Titanium dioxide ushers in a new wave of price increases. Multiple listed companies have raised product prices

With the arrival of the traditional peak season of "nine gold and ten silver", titanium dioxide has ushered in a new wave of price increases. From September 8th to 15th, several titanium dioxide production enterprises including Tihai Technology, Longbai Group, CNNC Titanium White, Shandong Dongjia, Huiyun Titanium Industry, Anada, and Jinpu Titanium Industry successively issued price increase letters.

Affected by the price increase news, on September 15th, titanium dioxide concept stocks rose across the board, with the entire sector up 5.68%. Among them, Tianyuan Shares, Jinpu Titanium Industry and others reported a daily limit up in revenue; Individual stocks such as Longbai Group, Anada, and CNNC Titanium White rose by over 5%.

Since the beginning of this year, the prosperity of the titanium dioxide industry has increased, and the price of titanium dioxide has continued to rise. The performance of related companies in the first half of the year has greatly increased, and their stock prices have also risen accordingly. The stock prices of several listed companies have doubled this year.

Tian Xiaoyu, an analyst in the titanium dioxide industry at Zhuochuang Information, told Securities Daily: "September was already the peak season for titanium dioxide sales, and the rise in raw material prices such as sulfuric acid also provided support for titanium dioxide prices. Coupled with the impact of tight spot supply from manufacturers, other manufacturers have also started to rise, driven by the leading price hikes in the titanium dioxide industry."

Rising raw material prices and tight spot supply

From the current price increase letters issued by various enterprises, it can be seen that the domestic price increase of titanium dioxide in this round is in the range of 700 yuan/ton to 1000 yuan/ton, and the foreign price increase is in the range of 100 US dollars/ton to 150 US dollars/ton.

Taking CNNC titanium dioxide as an example, in this round of price increases, its domestic customer sales price has increased by 1000 yuan/ton, and its international customer export price has increased by $150/ton. As of now, CNNC Titanium White has raised its product prices 7 times this year, with a cumulative increase of 6500 yuan/ton in domestic prices and 1080 US dollars/ton in foreign prices.

In addition to CNNC Titanium White, Huiyun Titanium Industry has also raised product prices seven times this year. In addition, Longbai Group has raised prices 8 times this year, and Jinpu Titanium Industry has raised prices 6 times this year.

Director Chen Wenming, founder of Zhejiang Xiaode Law Firm, told reporters, "The main reason for the price increase of titanium dioxide is the rise in raw material prices such as sulfuric acid, which has led to a significant increase in the production cost of titanium dioxide."

The price of sulfuric acid has been continuously rising since July 2020, and has shown an accelerating upward trend since July this year. Among them, the average price of sulfuric acid smelting in the East China region has risen from the lowest of around 100 yuan/ton in 2020 to 800 yuan/ton, an increase of 700%. Currently, the price has reached the highest level of this year.

In addition to the continuous increase in sulfuric acid prices, the price of titanium concentrate (excluding taxes) is also operating at a high level. At present, the price of titanium ore with a grade of 38 or above in the Panxi region is running in the range of 1650 yuan/ton to 1700 yuan/ton, the price of 46 grade 10 titanium concentrate is running in the range of 2400 yuan/ton to 2470 yuan/ton, and the price of 47 grade 20 titanium concentrate is running at a high level in the range of 2500 yuan/ton to 2550 yuan/ton.

Yang Xun, an analyst in the titanium industry, believes that in the short term, the supply of titanium concentrate in the spot market is still limited, and it is expected that the price of titanium concentrate in the Panxi region may continue to operate at a high level.

Multiple companies have seen a significant increase in performance and soaring stock prices

Thanks to the continuous increase in titanium dioxide prices, relevant production enterprises generally saw a significant increase in performance in the first half of this year. According to data from Dongfang Wealth Choice, seven listed companies in the titanium dioxide industry, including Longbai Group, CNNC Titanium White, Panzhihua Vanadium Titanium, Tianyuan Co., Ltd., Jinpu Titanium Industry, Huiyun Titanium Industry, and Anada, achieved a total operating income of 31.351 billion yuan in the first half of this year, all of which achieved positive growth compared to the same period last year. Among them, five companies saw a year-on-year increase in revenue of over 50% in the first half of the year.

In terms of net profit, all seven companies mentioned above achieved profitability in the first half of this year, with a total net profit attributable to the parent company of 4.216 billion yuan. There were six listed companies with a year-on-year increase of over 100%. Among them, Longbai Group achieved a net profit of 2.435 billion yuan in the first half of this year, far exceeding the other six companies. It is worth noting that the net profit of these 7 listed companies in the first half of this year has exceeded the net profit of the entire year last year.

Regarding the significant increase in net profit, several listed companies have stated that in the first half of this year, the market for their main product, rutile titanium dioxide, was in a strong business cycle, with product supply exceeding demand. Sales prices have continued to rise since the second half of last year, driving a significant year-on-year increase in net profit.

Benefiting from the high prosperity of the industry, stimulated by the continuous rise in product prices and significant growth in operating performance, the stock prices of some listed companies have also surged. As of the close on September 15th, the stock price of CNNC Titanium Dioxide has surged by 252.99% this year, ranking first in the titanium dioxide sector; The stock prices of Anada and Tianyuan rose by 194.46% and 193.4% respectively, closely following suit.

The industrial chain will undergo value reassessment

Since the beginning of this year, multiple titanium dioxide companies have begun to enter the field of new energy, producing iron phosphate or lithium iron phosphate, and achieving coupling between the titanium industry chain and the new energy industry chain.

At the beginning of this year, CNNC Titanium White announced plans to invest over 13 billion yuan in the construction of multiple projects, including an annual production of 500000 tons of lithium iron phosphate, to create a green circular production system, focus on the main business, and expand the development of lithium iron phosphate products.

Longbai Group plans to establish a joint venture with Hubei Wanrun New Energy to build an annual production of 100000 tons of iron phosphate project. At the same time, it also plans to develop an annual production of 200000 tons of battery material grade iron phosphate project, an annual production of 200000 tons of lithium-ion battery material industrialization project, and an annual production of 100000 tons of artificial graphite negative electrode material for lithium-ion batteries.

In addition, the second phase of the Anada 50kt/a battery grade nano iron phosphate expansion project was recently completed and put into operation. Its controlling subsidiary, Tongling Nayuan, will increase its iron phosphate production capacity to 50000 tons per year.

Huaan Securities analyst Liu Wanpeng believes that the core of the valuation system changes for titanium dioxide companies lies in the direction of their future development. Titanium dioxide enterprises are expected to use waste acid, ferrous sulfate, and other by-products as raw materials for the production of iron phosphate, significantly reducing production costs and entering the new energy iron phosphate industry. As titanium dioxide companies accelerate their layout in the field of new energy cathode materials, the titanium dioxide industry chain is expected to experience a re evaluation of its value.

At the policy level, recently, the Ministry of Industry and Information Technology stated in a letter responding to Proposal No. 1341 of the Fourth Session of the 13th National Committee of the Chinese People's Political Consultative Conference that relevant departments are preparing a national reserve development plan for the 14th Five Year Plan and will fully consider the suggestion of incorporating titanium dioxide into national strategic resource storage; The relevant departments will actively promote the comprehensive utilization of titanium ore resources. In the next step, the Ministry of Science and Technology will establish a key special project for "strategic mineral resource development and utilization" to promote the development and application of high-value utilization technology for titanium ore resources; To support the green and healthy development of the titanium dioxide industry, relevant departments will also actively build a standard system for the titanium dioxide industry.