EU imposes tariffs on titanium dioxide, leading manufacturers quickly take action to save themselves

Recently, the European Commission's official website released the latest progress in the anti-dumping investigation carried out against my country's titanium dioxide companies last year. The preliminary anti-dumping tax rates for the companies ranged from 14.4% to 39.7%, while Longbai Group (002601) and its affiliated companies may be subject to an additional 39.7% tax rate tariff. The above news caused widespread concern in the titanium dioxide industry.

"The implementation of the EU anti-dumping matter may have a certain demonstration effect. If other regions follow suit, it will lead to the pursuit and interception of China's titanium dioxide exports, which is not a good thing for the overall supply side. However, this incident will not have a positive impact on the domestic market in the short term. What impact will it have? For manufacturers with inventory in EU countries, existing inventory is extremely precious, and there may be a possibility of price increases in some countries and regions," said Yang Xun, a titanium industry analyst at Yantai.

Sun Shanshan, a titanium dioxide analyst at Zhuochuang Information, said that my country’s titanium dioxide production capacity accounts for more than 50% of the world’s, and its export volume ranks first in the world. In 2023, China's exports to the EU will be around 250,000 tons, accounting for 15% of total exports. The EU's preliminary ruling imposes anti-dumping tax rates of 14.4% to 39.7% on my country's titanium dioxide. Except for Venus Group, which was levied 14.4%, other companies' tax rates ranged from 35% to 39.7%.

"The higher anti-dumping tax rate will directly affect the export quantity of rutile titanium dioxide to the EU. In the short term, rutile titanium dioxide will most likely be transferred to domestic sales, which will put downward pressure on the domestic titanium dioxide market, and companies will also suffer from falling prices. Cost pressure is gradually increasing, and we will choose to reduce production or suspend production for maintenance to reduce the pressure of losses caused by price competition until prices return to a reasonable level," said Sun Shanshan.

Excluding the news of EU taxation, in recent times, the overall titanium dioxide market has also been in a period of stability after a weak price reduction.

Sun Shanshan said that since the beginning of this year, the domestic titanium dioxide market first rose and then fell. The main factor affecting the increase around the Spring Festival this year comes from demand. Domestic stocking and exports continue to grow, while domestic production has decreased, driving up prices. In the later period, as the digestion speed of downstream reserve stocks was lower than expected, domestic stocks began to accumulate, and prices also loosened in late April.

According to Yang Xun, the prices of various models of titanium dioxide have been lowered recently. The situation of manufacturers is different, so the price adjustment range is also different. Most of them price according to their actual situation. The price difference between products of the same level has slightly narrowed, and the overall price remains unchanged. Relatively reasonable price positioning.

At the same time, the volume of new orders in the trading market has also declined significantly recently. Most downstream rigid-need purchases have already increased their volume, and some orders are still in the process of being delivered. In particular, the inventory digestion effect of major large manufacturers is relatively good. Judging from the current trading market situation, most of the orders are for urgent needs, and a few are for stock preparation. According to the current price of raw material titanium concentrate and the production costs of various manufacturers, the room for further decline in the price of titanium dioxide is already very limited.

Affected by the news of additional tariffs imposed by the EU, the A-share titanium dioxide sector has generally weakened in recent days. From June 13th to 14th alone, Longbai Group’s stock price fell by more than 10%. However, in the early trading on June 18, Longbai Group's stock price stopped falling and recovered, and closed up 2.9% in the afternoon.

Previously, on the evening of June 17, Longbai Group announced that it planned to use its own funds to repurchase at a price of no more than 32.1 yuan per share. The total repurchase funds would not be less than 100 million yuan and no more than 200 million yuan. The lower limit to the upper limit of the number of shares repurchased this time ranges from 3.1153 million to 6.2305 million shares, accounting for 0.13% to 0.26% of the company's current total share capital. The repurchased shares will be used to implement employee stock ownership plans or equity incentives.

In addition, the company also disclosed that in order to further expand and strengthen the scandium and vanadium industry and strengthen the company's industrial chain advantages in scandium, vanadium and battery materials, it plans to establish a subsidiary, Hunan Dongfang Scandium Industry Co., Ltd. (hereinafter referred to as "Hunan Dongfang"). Scandium") or Hunan Dongshan's subsidiaries (including Hunan Dongshan's newly established subsidiary) invested 1.08 billion yuan to build the Scandium and Vanadium New Materials Industrial Park project.

The first phase of the project mainly constructs a 2,500 tons/year high-purity vanadium pentoxide project, a 20,000 cubic/year vanadium electrolyte project, and a 2,000 tons/year aluminum ball project; the second phase mainly constructs a 50 tons/year scandium fluoride project, a 1,200 tons/year. The annual aluminum-based master alloy project and the 40,000 cubic meter/year vanadium electrolyte project; the third phase mainly constructs the 20,000 tons/year new scandium-containing high-performance aluminum alloy casting rod project and the 20,000 tons/year new scandium-containing high-performance aluminum alloy profile project.

Longbai Group stated that the implementation of this project will enable the company to have "waste secondary resource extraction - scandium oxide - aluminum scandium master alloy - new scandium-containing high-performance aluminum alloy ingots - new scandium-containing high-performance aluminum alloy profiles" and "waste the two complete industrial chains of "auxiliary resource extraction - sodium polyvanadate - vanadium pentoxide - vanadium battery electrolyte" have improved the company's scandium and vanadium industrial chain, improved the company's competitiveness and profitability, and provided the company with rapid and a solid foundation has been laid for sustainable development.