Guangzhou, China, May 5, 2016 (Newswire.com) - With Sichuan Lomon increasing its rutile TiO2 price again, it is already the fifth round of price rise in China’s TiO2 market in 2016. The previous sluggish production in China’s TiO2 factories and the relief of oversupply would help TiO2 price to keep rising in a short time, according to analyst CCM.
The fifth round of price rise begins when Sichuan Lomon Titanium Co., Ltd. (Sichuan Lomon), Chinese TiO2 giant, announced that it raised again its rutile TiO2 price, by USD77.42/t for domestic sale and by USD50/t for export on 22 April, 2016.
In fact, in early April, not only Sichuan Lomon, but also many other domestic TiO2 players such as Henan Billions Chemicals Co., Ltd. (Henan Billions) and Shandong Doguide Group Co., Ltd. have already raised their product prices once again, according to CCM’s price monitor.
“It can be sure that the fifth round of price rise in China’s TiO2 market has come, with the market price increased by USD309.75/t compared with the price in early Jan,” said Dean Wu, editor of Titanium Dioxide China Monthly Report, CCM.
“The price would keep rising in a short time,” Dean predicted.
As of 4 May, 2016, the mainstream quotations for sulfate grade rutile TiO2 in China has reached USD1,781.15/t and those for anatase TiO2 has increased to USD1,517.85/t, according to CCM.
“Since the second half of 2015, the operating rate of the TiO2 industry in China has been collapsing. As a result, the oversupply situation in the market was relieved,” stated Dean.
“China's TiO2 market has finally turned into a seller's market. And TiO2 manufacturers, no longer burdened by inventory pressure, regained the confidence to raise their product prices,” said Dean.
In fact, early in March 2016, He Benliu, general manager of Henan Billions, once stated that the company's inventory level was lower than in the corresponding period last year and that supply is struggling to meet the increasing market demand.
In addition, a variety of supporting factors have been helping China's TiO2 industry to get out of the rut that it finds itself in and flourish again.
The increasing price from global TiO2 players gives China’s players confidence to raise their prices.
At the beginning of 2016, global TiO2 magnates such as The Chemours Company, Cristal Global and ISK have been raising their product prices. As of now (4 May), the market price of TiO2 has increased by USD300/t compared to that in Jan. 2016.
Additionally, a series of favorable policies in China have been released to support the domestic real estate industry, which would help boost the China’s TiO2 market.
For example, on 2 Feb., the People's Bank of China announced that down payments on homes could be reduced to as low as 20%, and on second homes could be reduced to as low as 30%; Later on 19 Feb., property deed tax and business tax applicable to real estate transactions was cut from 3% to 1% only; property deed tax for first homes that surpass 144 m2 was reduced to 1.5%; On 29 Feb., the People's Bank of China announced a 0.5% reduction in the required reserve ratio of banks, releasing as much as USD107.06 billion (RMB700 billion) in liquid capital.
Price to decrease again in the future?
“China's TiO2 market has had a fascinating start in the beginning of 2016, but we wonders whether these good market conditions can continue or not,” said Dean.
“With the increasing product price of TiO2, the operating rate may increase in the near future potentially causing a TiO2 price decrease in H2 2016,” Dean predicted.
- Recovery of operating rate
A pre-existing low operating rate has relieved oversupply and this is the key driving factor behind the recovery of China's TiO2 industry.
However, considering that the domestic TiO2 price keeps increasing, it is believed that many manufacturers will raise their operating rates to strive for more economic benefits.
Once the supply-demand relationship becomes imbalanced again, the TiO2 price is very likely to bottom out again quickly,” said Dean.
- Overseas market cannot help destock TiO2
The overseas market has always been an important market for Chinese TiO2 manufacturers when it comes to destocking. As of now (4 May), China's export volumes of TiO2 recorded YoY growths of over 20%, according to CCM.
“It has given confidence to manufacturers to raise their product prices. However, considering depressed global market conditions, Chinese TiO2 products which have no advantages in terms of quality will certainly lose market share in overseas markets once its price advantage has disappeared,” Dean added.
About CCM:
CCM is the leading market intelligence provider for China’s agriculture, chemicals, food & ingredients and life science markets. Founded in 2001, CCM offers a range of data and content solutions, from price and trade data to industry newsletters and customized market research reports. Our clients include Monsanto, DuPont, Shell, Bayer, and Syngenta. CCM is a brand of Kcomber Inc.
For more information about CCM, please visit www.cnchemicals.com or get in touch with us directly by emailing econtact@cnchemicals.com or calling +86-20-37616606.
Source: CCM
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