This year, the price of raw materials for titanium dioxide has seen a significant increase across the board, putting further pressure on industry profit margins. The cancellation of export tax rebates has also contributed to a more challenging environment, pushing the titanium dioxide sector into an era of low profitability. These insights were shared at the 2007 National Titanium Dioxide Industry Conference held in Panzhihua at the end of November.
Since the start of the year, the costs of key inputs such as titanium ore, sulfuric acid, coal, and diesel have all risen sharply. For example, ilmenite prices have climbed to between 1,500 and 1,700 yuan per ton, up by 300 yuan. Sulfuric acid prices have surged, with some regions like Shandong’s Shouguang reaching 1,500 to 1,600 yuan—up by 700 to 800 yuan compared to last year. In certain cases, the increase has exceeded 1,000 yuan.
Titanium ore is one of the primary raw materials used in the production of titanium dioxide. The sulfate process typically uses either titanium ore or acid-soluble titanium slag (with TiOâ‚‚ content ranging from 78% to 82%). Currently, titanium concentrate is the main source of titanium for domestic producers. In 2006, consumption reached 2.1 to 2.2 million tons, with 70,000 tons imported from abroad. It's estimated that in 2007, the demand will rise to 2.2 to 2.4 million tons.
However, China has faced a severe imbalance in the supply and demand of titanium ore, leading to distorted market prices. While the quality of titanium concentrates has declined, prices have soared—from a few hundred dollars a few years ago to as high as 1,500 to 1,700 yuan this year. Despite this, many companies still struggle to secure supplies, facing production delays or even temporary shutdowns.
To address this, many titanium dioxide producers have turned to the international market, sourcing titanium ore not only from Australia but also from Southeast Asian countries like Vietnam and Indonesia. This shift has led to a sharp rise in imports. From January to September, total titanium concentrate imports reached 889,500 tons, equivalent to 126% of the previous year’s total. Experts estimate that annual imports could reach 1.1 to 1.2 million tons.
The surge in imports has eased supply shortages and improved material quality. By the second half of the year, the titanium dioxide industry saw a more stable supply situation, with prices remaining within the range of 1,400 to 1,700 yuan. Although prices are expected to remain relatively high, significant fluctuations are unlikely in the near term.
In addition, the use of acid-soluble titanium slag has increased due to environmental pressures. Last year, domestic consumption was around 100,000 tons, averaging 3,000 yuan per ton. This year, demand is projected to exceed 150,000 tons, with prices now aligning with international standards at approximately 3,200 to 3,400 yuan.
Sulfuric acid, another critical raw material, has also seen rising costs. With cleaner production methods becoming more common, sulfur has become the primary input for sulfuric acid production. However, China’s limited sulfur resources mean heavy reliance on imports. As global sulfur prices have continued to climb, domestic producers have faced higher raw material costs. The fertilizer industry, which consumes over half of the sulfuric acid produced, has further supported these price increases.
Industry experts predict that sulfuric acid prices will remain elevated through the end of the year. While localized or short-term drops may occur, they are unlikely to be substantial.
Overall, the persistent rise in raw material costs and increased environmental compliance expenses have significantly raised production costs. As a result, anatase products are expected to operate at a loss, while rutile products will only yield minimal profits. Throughout the year, the cost of titanium dioxide raw materials is expected to remain high, signaling a prolonged period of tight margins for the industry.
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