Summary of Third Quarter Report | Titanium Dioxide Enterprises Exceed Expectations in Performance, Supported by High Raw Material Prices in the Fourth Quarter

Since the beginning of this year, the price of titanium dioxide has been on the rise. Affected by this, several titanium dioxide companies have seen a significant increase in their performance in the first three quarters of 2021, exceeding expectations.

Regarding this, Tian Xiaoyu, an industry analyst at Zhuochuang Information, told Caixin that the price of titanium dioxide remained high in the third quarter and there was strong demand for exports. Especially in September, due to the dual energy consumption restrictions, the operating rate of titanium dioxide enterprises nationwide has significantly decreased, resulting in tight supply. From the current situation, the export demand remains unchanged in the fourth quarter, with the main raw material titanium concentrate operating at a high level, supporting the continued high price of titanium dioxide and thus supporting the annual performance of titanium dioxide enterprises.

Enterprise insiders told Caixin News that there have been a lot of accumulated orders in the early stage, and production capacity has gradually returned to normal. The company is focusing on orders that were not delivered in a timely manner during production restrictions before delivery. At the current price, the company's profits are relatively high, and the annual performance will continue to maintain an upward trend.

The significant increase in net profit exceeded expectations

The third quarter report shows that CNNC Titanium White (002145 SZ) had a net profit of 1.001 billion yuan, a year-on-year increase of 181.37%. Anada (002136. SH) had a net profit of 129 million yuan, a year-on-year increase of 152.55%. Industry leader Longbai Group (002601. SZ) achieved a net profit of 3.83 billion yuan, a year-on-year increase of 96.48%. Panzhihua Vanadium and Titanium (000629. SZ) achieved a net profit of 782 million yuan, a year-on-year increase of 311.49%. Huiyun Titanium Industry (300891. SZ) had a net profit of 173 million yuan, a year-on-year increase of 168.77%; Jinpu Titanium Industry (000545. SZ) had a net profit of 157 million yuan, a year-on-year increase of 393.83%.

Regarding this, relevant business personnel told Caixin reporters that according to the third quarter report, Longbai Group is still the most profitable company in the industry, with even the smallest profit growth rate approaching 100%. The most important reason for this is that titanium dioxide companies have repeatedly raised product prices in the third quarter of this year, resulting in an average increase of about 5% in product profits, up to a maximum of 3500 yuan per ton, which exceeded expectations.

In addition, Tian Xiaoyu also told the Caixin News Agency reporter that in September this year, Panzhihua Iron and Steel's vanadium titanium natural gas was under control, and Jinpu Titanium Industry was restricted by film noise, resulting in a significant suspension of production capacity. At most, the total domestic titanium dioxide production capacity decreased to below 66%, and product supply was greatly restricted, which played a driving role in the price increase of titanium dioxide. Even within October, due to the impact of supply and demand, titanium dioxide companies still issued two price increase letters. At present, the mainstream quotation for titanium dioxide is between 19800 yuan and 21000 yuan per ton, which is almost the highest price this year.

High performance in the fourth quarter or sustained

The performance growth of titanium dioxide enterprises in the first three quarters exceeded industry expectations. Industry insiders told Caixin reporters that from the current situation, the price of titanium dioxide in the fourth quarter can still be maintained at a high level, which is also beneficial for the annual performance of titanium dioxide related enterprises.

From the perspective of production costs, the main raw materials for titanium dioxide, titanium concentrate and sulfuric acid, have stabilized. According to price monitoring by Zhuochuang Information, the price of 46% titanium concentrate has remained stable at 2350 yuan/ton for over a month. Although the domestic sulfuric acid market has shown a trend of southern decline and northern stability since October, the overall raw material prices can support the maintenance of high prices for titanium dioxide.

From a demand perspective, the current export demand for titanium dioxide remains strong. According to the latest customs data, the cumulative export of titanium dioxide in the first nine months of this year was 930600 tons, an increase of 5.22% year-on-year. And the export price rose to $3050-3150 per ton in October, an increase of $300 per ton compared to September.

From the supply side, due to the dual limit of energy consumption, the supply is still relatively low. At the end of October, the operating rate of the domestic industry was 74.61%, with a significant increase in East and Southwest China, but the current load in Shandong region is still at a low level.

Regarding this, some relevant enterprise personnel told Caixin News that there were many orders in August, which basically covered production in December. The current orders have actually been scheduled for the first quarter of next year. Therefore, with prices and orders tending to rise in the fourth quarter, product prices can remain high.

According to relevant industry data, the domestic titanium dioxide market achieved a total industry production of approximately 295900 tons in October. Although it increased by 11.56% month on month, it decreased by 13.71% compared to October 2020, and the inventory of titanium dioxide enterprises is still low.

Meanwhile, it is worth mentioning that in 2021, multiple titanium dioxide companies have laid out their iron sulfate production capacity. In the fourth quarter of this year, Ananda's 50000 tons of iron sulfate production capacity has been fully put into operation, with a monthly production of 4000 tons of iron sulfate. At the current price of 25000 yuan/ton, it can provide at least 100 million yuan in monthly sales revenue. Longbai Group's 200000 ton iron sulfate production capacity will also be tested at the end of this year, and the product is expected to be launched next year. So, with the current situation of insufficient supply and demand for iron sulfate, these production capacities will bring growth to the performance of related companies in the future.