The price of Chinese titanium dioxide (TiO2) has been raised since Spring Festival. Surprisingly, this raise came much earlier than the regular peak season raise. Chinese TiO2 manufacturers started their production in February, when part downstream factories hadn’t resumed the work after the holiday, many of them had sufficient stock for February and March. Here are five possible reasons for the unexpected price raise.
International Group of Titanium Dioxide Raised Their Prices
An average increase of $200 from large TiO2 groups abroad created profit margins for Chinese manufacturers and exporters. The rough RMB 1000 gap in price and export incentives encouraged Chinese TiO2 export
Insufficient Production in China
Affected by funding, production costs, strict environmental regulations and other pressures, many Chinese TiO2 plants cut off part of their production lines for cost control. The price has raised as a result of tight supply
Some Chinese customers who had small amount inventory expected the price fall after Spring Festival, however the market was the opposite; plus the news of price raise were everywhere, which deepened the market panic, some customers began stock up and pushed the price to a higher level.
Price Increase of Titanium Concentrate
Before Chinese titanium dioxide raise, some titanium concentrate dealers in Panzhihua, a primary concentrate origin in China, had raised the price. Almost all TiO2 manufacturers have procurement offices near Panzhihua, and usually purchase at least six months quantity in advance, in order to ensure the production stability. The price of titanium concentrate was 5,60 yuan per ton (tax excluded) at the beginning of 2016 , now it is at least 1650 yuan per ton (tax excluded). Titanium concentrate price is also soaring in other countries.
At the end of 2016, many titanium dioxide plants in Panzhihua was forced to shut down for environmental compliance. One of them couldn’t open for 3 weeks. Right after the Spring Festival in 2017, the Ministry of Environmental Protection started another round of environmental protection. The environmental regulation will continue to have an impact on chemical industry.
This round of price increase was more a result of these comprehensive factors, in stead of titanium dioxide plants’ unilateral intentions. The market reaction was relatively rational, many traders and end users took measures to control the price increase and ensure smooth transactions.
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