After the marriage of Longxi, titanium dioxide industry reshuffle or re-upgrade

Following the successful marriage of the domestic long-established enterprise Longli Lilian in the past year, Long Wanli announced that it intends to acquire 100% equity of Ruierxin with cash of RMB 190 million. After the acquisition is completed, Ruierxin will become a wholly-owned subsidiary of the company. Subsidiaries. It is estimated that in the next three years, a total of about 480,000 tons of titanium mineral resources can be provided for Longxi.

Starting from 2016, titanium dioxide has entered the price increase mode, and has continuously increased its price to 15 rounds within a year, and the momentum has been reduced since then. There are many reasons, including supply-side reforms, and the titanium dioxide industry is downgrading and filling, and companies are going The inventory is obvious; the environmental protection policy is strict; the overall supply of enterprises is reduced; the export situation of leading enterprises is good and the cost of the industry is increased. The continued rise in the price of titanium concentrate is undoubtedly an important reason for pushing up. According to statistics, the price of 46% titanium concentrate suitable for titanium dioxide has risen from around RMB 500/ton in early 2016 to RMB 1,750/ton in the current period, an increase of 250%; it is calculated from the cost of titanium concentrate alone. The cost per ton of titanium dioxide production has risen by 3,175 yuan/ton. As the main raw material for the production of titanium dioxide, the price change of titanium concentrate has a great impact on the price fluctuation of titanium dioxide.

According to the survey, from the beginning of 2016, domestic titanium dioxide companies started to rise, but their profit margins were not satisfactory. In the first half of 2016, although the domestic price of titanium dioxide rose from 9600 yuan/ton at the beginning of the year to 11,000 yuan/year. Ton, rose 1,400 yuan / ton, but the overall industry is basically no profit, maintained in the vicinity of the cost line, although the price of titanium dioxide has been madly rising in the later, but subject to the raw material titanium concentrate pulled up, the company's profit growth rate is relatively limited . In order to ensure maximum profits, how titanium dioxide companies reduce costs has become a top priority for their consideration. And this time Dragon's acquisition of its upstream titanium ore company is also a big step in this direction.

In the titanium dioxide industry, upstream and downstream integrated production, Long Bu Li is not the first case. As early as 2011, the world’s largest titanium dioxide producer, DuPont Titanium Dioxide, signed a six-year agreement with the Australian Basic Resources Corporation. The latter is allowed to purchase its products in the Kenya titanium mining project. According to basic resources company estimates, its titanium mining project in Kenya can produce 330,000 tons of ilmenite annually and 80,000 tons of rutile. After this acquisition, the competitiveness of DuPont's enterprise titanium dioxide has been greatly improved.

Longxu's acquisition of titanium concentrates is currently considered as a precedent in China, but it also represents and leads the trend of the future development of the titanium dioxide industry, or it will add another yardstick to the upgrade of the future titanium dioxide industry. The specific impacts are as follows:

Increased competitiveness, enhanced industry voice

Since last year's successful alliance between Longxi Lilian, its production capacity has ranked fourth in the world. The top three international giants all have their own titanium mines. China's titanium resources are mainly distributed in Panzhihua, Sichuan Province. Before that, Panzhihua Steel was the only one in China. Longjing has its own titanium resources. After the acquisition of Ruierxin by Longxi Lili, it can not only ease the tension in the supply of raw materials, but also ensure the stable supply of the company's raw materials, and can also enjoy “titanium concentrate-titanium dioxide”. The profit brought by the increase in the prices of the industrial chain products will increase, and the quality of the products can be better controlled from the source, thereby enhancing the company's overall profitability and industry competitiveness, and further enhancing its voice in the industry.

Reduced sensitivity to raw material price fluctuations and accelerated the industry reshuffle process

After Longquili acquired Ruierxin, the titanium concentrate was produced and sold by itself. The titanium dioxide price was less sensitive to changes in the price of titanium concentrate, and the price adjustment rate or frequency of the enterprise was significantly reduced compared to 2016, and its As a trend indicator for domestic titanium dioxide prices, the competitiveness of some titanium dioxide companies that do not yet have their own titanium concentrate resources will be relatively weakened. Under the circumstances that the price of titanium concentrates has skyrocketed in recent years, the competitiveness of some small-sized enterprises has weakened, or they are facing risk of elimination. . Industry reshuffle speed or speed up.

Titanium dioxide exports continued to increase, domestic competitiveness of titanium dioxide increased

According to information monitoring, in 2016, the total export of titanium dioxide in China was 720,500 tons. The total export volume of Longxu Titanium Dioxide in 2016 was approximately 173,000 tons, accounting for 24.01% of the total annual export of titanium dioxide in 2016. Longxi titanium dioxide has been export-oriented, and its product quality and price advantage, but also shortened the gap between China's titanium dioxide and international titanium dioxide quality, the competitiveness of domestic titanium dioxide gradually increased, is bound to drive China's titanium dioxide Export.

After the acquisition of upstream raw material companies by Longxioli, the domestic titanium dioxide industry is actually one of the development directions of many chemical industries. The integration of upstream and downstream industrial chains not only increases the competitiveness of the company itself in the market, but also the market price. The volatility and regulation are also of great benefit. This may be a small step in the development of Longxi Lilian, but it is indeed a major step in the development of China's titanium dioxide industry.

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