China’s
government has revealed another wave of environmental inspections, which will
further put pressure on China’s TiO2 manufacturers and producers of raw
materials like ilmenite. Tightening supply and increasing environmental
protection costs may support a further price rise of TiO2 in China 2017.
Since
the year of 2016, China’s government has strengthened efforts significantly to
reduce the environmental pollution of certain heavy-polluting industries. One
of these industries is the TiO2 industry, which prices recovered in 2016 due to
tighter supply.
In
fact, about 17% of the total production capacity of TiO2 in China was affected
by production limitation and haltering in the four main provinces
Shanxi, Henan, Shandong, and Hebei in China.
The
tight supply is the result of stricter environmental regulations, which forced
several enterprises to limit the production and even forced smaller-sized
companies to withdraw completely from the market, not able to achieve the
implementation of the new measurements.
One
of the results of China’s surging prices is the realignment of several overseas
buyers from China’s to other international markets. However, the increasing but
irregular orders for overseas manufacturers of TiO2 cannot be fulfilled every
time, since the production capacity is not sufficient for the new clients.
In
the beginning of April 2017, the Ministry of Environmental Protection had
revealed to intensify environmental inspections in heavy-polluting industries.
The main focus is set hereby on the economic heart of China in the
Beijing-Tianjin-Hebei region.
According
to market intelligence firm CCM, the main measurements of this new inspections
are on the one hand targeting the production suspensions and shutdown of
companies which are not able to achieve the new environmental standards. On the
other hand, organisations and facilities are being implemented, which supervise
the different grades of pollution by targeted companies and help to install
pollution treatment and monitoring devices.
The
detailed environmental inspections were implemented in the beginning of 2016
and are separated currently, among others, into air quality inspections and
environmental inspections on atmospheric pollution.
Inspections
are normally lasting for one year. A general environmental inspection has begun
in November 2016 and will end in 2017 accordingly. Other inspections have just
been implemented and will run until 2018.
Hence,
the pressure on manufacturers in heavy-polluting industries is going to rise,
which will have inevitably an effect on the supply and price of TiO2 in China
in the approaching seasons.
The
price of TiO2 in China is affected by surging environmental protection costs
for manufacturers. Those producers, which are not able to meet the new and
stricter requirements, have to face production suspension and limitation. An
increasing number of cases is getting published, where manufacturers failed to
install needed environmental protection devices or illegally discharged
pollution, which caused high penalty fines. Hence, production suspensions, not
only for the TiO2 producer but also upstream suppliers like ilmenite
manufacturer, are tightening the supply and put pressure on TiO2 prices in
China.
What’s
more, the new implementations of pollution tracking, monitoring and avoiding
devices is connected to big investments for the manufacturers. While
large-scale enterprises can afford these investments, and implement them
accordingly, many small and medium-sized enterprises do not have the financial
power to invest in the facilities and technology, which leads to a withdrawal
of the market in the long run.
China
has undergone a reorganisation of its TiO2 and titanium ore industry in recent
years. As a result, many mines and concentration plants have been shut down,
which has shortened the supply for ilmenite to some extent. The short supply,
together with a resulted price rise, is one of the main concerns of TiO2
manufacturers.
About CCM
CCM
is the leading market intelligence provider for China’s agriculture, chemicals,
food & ingredients and life science markets.
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