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Study Goal and Objectives This report provides the industry executives with strategically significant competitor information, analysis, insight and projection on the competitive pattern and key companies in the industry, crucial to the development and implementation of effective business, marketing and R&D programs. Report Objectives To establish a comprehensive, factual, annually updated and cost-effective information base on market size, capabilities, output, competition patterns, downstream, goals and strategies of the leading players in the market, reviews and forecasts. To assist potential market entrants in evaluating prospective acquisition and joint venture candidates. To complement the organizations internal competitor information gathering efforts with strategic analysis, data interpretation and insight. To suggest for concerned investors in line with the current development of this industry as well as the development tendency. To help company to succeed in a competitive market, and understand the size and growth rate of any opportunity. This report presents the ideal medium to understand the increasing opportunities in the field of this industry, including their market and applications, and will help research institutes, manufacturers, distributors, investors and other industry insiders to succeed in this growing industry. Intended Audience The report will be relevant to the following stakeholders: Marketing managers to identify new market opportunities and develop targeted promotion plans for their products; Research and development professionals to stay on top of competitor initiatives and explore demand for their products; Business development executives to understand the dynamics of the market and identify possible new markets; Information and research center librarians to provide market researchers, brand and product managers with the information needed to do their jobs more effectively. Methodology Both primary and secondary research methodologies were used in preparing this study. Initially, a comprehensive and exhaustive search of the literature on this industry was conducted. These sources included related books and journals, trade literature, marketing literature, other product/promotional literature, annual reports, security analyst reports, and other publications. Subsequently, telephone interviews or email correspondence was conducted with marketing executives etc. Other sources included related magazines, academics, and consulting companies. 2
Information Sources The primary information sources include NBS, WIND, etc. National Bureau of Statistics of China (NBS) Directly under the State Council, NBS is in charge of carrying out national statistics, accounting national economy, working out statistical laws and regulations, statistical reform & modernization programs and national statistics investigation plans, organizing, leading, supervising and checking statistics and national economic accounting work in all regions and departments, and supervising and checking the implementation of statistical laws and regulations. Wind Information Co., Ltd (WIND) Wind Information Co., Ltd (Wind Info), headquartered in Lujiazui Financial Center in Shanghai, is a leading integrated service provider of financial data, information and software. Chemical Industry Productivity Promotion Center of China Founded in 1995, Chemical Industry Productivity Promotion Center of China is a not-for-profit intermediary service institution whose establishment was officially authorized by the original State Scientific and Technological Commission and relying on the original Science and Technology Division of Chemical Ministry and the Central Research Institute of China Chemical Science and Technology. The Center has 5 functional departments as well as 16 regional and professional branch centers. 3
Abstract Since 2013, global and China titanium dioxide industry has been characteristic of the following: Global titanium dioxide capacity growth suffered stagnation while new capacity was mainly concentrated in China: the titanium dioxide capacity worldwide in 2013 was 6.56 million tons, against the figure 6.55 million tons in 2012, while the new titanium dioxide capacity, which was mainly contributed by China, stood at 2.935 million tons in 2013, up 5.4% year on year, and accounting for approximately 45% of the world s total as opposed to 30% in 2010. Thanks to economic recovery in Europe and America, the prosperity of titanium dioxide industry in China saw a pickup in 2014, which can be elaborated below: Great surge in export volume: during 2012-2013, the export volume of titanium dioxide in China remained around 400 kt; while during Jan.-Aug. 2014, China exported 376 kt of titanium dioxide, soaring by 48.62% yr-on-yr. Substantial growth in net income of major companies: in 2013, there were merely less than 20% titanium dioxide companies in the black, seeing meager profit; while from 2014, with the rally in titanium dioxide price and the recovery of overseas demand, titanium dioxide producers enjoyed distinct improvement in performance, in which Henan Billions Chemicals reported a year-on-year growth rate of as high as 636.62%. Rise in titanium dioxide price: since 2014, large titanium dioxide manufacturers at home and abroad continuously have raised their quotations, and the titanium dioxide price in the Chinese market tends upwards. In Sept. 2014, Chinese titanium dioxide was averagely priced at RMB14,350/ton, slightly increasing by 5.21% in contrast with RMB13,640/ton in Aug.2014 and jumping by 12.11% compared with the figure in Jan. 2014. Net Income and YoY Growth Rate of Major TiO2 Producers in China, 2013 and H1 2014 (Unit: RMB mln) 4
