Financial Associated Press, November 14 (Reporter Jia Xiaoning)After Longbai Group (002601.SZ) issued a price increase letter, last night, China Nuclear Titanium Dioxide (002145.SZ) and Jinpu Titanium Industry (000545.SZ) also issued announcements about the price adjustment of main products. The two companies have the same price increase as Longbai Group. Titanium dioxide is raised by 800 yuan / ton for domestic customers and 100 US dollars / ton for international customers. It is understood that this price increase is mainly to cope with the rising cost pressure and stimulate the downstream to take goods to inventory.
Manuo, an industry analyst at Longzhong Information, told the Financial Associated Press that the leading titanium dioxide companies issued a price increase letter during the off-season at the end of the year, which may be to digest the recent rising costs. The recent increase in titanium concentrate and natural gas prices has made this Titanium dioxide enterprises with sluggish demand are under increasing pressure. However, at present, there is no obvious benefit in downstream demand, and the product inventory is relatively large. After the price increase letter is issued, the price may still be negotiated one by one. It is estimated that it will be difficult to implement the effect of the price increase.
Weak demand, falling prices
Since the second half of this year, the price of titanium dioxide, like other commodities, has been declining. According to the price data of Longzhong Information, as of the end of October, the mainstream average price of the domestic sulfuric acid method titanium dioxide market was 14,778 yuan/ton, which was a drop of more than 25% compared with the high price of 20,500 yuan/ton during the year.
Manuo told the Financial Associated Press that overall, the price drop in the titanium dioxide industry this year is not large, but the price has continued to fall since the second half of the year, which has had a significant impact on corporate profits.
The Financial Associated Press noticed that among the titanium dioxide companies that have released the third quarterly report, the price of products fell in the second half of the year, which has a great impact on the performance of the company. In the first three quarters of 2022, Longbai Group achieved a net profit of 3.173 billion yuan, a year-on-year decrease of 17.17%, while CNNC Titanium Dioxide and Jinpu Titanium achieved a net profit of 617 million yuan and 23.464 million yuan respectively, a year-on-year decrease of 38.42% and 85.07%.
Longbai Group said that in the third quarter of 2022, the price of titanium dioxide will be adjusted, the average price of main raw materials will rise, the price difference of the company’s products will be narrowed, and the decline in gross profit margin will lead to a decline in profits.
Since the second half of the year, the price of titanium dioxide has continued to decline, mainly due to sluggish demand. In the past October, the new construction and sales volume of domestic real estate were both negative, the downstream coatings industry was under-operated, the domestic demand for titanium dioxide remained low, and the export volume also decreased. In order to cope with the downturn in the market, titanium dioxide companies have reduced production and guaranteed prices. In September, the Panzhihua area was mainly due to the restriction of natural gas supply and the shutdown, resulting in domestic titanium dioxide production during the traditional peak season.
According to industry data from Longzhong Information, my country’s titanium dioxide production in September was 267,900 tons, a decrease of 24,500 tons from the previous month and a month-on-month decrease of 8.38%. The industry capacity utilization rate was 62.13%, down 5.67 percentage points from the previous month and down 13.77 percentage points year-on-year. Due to the downturn in the market, the pressure on companies to ship products, cost upside down, power and gas restrictions and other factors, most titanium dioxide manufacturers overhauled or reduced production in September, and some companies even stopped production.
Price increases to eliminate inventory and digest costs
As for the price increase letter in November, for titanium dioxide enterprises, on the one hand, it can cope with the rising cost pressure, and on the other hand, it tries to stimulate downstream purchases through price increases, so as to achieve the purpose of destocking.
From the perspective of cost, as of last week, the price of 46-grade 10 ore in Panzhihua was 2,080 yuan/ton, which was a high level for the year; while sulfuric acid, except Shandong, all other parts of the country rose to varying degrees, with the largest increase in Sichuan, which rose by 50 yuan/ton. ton, an increase of 14.29%, and the price is 400-500 yuan / ton.
A person from a relevant business told a reporter from the Financial Associated Press that after Longbai Group and China Nuclear Titanium Dioxide and other leading companies issued a price increase letter, almost all titanium dioxide companies have plans to follow up. Since November, the price of titanium dioxide raw materials, especially fuel, has risen. Faster, as titanium dioxide with high energy consumption, it really needs to increase the price to digest the cost.
On the other hand, the inventory positions of major large-scale titanium dioxide enterprises are relatively high. In the case of sluggish downstream demand, if titanium dioxide enterprises continue to reduce production to maintain prices, the inventory will further accumulate, so once the price reduction trend is formed, the inventory value will drop sharply. This is a large titanium dioxide enterprise unwilling to face the result of.
In addition, at present, large enterprises such as Longbai Group and China Nuclear Titanium Dioxide are actively switching to the iron phosphate industry. The initial investment is large and the cash flow is tight. If the price increase can drive the destocking and bring cash flow, it is ideal for titanium dioxide enterprises. the result of.
However, some people in the industry told the Cailian Press that the price of high-end titanium dioxide products rose in early November, mainly because the terminal market feared a small amount of stocking in the early stage, and this part of downstream demand had been overdrafted; Longbai Group’s price increase letter can at most play a role in price stabilization and stimulation. On the premise that the end market demand cannot be improved, it is not easy to implement the price increase and successfully destock.
(Editor: Cao Jingchen)