CCM International Ltd.
At 2:46 PM JST, March 11, 2011 a massive 9.0-magnitude earthquake occurred near the northeastern coast of Japan, creating extremely destructive tsunami waves which hit Japan just minutes after the earthquake. The earthquake and tsunami have caused extensive and severe damage in Northeastern Japan (Fukushima, Iwate, Miyagi, Ibaraki, Chiba, etc.), leading to a large number of chemical enterprises shutting down, and it will also influence China’s chemical industry.
Some oil refinery processing plants are shut down because of the earthquake in Japan, influencing the manufacture of basic materials such as petroleum products, olefin, arene, etc. Especially the underproduction of olefin including ethylene, propylene and arene products will have great effect on it in the future.
Ports are closed due to the tsunami in Japan, which will probably influence the global sulfuric acid market. Japan is the third biggest sulfuric acid exporter, with total output of 7,500,000 tons per year, (Continued on page 24...) and the total export volume of sulfuric acid was 2,800,000 tons in 2010, which was exported to Chile, China, Philippines and India.
As one of the best industrial export countries in the world, Japan has suffered this violent, which will cause visible impact to global economic and related industry. Especially for China, the biggest negative impact to related industry and international business is reflected in imports.
The price of TiO2 has continued to rise since the beginning of 2010 in China. In 2011, due to the lack of raw materials and price increases, the quotation of titanium concentrate is rising in Vietnam, and the price increase of sulfuric acid, etc., makes the cost of TiO2 to increase.
According to CCM’s data, in December 2010, Japan exported 7,331 tons of TiO2, up by 37.1 percent compared with last month. As a result, Japan’s TiO2 export volume has boosted to 70,673 tons in 2010, up by 50.3 percent year on year. The soaring export volume of Japan's TiO2 indicates the demand for TiO2 has rebounded, especially in Asia Pacific. As one of Japan's most important TiO2 export destinations, China imported 31,857 tons of TiO2 from Japan in 2010, accounting for 45.1 percent of Japan’s total export volume, with an increase of 5,314 tons compared with that of 2009. However, will this situation change after the earthquake?
According to Sakai Chemical Industry Co., Ltd. (Sakai), a Japanese TiO2 producer with production capacity of 60,000 tons per year, it has suffered from the damage caused by the earthquake. After the disaster, Sakai’s TiO2 facility has been halted because utilities such as electricity and water supply have been shut down since the earthquake struck.
Though Ishihara Sangyo Kaisha, Ltd. (ISK), the largest TiO2 producer with production capacity of 160,000 tons per year, was not involved by this earthquake, the TiO2 industry will still be affected. On the other hand, some ports closed due to the tsunami and earthquake will influence the import and export situation in Japan. Moreover, the violent earthquake will lead to a large reconstruction effort. Can ISK satisfy such a large rebuild demand?
As the largest producer of building material and steel, as well as the largest building market, China’s related industries are expected to obtain a certain market share. Most of the building materials in Japan are imported from China. How much building material of TiO2 will be needed to satisfy the demand of billions of reconstruction dollars?
According to one Indian titanium feedstock suppliers, some limenite orders will be suspended, as TiO2 production in Japan is to be impacted due to the power shortage after the earthquake. Hence, they can divert some volume for China’s end user in April 2011. As a result, the price of titanium feed stock is expected to restart to some extent.
Japan’s reconstruction effort after the earthquake will certainly boost TiO2 demand in Japan, which will shrink ISK’s TiO2 export volume. Moreover, the halt of Sakai will further intensify the shortage of TiO2 worldwide, especially in Asia Pacific. As a result, TiO2 price is expected to witness a faster increase.
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