Driven by the increasingly stricter environmental protection policies, the titanium dioxide industry in China will develop toward large scale and chlorination process. Over 98% of the titanium dioxide in China was produced via sulphate process. Access Conditions for Titanium Dioxide Industry (Revised) and Policy on Titanium Dioxide-oriented Industrial Pollution Prevention & Control Technology will be released in 2014 to promote industrial structure upgrading and industrial agglomeration, which would be conducive to the industrial development for a long time. Global and China Titanium Dioxide Industry Report, 2014-2017 highlights the followings: Capacity, product structure, regional capacity structure, producers capacity and competitive landscape of global titanium dioxide industry; Policy, capacity, output, consumption, import & export, price trend, industrial gross margin, etc. of titanium dioxide industry in China; Market structure, market pattern and profitability of major producers in China titanium dioxide industry; Upstream titanium dioxide raw material industry analysis from the perspective of titanium ore and sulfuric acid market, and cost analysis of titanium dioxide; Downstream application of titanium dioxide, involving demand structure and the demand from sectors such as paint, plastic, papermaking and denitration catalyst; Operation, output and sales volume of TiO2, revenue structure, gross margin, major investment projects, etc. of 11 key Chinese titanium dioxide producer and 5 major titanium dioxide players in the world; Development prospect of China s titanium dioxide industry, covering forecast for capacity, output, import volume & export volume and total demand. 5
3 China Titanium Dioxide Industry 3.1 Capacity 3.1.2 Capacity Figures In 2013, there were about ** titanium dioxide producers in China, with total capacity reaching ** kilotons, up **% yr-on-yr (the average operating rate of the whole industry increased to **% as opposed to **% in 2012), of which ** companies boasted a capacity of over ** kilotons, collectively adding up to ** kilotons, and the rest below** kilotons. Titanium Dioxide Capacity in China, 1999-2013 (Unit: kiloton) Unit: kt 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 Capacity 550 720 ** ** ** ** ** ** ** ** ** YOY 14.6% 30.9% ** ** ** ** ** ** ** ** ** Source: TiO2 Branch Center of National Chemical Industry Productivity Promotion Center, ResearchInChina The surging domestic titanium dioxide capacity spurs the titanium dioxide industry to transform from import substitution to export sales, which subjects the Chinese titanium dioxide industry to dual influence from demand at home and abroad. 6
3.1.3 New Capacity New Capacity of Titanium Dioxide in China, 2013-2015E Producer New Capacity Planned Status Process (kiloton) Commencement Date Sichuan Lomon 100 2013 H1 Put into Sulphate Process production Shandong Jinhai Titanium 50 2013 H1 Put into Sulphate Process Resources Technology production Guangxi Jinmao Titanium 50 2013 H1 Put into Sulphate Process production Panzhihua Dongfang Titanium 80 2013 H1 Put into Sulphate Process Industry production Yunnan Xinli Nonferrous Metals 60 2014 H1 Trial run Chloride Process Xuzhou Titanium Dioxide of 80 2014 H2 Under Sulphate Process Nanjing Titanium Dioxide construction Chemical Luohe City Xingmao Titanium 60 2014 H2 Trial run Chloride Process Industry Ningbo Xinfu Titanium Dioxide 40 2014 H1 Trial run Sulphate Process Anhui Venus Titanium Dioxide (Group) Co., Ltd. of CNNC Hua Yuan Titanium Dioxide Co., Ltd. 40 2014 H1 Trial run Sulphate Process Guangxi CAVA Titanium 100 To be confirmed Under Sulphate Process Industry construction Chongqing Titanium Industry 100 2015 To be Chloride Process Co., Ltd. of Pangang Group implemented Jiangxi Tikon Titanium 50 2015 To be Sulphate Process implemented Wuhan FangYuan Titanium 40 2015 To be Sulphate Process Dioxide implemented Source: ResearchInChina 7
3.2 Output 3.2.1 Output Figures According to latest statistics of TiO2 Branch Center of National Chemical Industry Productivity Promotion Center, in 2013, the total output of titanium dioxide in China hit ** kilotons (breaking the **-kiloton mark for the first time), up **% from a year earlier, including ** kilotons of rutile titanium dioxide, ** kilotons of anatase titanium dioxide and ** kilotons of non-pigment level and special titanium dioxide, separately making up **% (down ** percentage points as opposed to the figure in 2012, similarly hereinafter), **% (down ** percentage points) and **% (up ** percentage points) of the total titanium dioxide production. Titanium Dioxide Output in China, 1999-2013 (Unit: kiloton) Unit: kt 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 Output 600 ** ** ** ** ** ** ** ** ** YOY 42.86% ** ** ** ** ** ** ** ** ** Source: TiO2 Branch Center of National Chemical Industry Productivity Promotion Center, ResearchInChina 8
