June 11, 2021
There are only 10 stocks included in the Shenwan Titanium Dioxide sector, and 4 of them have a daily limit.
On June 9, the titanium dioxide sector led the A-share gains. Jinpu Titanium, Anada and Lubei Chemical's three titanium dioxide producers, and the titanium concentrate producer Anning shares daily limit.
In the evening of the previous day, according to the market demand for titanium dioxide, the increase in raw material prices and other factors, the price committee of Lomon Baililian Group Co., Ltd. decided that from July 1, 2021, the company’s various types of titanium dioxide (including sulfuric acid On the basis of the original price, the sales price of French titanium dioxide and chlorinated titanium dioxide will be raised by RMB 500/ton to downstream customers.
It needs to be pointed out that Lomon Baili is the absolute leader in the domestic titanium dioxide industry, and its price adjustment guidance effect is very obvious.
Relevant data shows that the total domestic production capacity of titanium dioxide is 4.23 million tons, of which Lomon Baili accounts for nearly 24%. It has 6 major production bases in Jiaozuo, Deyang, Panzhihua, and Xiangyang, with a production capacity of 1 million tons.
This time, Lomon Baili announced an increase in the price of titanium dioxide in July, which undoubtedly once again locked the prosperity of the next month in advance for the already high price of titanium dioxide.
Prior to this, the price of titanium dioxide has also been rising for 7 consecutive months. The price of domestic rutile titanium dioxide has rebounded from its peak in October 2020. At that time, the price was only 12,680 yuan/ton.
As of June 8 this year, the price of the above products has risen to 20,400 yuan/ton, a cumulative increase of 60.88%. So far, the price of rutile titanium dioxide has been very close to the historical high of 23,000 yuan/ton in early June 2011.
The reason is still driven by the relationship between supply and demand and cost.
Due to technical reasons, domestic manufacturers are still dominated by the sulfuric acid process, of which the cost of raw materials such as sulfuric acid and titanium concentrates accounts for about 50%. According to data, in the past year, the price of sulfuric acid has risen from 150 yuan/ton to the current 500 yuan/ton, an increase of more than 233%.
Data show that from August 2018 to the end of March 2020, the price of titanium concentrate in Sichuan has always been maintained at 1,250 yuan/ton, but it has now risen to 2,000 yuan/ton, which is also close to the 2011 high.
In contrast to downstream demand, titanium dioxide is currently the most important white inorganic pigment. More than half of the demand comes from coatings, and another 25% comes from the plastics industry.
With the gradual recovery of the domestic economy and the gradual control of the overseas epidemic, the demand for domestic titanium dioxide exports has increased significantly.
Data shows that the outbreak of the epidemic has also contributed to the increase in exports. In 2020, domestic exports of titanium dioxide reached 1.21 million tons, an increase of 21% year-on-year. In the first quarter of this year, the export of titanium dioxide was 328,000 tons, an increase of 41% compared with the same period last year.
"The growth rate of terminal demand and consumption of titanium dioxide is closely related to GDP. With the gradual recovery of the global economy, the demand for titanium dioxide will continue to increase, and the industry boom cycle is expected to continue." Insiders pointed out.
The continuation of the boom will directly drive the improvement of the profitability of the above-mentioned related companies.
Unlike other industries, industry chain companies, including Lomon Baili and Anning shares, have the characteristics of high business concentration.
Among them, Anning shares are located in Panzhihua, which is the most important source of titanium concentrate in China. In 2020, more than 52% of the company's revenue will come from titanium concentrates. In the revenue structure of Lomon Baili, the revenue of titanium dioxide accounts for as much as 77.32%.
The highly concentrated business structure also gives the above-mentioned companies higher performance flexibility. In addition, considering that the rising trend of titanium dioxide has not yet ended, the net profit of related companies in 2021 is expected to hit a record high.