Lack of international production capacity or favorable situation for China's titanium dioxide production

According to Reuters, on May 14, Venator, a British titanium dioxide manufacturer, applied for Chapter 11 bankruptcy protection in the United States. After the news came out, the insiders said that Venator's application for bankruptcy protection or reduction of international titanium dioxide supply would benefit China's titanium dioxide to enter the international market.

According to the data, Venator's titanium dioxide production capacity ranks fourth in the world, with a total annual capacity of more than 800000 tons in all factories around the world. In February, Venator voluntarily shut down two factories in Italy and Germany due to cost reasons, with a total annual production capacity of 130000 tons closed. According to the analysis of this matter by Chinese industry analysts, the news of Venator's application for bankruptcy protection may mean that the international supply of titanium dioxide will be further reduced, which can create new business opportunities for Chinese products to enter the international market.

For many years, the domestic production of titanium dioxide has been dominated by sulfuric acid method, while the foreign production has been dominated by chlorination method. The sulfuric acid method has a certain cost advantage over the chlorination method. In addition, the recent energy crisis experienced by international giants and the interest rate hike in the United States led to a sharp increase in production costs. This has also become the last straw that will crush international giants like Pan Energy.

At present, the mainstream prices of most domestic sulfuric acid rutile and anatase titanium dioxide are 17500~19000 yuan/ton and 15000~16000 yuan/ton respectively, and the mainstream prices of domestic and imported chlorinated rutile titanium dioxide are 21000~23500 yuan/ton and 31500~36000 yuan/ton according to the use (the above are cash ex warehouse prices including tax). According to customs statistics, in April, the average monthly import price of titanium dioxide in China was US $3620.72/ton, down 3% year on year, while the average monthly export price of titanium dioxide in the same period was US $2243.81/ton. From January to April, China imported less than 20000 tons of titanium dioxide, with an average import price of 3710.9 US dollars/ton, and exported about 566000 tons in the same period, with an average export price of 2164.71 US dollars/ton. It can be said that the cost advantage of titanium dioxide in China is expanding.

If Venator's bankruptcy protection causes capacity loss, its gap in the international market will be filled by China's titanium dioxide, which is a good thing for China's titanium dioxide market. At present, the domestic titanium dioxide price market is weak and stable, and the overall trading and investment market is not optimistic, lacking domestic demand support. Venator's bankruptcy protection can accelerate the expansion of international market share, alleviate the comprehensive pressure of domestic production capacity release, and provide some support for the market. Of course, the effect will not be immediately apparent, but it will definitely be sustained and permeable fermentation, and there will be more and more global demand opportunities in the future. According to the comprehensive market data analysis, China's titanium dioxide export market still has a large cost advantage. If Venator gradually closes its production facilities, the resulting gaps will be filled by China.

Venator announced bankruptcy protection this time. In the short term, the enterprise capacity will gradually withdraw from the market, which will reduce the supply of titanium dioxide to the global titanium dioxide market. With the steady growth of titanium dioxide production capacity in China, this matter is good for the domestic titanium dioxide export market. At present, the quality of titanium dioxide in China is constantly improving, and the production of enterprises is stable. In addition to the recent rise in the US dollar exchange rate, the price of titanium dioxide also has a comparative advantage. Under the favorable news of Venator, the competitive pressure of domestic enterprises exporting titanium dioxide will increase, but it will also ease the pressure of manufacturers' inventory. From January to April, China's titanium dioxide export data remained good, precisely because the international market demand was relatively strong. Strong export market support will help titanium dioxide prices to run firmly.

However, currently, Venator has only applied for bankruptcy protection, not bankruptcy liquidation. At present, the incident has not caused too much impact on the international and domestic titanium dioxide markets. All parties are mainly wait-and-see, and further attention should be paid to the Venator restructuring plan in the later stage. From a legal perspective, bankruptcy and bankruptcy protection are completely different concepts. A company that declares bankruptcy must immediately and completely cease all business and enter bankruptcy liquidation procedures, while a company that applies for bankruptcy protection can continue to operate its own business in order to seek restructuring or profitability to avoid bankruptcy. In the future, the market trend of titanium dioxide at home and abroad, as well as the operation of Pan Energy, still need further observation.