Lack of pricing power China's titanium dioxide market is in a state of malaise

From the second half of 2010, the price of titanium dioxide continued to rise from 12,000 yuan/ton to 24,000 yuan/ton, which has more than doubled. The 2011 annual earnings report issued by the company, which is mainly for titanium dioxide, shows that at the end of the reporting period, the company’s operating profit was 423.4 million yuan, an increase of 138.44%. “The overall production and operation of the company is in good condition, with a substantial increase in operating income, operating profit and net profit, which is mainly due to the increase in sales and sales of the rutile-type titanium dioxide, the leading product, and the increase in sales price and gross profit rate.”

While some domestic small and medium sized Titanium Dioxide SMEs did not double their profits, they also achieved good results in 2011. Mr. Wan of Nanchang Wanfang Chemical Co., Ltd. stated that last year, the company’s profits rose by 50% year-on-year. However, Mr. Wan indicated that their achievements are obviously affected by the increase in the price of titanium dioxide in the international market. SMEs like them have no bargaining power at all. “Even some large domestic companies lack bargaining power. The direction is based on the price of the international market.” Mr. Wan, who has more than 10 years of experience, believes that the primary reason for domestic companies’ lack of bargaining power in the international market is product quality. “The majority of large international companies use chlorination processes. However, such domestic producers are only Jinzhou Titanium, and the remaining 50 to 60 are sulfuric acid producers. The difference in product quality brought by the process cannot be avoided, especially in terms of whiteness and weatherability. The product's proprietary market."

Mr. Wan’s statement was also recognized by Yang Xun. He said that in addition to product quality, the international market’s high control of titanium concentrates and other resources has also become an important guarantee for him to control his discourse power. “The domestic titanium concentrate, high Titanium slag and other raw material resources are limited. Most production depends on imports from Vietnam and Australia to maintain the supply of raw materials, and sometimes depends on the face of the supplier government (July Vietnam stopped exporting titanium concentrates). Therefore, raw materials are compared with international producers. "There is also a disadvantage in comparison to the others." "One more reason is that the foreign brand effect is ingrained." Yang Xun said that the long-term monopoly of foreign products establishes their long-term brand effect in the industry, which deeply affects the vast majority of downstream companies. "Thus, although China's petrochemical market has the world's largest titanium dioxide production capacity, it has always had no right to speak and pricing in the international market."

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