanium dioxide industry has not waned. According to statistics, China's titanium dioxide production reached 4.16 million tons in 2023, a year-on-year increase of 6.3%. It is expected that nearly 1.2 million tons per year of new capacity will be launched into the market in 2024-2025.

According to Bi Sheng, secretary-general of the Titanium Dioxide Alliance, the total annual capacity of titanium dioxide in China is expected to increase to around 7.5 million tons in the next 2-3 years, which would mean that China's annual capacity will be more than double that of all other countries combined, accounting for two-thirds of global capacity. This is not good news for an industry already facing oversupply.

2. Insufficient Cost Support from the Industry Chain

Against the backdrop of supply-demand imbalance, the raw material cost support for the titanium dioxide industry chain also appears insufficient. The pricing in the titanium dioxide industry is mainly based on costs. Raw material costs account for approximately 60% to 70% of titanium dioxide costs, with the primary raw materials being titanium ore and sulfuric acid. Titanium concentrate is the direct raw material for titanium dioxide production and constitutes over 50% of raw material costs. Sulfuric acid is a key auxiliary raw material, accounting for about 20% of raw material costs. In June, the price trends of titanium dioxide raw materials showed fluctuations; titanium concentrate prices weakened, but sulfuric acid prices rose due to tight supply, signaling high costs. Overall, the cost support from the raw material side for titanium dioxide appears insufficient.

However, there is positive news on the market front.

Internationally, titanium dioxide producers have started a price increase trend. According to incomplete statistics, international manufacturers like Chemours and Kronos have successively announced price hikes: starting from July 1, 2024, various companies will increase prices by between $100 and $200 per ton. This is also a favorable signal for the Chinese market.

3. Anti-Dumping Investigations Leading to Export Crisis

In the context of globalization, international cooperation has proliferated, and titanium dioxide is no exception. China is currently the world's largest titanium dioxide production base and supplier. According to statistics from CoatingDuoduo, the global titanium dioxide capacity reached 9.819 million tons in 2023, with growth primarily coming from China, which currently accounts for 55% of global capacity. At the same time, the exit of some capacity in the international market has provided opportunities for China, enabling Chinese companies to seize overseas market opportunities and continue expanding their market share. In 2023, China's titanium dioxide exports reached 1.6418 million tons, accounting for about 40% of its annual production capacity, an increase of 638,400 tons or 63.62% compared to 2019.

With the increasing reliance on exports from China, international trade protectionism has also risen. Since late last year, the EU, India, and Brazil have launched anti-dumping investigations against Chinese titanium dioxide. According to the EU's anti-dumping investigation information, Longbai Group (002601) and its subsidiaries will face a 39.7% tariff, while the fully-owned subsidiary of China Nuclear Titanium Dioxide (002145), Jinxing Titanium Industry, will face a 14.4% tariff. According to export data from January to May of this year, China's main export destinations for titanium dioxide are concentrated in Asia and Europe, with India being the leading market. The anti-dumping investigations from major exporting countries undoubtedly place significant pressure on Chinese titanium dioxide companies.

China's major titanium dioxide producers include Longbai Group, Vanadium Titanium Co., Ltd. (000629), and China Nuclear Titanium Dioxide. Among them, Longbai Group significantly surpasses the other two in terms of revenue scale and profitability, making it the absolute industry leader. The performance changes of industry leaders have guiding significance for the entire sector. Longbai Group has maintained stability in revenue and profitability over the years. In 2023, Longbai Group reported total revenue of 26.794 billion yuan, of which foreign revenue was 10.991 billion yuan, accounting for 41%. Foreign revenue constitutes a substantial part of Longbai Group's business. It is undeniable that anti-dumping measures will create ripples in the performance of industry leaders.

The preliminary ruling on the EU's anti-dumping investigation is expected to be announced on July 12, with the final ruling anticipated in early 2025. If the situation does not reverse, it will inevitably intensify competition for market shares in China and other regions in the short term. However, expediting exports before the final ruling may become an option for many companies, which could lead to unexpectedly strong performance for titanium dioxide companies in 2024.

Shandong Wotai Chemical New Materials Co., Ltd.
https://wotaichem.com/
Han Yu Finance Valley, No. 7000 Jingshi Road, Jinan, Shandong, China
info@wotaichem.com
+86 53168656629
+86 18560052659

WOTAIchem belongs to Shandong YuanWang Import&Export Co., Ltd. It's a professional construction additive manufacturer and supplier in China.

We adopt German equipment and technology in research & development, and production. WOTAIchem owns three major production bases in China, with well-equipped manufacturing facilities and laboratories. Our product lines cover cellulose ethers, RDP powders, PP fibres, calcium formate, water-reducing agents, etc. With an annual capacity of 40,000MT for cellulose ethers and 30,000MT of RDP powders, respectively.

This release was published on openPR.