NEW YORK, March 10, 2016 /PRNewswire/ -- In Feb. 2016, China's TiO2 market was stagnant and many manufacturers suspended production influenced by Chinese Lunar New Year. Market price failed to continue the upward trend that initiated in Jan. and remained stable. CCM predicts that later in March and April (Chinese traditional peak sales season for the TiO2 industry), domestic market price may rise slightly again. At the end of Feb., some manufacturers such as CNMC (Guangxi) PGMA Co., Ltd. and Luohe Xingmao Titanium Industry Co., Ltd. have already raised their product prices.
Market dynamics of titanium products:
Ilmenite: operating rate was not high in Feb. and market price had remained persistently low and many manufacturers, deciding to a wait-and-see attitude towards the market, refused to resume production in late Feb. In Sichuan Province, local quotations for ilmenite remained as high as USD80.87/t-USD83.92/t (RMB530/t-550/t) as TiO2 price shows upward trend, but market enquires were few.
Titanium slag: market prices of acid dissolved titanium slag and high titanium slag dropped further in Feb. and many manufacturers stopped production during Chinese Lunar New Year and refused to resume production in late Feb. CCM predicts that operating rate will keep falling and market prices are expected to stop declining in the short term.
Exports of TiO2
In Dec. 2015, China's export volume of TiO2 soared while import volume fell mainly because at the end of the year, the domestic downstream coating market was stagnant and manufacturers had no choice but to cut product price and increase export volume to relieve pressure from inventory.
In Feb. 2016, Anhui Annada and CNNC TD released their 2015 performance forecasts. Accordingly, both of their net profits dropped significantly mainly because of the increasing inventory provision at the end of the reporting period and a decreasing gross profit margin which was a result of the falling market price of TiO2 in China in Q4 2015.
It is worth noting that CCM reviewed China's TiO2 market dynamics in 2015. The market price rose up in H1, and then took a dive in H2, with annual output sliding for the first time in 17 years. Under such depressed market conditions, what is comforting is that chloride grade TiO2 development has performed well and the marriage of Sichuan Lomon and Henan Billions shows that Chinese TiO2 enterprises are challenging the status quo of the global TiO2 market.
The RMB/USD exchange rate in this issue is USD1.00=RMB6.5539 on 1 Feb., 2016, sourced from the People's Bank of China. All the prices mentioned in this newsletter include the VAT unless otherwise specified.In Dec. 2015, China's export volume of TiO2 grew significantly while import volume fell month on month influenced by the coming of the Chinese Lunar New Year. The gap between import volume and export volume has widened from 28,131 tonnes in Nov. to 47,590 tonnes in Dec. and the gap between import price and export price increased from USD847/t in Nov. to USD925/t in Dec.
In Dec. 2015, China's import volume of ilmenite dropped slightly month on month. Specifically, import volumes from Senegal and Australia fell significantly MoM, while those from Kenya and Russia increased substantially month on month. Domestically, output plummeted compared to that of the previous month, Nov., particularly in Sichuan Province.
In Feb. 2016, with China's Lunar New Year right around the corner, China's TiO2 market was stagnant as a whole. The market price of TiO2 was quite stable, as many manufacturers stopped production to overhaul equipment. However, market prices of high titanium slag, acid dissolved titanium slag and ilmenite in China all slid.
To summarise the market conditions of TiO2 in China in 2015: the market price rose up in H1, then took a dive in H2, with annual output sliding for the first time in 17 years. Under such depressed market conditions, what is comforting is that chloride grade TiO2 development has performed well and the marriage of Sichuan Lomon and Henan Billions shows that Chinese TiO2 enterprises are challenging the status quo of the global TiO2 market.
Inter-China Chemical announced the successful establishment of Chinese first TiO2 CMA application testing institute on 21 Jan., 2016. Thanks to this, China's TiO2 application testing and research abilities are expected to be improved in the near future and, according to CCM's research, Inter-China Chemical has already built cooperation relationships with many domestic TiO2 manufacturers such as Sichuan Lomon, Henan Billions and Shandong Doguide.
On 28 Jan., 2016, Anhui Annada released a revision to its 2015 performance forecast. Accordingly, the company is predicted to have suffered heavier loss in 2015 than were expected, due to increasing inventory provision at the end of the reporting period and a decreasing gross profit margin which was a result of the falling market price of TiO2 in China in Q4 2015.
As the market conditions of TiO2 bottomed out in China in 2015, China's ilmenite import volume continued to drop year on year, especially falling from Australia and Vietnam while the proportion of imports hailing from India and African countries grew significantly.
On 14 Feb., 2016, Orient Zirconic announced that it has signed an agreement with Image in relation to a series of transactions directed towards fast-tracking the development of Image's flagship, 100%-owned, high grade Boonanarring mineral sands project in Western Australia. CCM believes that this will help Orient Zirconic to gain an abundance of zircon resources and further consolidate its leading position in the industry in China.
Reports such as "Chinese coating industry suffers severe overcapacity in 2015, making de-capacity the only way out" can be seen again and again; however, whilst researching capacity expansion in the Chinese coating industry in the recent two years, CCM noticed that Chinese coating enterprises, especially the leading ones, are still expanding their capacities without showing any restraint under the circumstance of serious overcapacity.
On 11 Feb., 2016, AkzoNobel disclosed that it planned to acquire BASF's industrial coating business. CCM considers that with the declining trend of the global coating industry, mergers and acquisitions among international giants will lead to a further decline in market competitiveness for small-and-medium-sized enterprises. As this trend continues, a highly dispersed Chinese coating industry will enter a period of consolidation.
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