Since the new century, China's titanium industry has made significant progress. The annual production of sponge titanium in China has jumped from 23000 tons at the beginning of this century to over 70000 tons, accounting for one-third of the global total production; The annual production of titanium dioxide has increased from 300000 tons at the beginning of the century to nearly 3 million tons, accounting for 45% of the global total production. With the rapid increase in downstream product production, China's demand for titanium raw materials is also rapidly increasing. At present, China's annual consumption of titanium raw materials accounts for more than 45% of global demand. In addition, the previously mentioned sponge titanium production accounts for one-third of the world's total, and titanium dioxide production accounts for 45% of the world's total. It can be said that China has become the most important component of the global titanium industry. The quality of China's titanium market and the progress of China's titanium industry development will have a significant impact on the global titanium industry.

External influences are mainly short-term, and internal development is the long-term factor

Some people believe that the changes in the international trade environment last year led to a slowdown in the Chinese market. But I believe that the impact of trade frictions between China and the United States on the market has been overestimated by some people. China's exports of titanium materials and titanium dioxide to the United States only account for 1.6% of the total production, and their dependence is not high. In 2018, the tense trade frictions between the two countries not only did not affect exports to the United States, but also prompted American customers to increase their purchases of Chinese titanium dioxide, resulting in a more than double increase in exports to the United States in 2018 compared to previous years. From a long-term development perspective, if the trade friction between China and the United States escalates, it will be more favorable for the development of China's titanium dioxide market. China is building a titanium dioxide chlorination plant. From the perspective of product structure, China mainly exports sulfuric acid titanium dioxide to the United States and imports chloride titanium dioxide. If tariff barriers arise, China can easily digest the 45000 tons of sulfuric acid process titanium dioxide exported to the United States each year and exclude the 40000 tons of chloride process titanium dioxide imported from the United States each year, freeing up market space for China's new chloride process titanium dioxide factories and benefiting the development of domestic chloride process titanium dioxide. In 2018, export markets including the United States continued to maintain high growth. In contrast, the slowdown in domestic market growth is a more important issue.

In recent years, some new policies and market changes have continuously had an impact on China's titanium industry. Faced with these impacts, Chinese enterprises are also constantly making adjustments. The biggest factor affecting the market in recent years has been the pressure brought by environmental policies. Since 2016, the Chinese government has strengthened its environmental verification efforts and will no longer tolerate illegal emissions by enterprises. This requires various enterprises to increase their investment in environmental protection equipment. For some small and medium-sized enterprises, the funding threshold for improving environmental protection equipment exceeds their capacity, leading to some small and medium-sized enterprises stopping production and exiting the market. In addition, some enterprises have limited capacity to handle waste, and in order to ensure compliant emissions, they have to reduce production to match the waste production and treatment capacity. In order to reduce the production of waste, some companies have also chosen higher quality raw materials, but this has also pushed up their production costs.

Overseas investment and process improvement are important means to solve the future supply of raw materials

During the rapid development of China's titanium industry, some problems have also emerged one after another. Firstly, the growth of domestic titanium ore production is relatively slow, leading to a gradual increase in dependence on imported ores. The self-sufficiency rate of China's titanium ore reached its highest point of 67% in 2014, but has now fallen back to 58%. Secondly, while the demand for imported titanium ore has increased, some major import source countries have experienced fluctuations, resulting in some downstream enterprises not having a stable supply of raw materials, which has had an impact on production. The unstable supply of raw materials has had a negative impact on the product quality and production costs of titanium dioxide enterprises. In addition, the quality of imported titanium ore has been continuously declining in recent years. Among them, the decrease in TiO2 content has led to a decrease in the production efficiency of titanium dioxide enterprises, while also bringing more waste production. After 2016, China's environmental protection requirements have significantly strengthened, and the increase in waste has put enormous pressure on titanium dioxide enterprises. Some regional enterprises have reduced or temporarily stopped production due to emission issues. The decrease in TiO2 content is generally accompanied by an increase in impurity element content, which also affects the quality of downstream products. Downstream enterprises need to invest more costs in production to eliminate the impact.

With the rapid increase in demand for titanium raw materials in China, more and more enterprises are starting to invest in mines overseas. Currently, Africa is the region with the most concentrated investment from Chinese enterprises, and Australia is also a non ideal investment destination. There are some ideal titanium ore projects being developed around Perth. We also hope to see more successful cases of cooperation with Chinese enterprises and achieving a win-win situation. In China, due to the huge demand generated by future chlorination projects, some companies are developing new technologies to enable more low-grade titanium ore to be processed to meet the requirements of chlorination titanium dioxide production, thereby increasing the value of low-grade titanium ore. If such technology is successfully industrialized, it will solve the raw material dilemma faced by China. So far, China's demand for titanium raw materials has mainly been sulfuric acid based titanium ore, but the future growth point will be chloride based titanium ore, rutile and other raw materials. The components of domestically produced titanium ore in China cannot be used as raw materials for the chlorination process, and almost all rely on imports. This is also the fundamental reason for China's efforts to develop new technologies that change the applicability of titanium ore. Before the emergence of new technologies, China's huge demand for chlorination raw materials in the future will inevitably further drive up their prices.