Market Research

China’s TiO2 prices continue to increase in 2011

March 14, 2011

The Chinese chemical consulting company CCM International Limited predicts China’s TiO2 prices will continue to increase throughout 2011.

Though the domestic market slowed down at the start of winter, China’s TiO2 prices maintained stability as of January 2011, supported by rising raw materials prices and strong export volume, the firm said.

As it is well known, there is a global titanium feedstock supply shortage. As a result, prices of titanium feedstock soared in 2010. Compared with January 2010, the average CIF price and average domestic ex-factory price for the whole year of 2010 increased by 49.9 and 44 percent, respectively.

In the short term, the reinvesting titanium feedstock projects cannot be launched, which will not help to alleviate the short supply of titanium feedstock. Meanwhile, contributing more than 40 percent of China’s titanium feedstock import volume, Vietnam is to strengthen its management of mineral exploitation and licensing mineral exploitation through auctioning exploitation rights. In addition, the Vietnam government will collect a fee from individuals and organizations that are licensed to explore minerals. Owing to the short supply, China’s TiO2 producers or mining traders have to bid in the spot abroad.

Hence, prices of titanium feedstocks are predicted to continue to increase in 2011, which will sustain TiO2 prices.

In 2011, China’s TiO2 export volume is expected to continue growing strong which will also boost the prices of Chinese TiO2. Thanks to the short supply of TiO2 outside of China and the frequent price hikes, more and more European and American consumers source TiO2 from China, which has led China to be a TiO2 net exporter since May 2010. As of October 2010, China exported a total of 255,323 tons of TiO2. This represents a 109.9 percent year-on-year increase.

In 2011, besides a 40,000-ton capacity expansion of Tiwest Joint Venture (a joint venture of Tronox and Exxaro in Australia), there is not any new incremental TiO2 production capacity outside of China. Accordingly, the short supply situation of TiO2 in the European and American markets will not alleviate much in 2011.

Owing to the continuous tight supply in the Western markets, the global Big 5 TiO2 producers—DuPont, Cristal, Huntsman, Tronox and Kronos—all announced price hikes for their worldwide TiO2 products in January 2011, by USD200/t to USD300/t. This round of price hikes will push more consumers to adopt Chinese TiO2 for substitution, to cut cost.

In general, there is a USD250-350 gap between China’s average rutile ex-factory price and average CIF price; and a USD300-450 gap between the actual transaction FOB price and average CIF price. Hence, the CIF prices of China’s import TiO2 are expected to range in USD2500/t to USD2700/t in 2011. China’s import TiO2 average CIF price reached USD2530/t in October 2010 while there was not price increase announcement during November and December last year.

Though China’s TiO2 prices will be driven by the increasing international prices and the firm export volume, the downturn demand in the domestic market and the newly launched production capacity will offset the extent of price increases. Owing to the downturn demand, some producers reduced their anatase TiO2 price in December 2010. Accordingly, China’s rutile prices are optimistically expected to keep at the current level for the remainder of 2011.
However, domestic demand for TiO2 will certainly rebound after the Chinese New Year and keep growing driven by the start of promoting building materials in the countryside and expanding urbanization. In a word, China’s TiO2 prices will keep the uptrend through 2011, following global TiO2 prices.

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