China's titanium industry enters a new round of investment peak
In 2017, the output value of titanium industry in China was about 750-80 billion yuan. Compared with industries such as copper, aluminum, lead and zinc, the titanium industry has a small volume. From the upstream and downstream structure, the main raw materials for the production of upstream raw materials are: China, South Africa, Mozambique, Kenya, Australia, India, Senegal, etc. The main producing countries and regions of downstream industrial products are: the United States, Canada, the European Union, China, and Japan. In addition, India also has the production capacity of some products, but the output is very small and the quality and economy are poor. Although the titanium industry is a niche industry, its products have a wide range of uses, such as building materials, paper, clothing, food, cosmetics, industrial equipment, pressure vessels, medical equipment, environmentally friendly materials, etc., from the daily necessities of people's clothing, food and shelter to Titanium can be seen on high-precision products such as fighter submarines and space probes. It is also because of the wide application of titanium products that the industrial cycle is highly consistent with the macroeconomic cycle. Therefore, the prosperity index of the titanium industry can also be regarded as a “barometer” of the macro economy.
Titanium industry enters a new round of boom cycle
After the downturn from 2012 to 2016, the prices of major titanium products in China (titanium ore, titanium slag, titanium sponge, titanium dioxide, etc.) began to rebound at the end of 2016 and reached a relatively high level in 2017. While prices have risen to the high range, production of several major titanium products has all grown in 2017. It can be said that China's titanium industry has completely bottomed out in 2017 and entered a new round of economic cycle.
With the recovery of the market sentiment, the industry investment has also ushered in a new round of active period. Many projects that were temporarily put on hold due to the market downturn started construction at the end of 2016, and some new investors are planning to build new factories. According to the author's general statistics, in the past year, there have been more than 10 large-scale projects in the domestic titanium industry, and the total capacity under construction is equivalent to 17% of the current total domestic production capacity. If we consider the 10 large-scale projects in preparation, China will have a potential capacity equivalent to more than 16% of the total domestic production capacity in the future. In parallel with the domestic market, the activity of new projects in the world is also increasing, and mine development projects are the mainstay. According to the author's preliminary statistics, after the market price rebounded, the capacity of mine projects initiated abroad accounted for 6% to 7% of the global titanium ore production capacity in 2017. About half of the mine projects initiated abroad have completed the preliminary exploration report and mining plan design, and will produce the first batch of minerals after 2 to 3 years. The reason why the capacity of this domestic new capacity is mainly based on the downstream processing of the industrial chain, and the new foreign production capacity is mainly based on mineral raw materials, the author believes that the main reasons are as follows.
Limited by resource endowments, the resources available for development in China are relatively limited. Domestic titanium ore resources are mainly concentrated in the Panzhihua area, and most of them are associated ore. This leads to the large amount of surface exfoliation of domestic titanium ore, high mining cost and high impurity content. In contrast, foreign projects with current development value are mostly sand mines, and they are shallow topsoil mining, and the mining cost is significantly lower than domestic.
Different from mining, the production of titanium products in China has obvious advantages compared with foreign countries. In Western countries, higher environmental costs and labor costs have greatly weakened their technological superiority. Therefore, although the downstream manufacturers in the West maintain a competitive advantage in high-end products, they are at a competitive disadvantage in the middle and low-end products, resulting in almost all of the low-end and mid-end markets being occupied by China. Therefore, in the past 10 years, the global production capacity of downstream products of China's titanium industry has increased from 20% in 2000 to 43% now, and this trend continues. It is expected that by 2020 this proportion will reach 50% or even higher.