Before the Spring Festival, titanium dioxide market prices declined steadily and showed little sign of recovery

Thread Content

As the Lunar New Year approaches, the price of sulfuric acid in the raw material chain for the titanium dioxide industry has risen slightly compared to earlier times, going from 200 yuan per ton to 250 yuan per ton. Experts predict that the price of anatase titanium dioxide may also increase by 300–500 yuan per ton in the near future. Based on the overall trend in current titanium dioxide market prices and various abnormalities within the titanium dioxide industry’s supply chain, the author concludes that before the holiday period, titanium dioxide prices will only continue to decline gradually, with little chance of rising. The reasons for this analysis are as follows: First, over 60% of the small and medium-sized enterprises in this industry are currently shut down or operating at reduced capacity. The price of titanium dioxide has been falling continuously, forcing even some key companies to cut back their production capacities, including industry leaders such as China National Titanium Industry and Panzhihua Titanium Industry. Other enterprises in Guangxi and Panzhihua in Sichuan are in an even more difficult situation. In these areas, most individual enterprises do not have a modern production scale; they lack competitive product lines as well, and their products are of limited variety and low quality. Under such severe conditions and environmental pressures, many small and medium-sized enterprises have been shut down since the end of last year. II. The slight increase in the price of sulfuric acid in the raw material chain of the titanium dioxide industry compared to some time ago merely indicates a slight rise in local demand or increased costs associated with long-distance transportation. Without strong demand from the titanium production sector to drive things forward, this will not affect or reverse the downward trend in titanium dioxide prices in the short term. III. Large end-users in the titanium dioxide industry chain, such as manufacturers in the coatings, paints, packaging, paper, and cosmetics sectors, are also affected by the financial crisis. They are unable to sell large quantities of their inventory, which consumes a lot of their working capital; as a result, they are reducing production or even shutting down operations in order to clear their inventories and recover funds. They are carefully analyzing and addressing market risks in preparation for market development in 2009. This has led to a buyer’s market driving the price of titanium dioxide lower throughout the market. IV. On the other hand, as market prices in the titanium dioxide industry rose steadily last year before dropping sharply, many downstream companies purchased excessive amounts of raw materials, and were unable to bear the losses resulting from these price drops. These companies have been waiting patiently, hoping that prices will continue to fall so that they can purchase large quantities of materials at lower prices and thus offset the losses incurred due to their previous purchases at higher prices. With market prices stuck in a stalemate, titanium dioxide manufacturers are in the most difficult position; they can only hope that a decrease in the prices of upstream raw materials will help break this deadlock with downstream customers. When a deadlock cannot be broken, it is difficult for titanium dioxide market prices to recover – this is the law of the market economy.