TiO2 prices in China still booming

Increasing costs and a decreasing supply of raw materials keep the price of Titanium Dioxide (TiO₂) rising in China. According to CCM, the overall TiO₂ business will remain stable until this month’s Spring Festival. The middle of December saw a 29.38% increase yr-on-yr for rutile TiO₂ and a 32.05% yr-on-yr rise for anatase. This increase has led to an average price of US$2249/t for rutile TiO₂ and US$1956/t for anatase TiO₂. While rutile TiO₂ has been increasing almost steadily since the beginning of last year, anatase TiO₂ prices remained relatively stable, until November. December, however, saw a huge jump in prices with an increase of 22.34% compared to the previous month.

CCM states that this was mainly due to a reduction in production of titanium ore and TiO2 manufacturers, who are operating in China’s Panxi area. The reduction is part of the governmental plan to increase environmental protection and the quality of air and water. However, even if the reduction in production continues longer, it will be balanced out by the sinking domestic demand for TiO₂, decreased export values and less activity in the downstream TiO₂ industry. So, CCM is expecting a stable development in TiO₂ prices in the middle-term.

Development of the upstream market

Looking at the raw materials for the TiO₂ production, most show an increasing price trend as well. The biggest rise can be seen for titanium slag (74-76%). Here the price has increased more than US$50/t in Sichuan Province, with less increase in Yunnan and Hebei province. According to CCM, the trend can be explained by price rises of titanium ore.

Titanium slag (90%) did not perform this well. While the price was also increasing in December 2016 in Sichuan Province, the price trend in other provinces like Yunnan Province has seen even slight losses.

Furthermore, Ilmenite saw a very steady price increase during 2016, with a higher price increase in mid-year and at the end of 2016, the price rose faster again. This is explained by CCM again with the production suspension in the Panxi region in China. The production limitation in the Panxi region took place because it was revealed in early December, that several enterprises in this area had clandestinely discharged some polluted water causing huge environmental pollution. As a result, 28 companies had to suspend their production, of which eight are TiO₂ and its upstream products manufacturers, according to CCM.

The outcome of this measurement is affecting the supply, which is going to be less. It will also benefit huge companies with their own supply chain like Sichuan Lomon because they are less affected by increasing raw material prices.

There have been more production reductions in China in several industries recently, due to the focus of China’s government on higher environmental protection. According to CCM, this will improve the supply-demand situation of TiO₂ in China in general and may lead to a steady price rise.