The price of sponge titanium rose sharply to 68000 yuan / ton after the festival. Industry insiders: downstream demand surges and prices may continue.

The price of titanium sponge, a much-needed raw material for high-end chemical, aerospace, shipbuilding and electric power industries, continues to soar after the Spring Festival this year. As of April 7, the price of titanium sponge No. 1 in China was quoted at 68000 yuan, nearly 40% higher than the lowest point in July last year.

With regard to the current round of price increase of sponge titanium, industry analyst Zhao Lili told the Financial Associated Press that although the current price of 68000 yuan per ton of sponge titanium is this year's high, compared with the highest price of 90,000 yuan during last year's epidemic, there is still room for subsequent price increases. For sponge titanium, the biggest factor causing product price fluctuation is the relationship between supply and demand of products. From the current point of view, due to the upsurge in downstream demand, especially military demand, there may be a possibility that the price of titanium sponge will continue to rise.

However, some enterprises engaged in the production of sponge titanium told reporters that domestic sponge titanium enterprises have a high monopoly concentration, and their production bases are mainly concentrated in places such as Panzhihua, Sichuan, Henan and Guizhou, and the enterprises have strong bargaining power on their products. it is also the reason why the price of sponge titanium remains strong. However, with the gradual increase in the production capacity of domestic sponge titanium, it may be able to alleviate some demand pressure.

Sufficient orders push up prices

With the sustained and rapid development of China's economy and the continuous improvement of national consumption capacity, titanium alloy has a huge development space in the civil market. It is estimated that in the next 20 years, the consumption of titanium in China's civil market will reach more than 300000 tons, with a market economy value of 60 billion yuan. As for military titanium materials, industry insiders believe that in the next three to five years, China's military industry will enter a high economic cycle, and military titanium materials will continue to usher in a period of development opportunities in the future, which also provides a broad market space for sponge titanium.

According to industry data, China's demand for sponge titanium in 2020 was 114200 tons, an increase of 26.7% over the same period last year, while China's sponge titanium production in 2020 was 110000 tons, and there are still some gaps in product supply.

In this regard, Zhao Lili told reporters that during the epidemic last year, due to the existence of downstream demand and underemployment of sponge titanium enterprises, product prices once rose a lot. Subsequently, the downstream industry was seriously affected by the epidemic, and after the sponge titanium enterprises gradually resumed supply, product prices fell all the way, as low as 48000-50, 000 yuan. After November last year, the downstream industry gradually returned to normal, and the price of titanium sponge rebounded again.

The above-mentioned business people also told reporters that prices rose sharply after the Spring Festival this year, due to sufficient downstream orders, but insufficient supply of production capacity, pushing up prices.

It is worth mentioning that the price of titanium concentrate has continued to rise since last year, and the market is worried that it will bring cost pressure to sponge titanium. In this regard, Zhao Lili told reporters. The main raw material of sponge titanium is ilmenite ore, which is processed into SI titanium chloride, and then reduced to produce sponge titanium. There is a difference in quality between the raw ilmenite ore and the titanium concentrate producing titanium dioxide, so the price increase is limited, which will not bring huge cost pressure to the sulfuric acid titanium dioxide enterprises as the price increase of titanium concentrate brings to the sulphuric acid titanium dioxide enterprises, so there is no need to worry too much.

Continuous expansion of production capacity

In the face of the rising demand for sponge titanium, the production capacity of domestic sponge titanium is also expanding.

According to industry data, in 2020, Xiangsheng in Xinjiang and Xinli in Yunnan resumed production and expanded sponge titanium production lines, increasing the production capacity of sponge titanium. The Sponge Titanium production of Sichuan Shengfeng Titanium Industry has been expanded to 15000 tons and will be put into production in October 2021.

The first titanium sponge product of industry leader 002601.SZ and Gansu Guoti Co., Ltd., a joint venture of Jinchuan Group, was successfully released on January 17th, 2021. Longpang Bai Li related sources told the Financial Associated Press that the company's cooperation with Jinchuan Group is to make titanium sponge and strengthen the company's overall industrial chain. In addition, the 30, 000-ton / year rotor sponge titanium project, which Longyanbai cooperates with Jinchuan Group, is currently under active construction, with a total investment of 1.8 billion yuan in two phases, of which 1 billion yuan is invested in the first phase. to build a technical upgrading and renovation project with an annual output of 15000 tons of rotor sponge titanium; the second phase invests 800 million yuan to build a new rotor sponge titanium project with an annual production capacity of 15000 tons. It is planned to form an annual production capacity of 30,000 tons of rotor-grade sponge titanium by 2023.

In this regard, Zhao Lili told reporters that capacity expansion may ease the pressure on the supply of sponge titanium, but affected by technical conditions, the operating rate of domestic sponge titanium enterprise equipment has never exceeded 60%, so the total output is still relatively limited. At the same time of capacity expansion, the production capacity of industry enterprises for high-quality sponge titanium also needs to be strengthened.

According to the reporter's understanding, there are three main production processes of titanium sponge in China, namely, chlorination process, molten salt chlorination process and Mg reduction process. Due to the slow long-term development and insufficient investment, the production of titanium sponge in China has almost no technical reserves. except that the reduction distillation process can compete with foreign technology in single furnace capacity, it lags behind foreign countries in other processes. as a result, the output of high-quality sponge titanium is low.

Some industry insiders told reporters that in the future, the price trend of sponge titanium will be dominated by high-end demand. With the upgrading of Chinese military products, the demand for high-end titanium downstream will grow rapidly, and high-end sponge titanium will become the mainstream of the market. This will force the production capacity and technology upgrading of sponge titanium enterprises.

The performance of related enterprises is improving.

While benefiting from the sponge titanium market, the performance and share prices of the relevant companies rose significantly in the first quarter of this year.

Sponge titanium leading enterprise Panzhihua Iron and Steel (000629.SZ) output accounts for more than 20% of the country's total output, the sponge titanium price increase company is significant. On the evening of April 6, Vanadium and Titanium of Panzhihua Iron and Steel Co., Ltd. announced its results for the first quarter of 2021. The company expects to achieve a net profit of 140 million yuan to 160 million yuan belonging to shareholders of listed companies in the first quarter, an increase of 98.59 percent over the same period last year. The company said that the sharp increase in performance in the first quarter of this year was mainly due to the recovery of the vanadium and titanium industry, and the market price of titanium products rose sharply compared with the same period last year.

In addition, according to the first-quarter results forecast issued by Baoti, the net profit attributable to shareholders of listed companies is expected to be about 92 million yuan in the first quarter of 2021, an increase of about 122.59% over the same period last year. According to the forecast of Anning's first-quarter results, the net profit attributable to shareholders of listed companies is expected to be 340 million yuan to 370 million yuan in the first quarter of 2021, an increase of 77.74% to 93.43% over the same period last year.

In this regard, the above-mentioned business people told the Financial Associated Press that the price rise will promote the performance of the relevant listed companies, and according to current expectations, prices will continue to rise, so it will also be positive for the semi-annual performance of the relevant listed companies involved.

From the A-share market, vanadium and titanium in Panzhihua Iron and Steel Co., Ltd. has increased significantly since February 9 this year. On April 7, after the release of the quarterly forecast, vanadium and titanium in Panzhihua Iron and Steel Co., Ltd. rose 4.11% to close at 2.28 yuan, up more than 20% from the lowest point on February 9. Oriental Tantalum Industry (000962.SZ) also rose sharply from February 9 this year, closing at 8.12 yuan as of April 7, an increase of more than 20%.