Output of Rutile Titanium Dioxide and % of Total Output in China, 2000-2013 (Unit: kiloton) Unit: kt 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 Output 27 50 53 93 143 ** ** ** ** ** ** ** ** ** % of Total 9.3% 16.2% 14.3% 22.1% 23.8% ** ** ** ** ** ** ** ** ** Source: TiO2 Branch Center of National Chemical Industry Productivity Promotion Center, ResearchInChina 3.2.2 Output Structure In 2013, the Chinese titanium dioxide industry featured two decreases and one increase : despite the total output growth in the industry, the proportions of rutile titanium dioxide and anatase titanium dioxide to the total titanium dioxide output decreased while that of non-pigment and special titanium dioxide especially denitration titanium dioxide showed an uptrend. Output Structure of Titanium Dioxide in China, 2013 Note: Figures in brackets are the proportions in 2012. Source: TiO2 Branch Center of National Chemical Industry Productivity Promotion Center, ResearchInChina 9
7 Key Titanium Dioxide Enterprises in China 7.2 Henan Billions Chemicals Co., Ltd. 7.2.1 Profile Company Name Henan Billions Chemicals Co., Ltd. Website http://www.billionschem.com/ Established 1975 Registered RMB94 million Employees 1,707 Capital Address Zhongzhan District, Jiaozuo, Main Titanium dioxide, zirconium Henan Product products and aluminum sulfate Stock Code 002601 Brand Xuelian Titanium Dioxide 7.2.2 Output and Sales Volume of TiO2 In H1 2014, the company produced ** tons and sold ** tons of titanium dioxide, respectively rising ** and ** yr-on-yr. Titanium Dioxide Output, Sales Volume and Inventory of Henan Billions Chemicals, 2010-2014 (Unit: ton) 2010 2011 2012 2013 2014H1 Output 102,100 ** ** ** ** Sales Volume 100,700 ** ** ** ** Inventory - ** ** ** ** 7.2.3 Operation Subject to the overall economic environment at home and abroad, the titanium dioxide market remained sluggish. 2013 witnessed the company merely post RMB1,722.5 million in revenue and RMB23.6 million in net income, respectively falling by 4.51% and 87.22% from a year earlier. In 2014, benefiting from the economic recovery in Europe and the powerful economic rebound in Q2 in the United States, Henan Billions Chemical earned a revenue of RMB1,048.4 million and a net income of RMB11.6 million in H1, increasing substantially by 32.71% and 636.62% on a year-on-year basis, separately. 10
Revenue and Net Income of Henan Billions Chemicals, 2009-2014 (Unit: RMB mln) 2009 2010 2011 2012 2013 2014H1 Revenue 778.9 1,247 1,906.1 1,803.8 1,722.5 1,048.4 Net Income 51.7 161.7 359.5 184.5 23.6 11.6 7.2.4 Revenue Structure The revenue from rutile titanium dioxide had an increasing share in the revenue structure of Henan Billions Chemicals during 2008-2011, of which, the 600 series swept ** of total revenue while the 500 series took up ** in 2009. Revenue Structure of Henan Billions Chemicals (by Product), 2008-2011 2008 2009 2010 2011 600 Series Rutile 47.47% ** ** ** 500 Series Rutile 23.07% ** ** ** In H1 2014, the revenue contributed by titanium dioxide products accounted for **% of total revenue. Revenue Structure of Henan Billions Chemicals (by Product), 2012-2014 2012 2013 2014H1 Titanium Dioxide 95.05% ** ** Zirconium Products 3.29% ** ** Others 1.67% ** ** 11
In 2012, impacted by the financial crisis, the titanium dioxide market underwent downturn, and Henan Billions Chemicals proportion of export revenue slipped to **%. However, with the recovery of overseas economy, the export revenue got improved and occupied **% of total revenue in H1 2014. Domestic sales of the company are mainly concentrated in East China and North China. Revenue Structure of Henan Billions Chemicals (by Region), 2008-2014 2008 2009 2010 2011 2012 2013 2014H1 China 66.11% 68.95% ** ** ** ** ** Overseas 33.89% 31.05% ** ** ** ** ** 7.2.5 Gross Margin The gross margin of titanium dioxide has been on the decline since 2011, but as the industry demand picks up, the figure has come to **% in 2014, up ** percentage points. Gross Margin of Henan Billions Chemicals, 2012-2014 2012 2013 2014H1 Titanium Dioxide 23.18% ** ** Zirconium Chemical 2.59% ** ** Others -8.16% ** ** 12
7.2.6 R & D and Investment In H1 2014, the company spent ** as R&D costs which made up **% of the operating revenue. R&D Costs and % of Total Revenue of Henan Billions Chemicals, 2009-2014 2009 2010 2011 2012 2013 2014H1 R&D Costs (RMB10,000) 2313.94 3639.82 ** ** ** ** % of Total Operating Revenue 3.10% 3.04% ** ** ** ** Key Projects under Construction of Henan Billions Chemicals Project Total Investment (RMB mln) Commissioning Time / Process (as of end-june 2014) 60 kt/a Chloride Process Titanium 572 Dec. 2014 Dioxide Production Line Project Rutile Titanium Dioxide Production 540 81.56% Line Expansion Project Titanium-rich material project 510 41.65% 7.2.8 Performance Forecast According to the plan, by the end of the 12th Five-Year Plan period, the company will be able to produce 300 kilotons of rutile titanium dioxide (consisting of 100 kilotons by chloride process and 200 kilotons by sulphate process), 30 kilotons of zirconium products (including 1 kiloton of non-raw material high-tech high value-added products), 50 kilotons of color iron pigments, 50 kilotons of ferrous sulphate monohydrates and 300 kilotons of high titanium slag. Revenue and Net Income of Henan Billions Chemicals, 2014E-2017E (Unit: RMB mln) 2014E 2015E 2016E 2017E Revenue 2,097 ** ** ** Net Income 26 ** ** ** Source: ResearchInChina 13