From January to February, China's Titanium Dioxide export volume achieved a year-on-year growth of more than 20%. The data of the current two months also verified our view that "the monthly export of more than 100000 tons will be normalized". The strong external demand hedged the downward pressure on the price caused by weak domestic demand, which also showed the importance of the subsequent boom growth of external demand on the choice of the rise and fall direction of titanium dioxide price in the future.
In the monthly import and export interpretation, we use the form of question and answer to discuss and analyze the focus of everyone. The volume and price data and specific trend will not be repeated here.
Question 1: in January 2022, China's export volume of titanium dioxide exceeded 140000 tons, which not only became the highest export volume in January in history, but also close to the historical high value in the peak season in March 2020. At the same time, the monthly export volume in February also exceeded 100000 tons. Does this mean that the external demand of China's titanium dioxide market still maintains the boom growth state since the fourth quarter of last year?
There is no doubt that China's export growth of 140000 tons of titanium has exceeded the expectation since January and February of 2021, and there is no doubt that the cumulative growth rate of titanium dioxide in the domestic market has exceeded the expectation of January and February of 2022. There is no doubt that China's export has not only continued the positive growth of 300000 tons of titanium dioxide since January and February of 2021.
Through calculation, we get that the average annual compound growth rate of the cumulative export volume in the first two months of 2017-2021 is 15.77%. Based on this growth rate in 2021, we get that the theoretical export volume from January to February of 2022 is 232800 tons, while the actual value is 243000 tons, which is higher than the former. Therefore, from the perspective of the data itself, the growth of external demand from January to February is higher than expected, so it can be considered that the growth state is prosperous.
In fact, the method of using the growth rate of external demand in a longer period to predict the short-term export volume has been used since the interpretation of import and export data since the second half of last year. It can be found that, especially since October 2021, the actual export volume in most cases is higher than the theoretical value calculated by us, which may support the view that the output growth of foreign supply side can no longer meet the increase of global titanium dioxide consumption demand at this stage, Further, the urgency for foreign suppliers to expand their production capacity is increasing. However, the reality is that not only the sulfuric ACID production capacity continues to be introduced, but also the expansion of the chlorination production capacity of foreign suppliers is very limited. Therefore, this provides an opportunity and time window for the share expansion of China's chlorination and high-quality sulfuric acid titanium dioxide in the global market.
Back to the interpretation of the data from January to February 2022, it can also be observed through the seasonal index model of titanium dioxide consumption that the index value in the first two months is significantly higher than the corresponding position of the 10-year curve (115% in January and 85% in February). However, it should be noted that the relatively strong consumption demand is still contributed by external demand. Later, it will be mentioned that the import volume actually dragged down the growth of the index.
To sum up, combined with the performance of the domestic market from January to February, the boom growth of foreign demand has provided strong positive support for the domestic market price. As shown in Figure 3, in addition to the influence of the base effect, the weak growth of consumer demand transmitted from the terminal to the upstream of the industrial chain has made the year-on-year growth rate of domestic demand in China's titanium dioxide market turn negative since July 2021. Under the background that the domestic supply and demand pattern plays a decisive role in the formation of market price, the market price has stopped rising and operated in a narrow range since the second half of last year, which shows that the game result of total supply and total demand is relatively balanced, Therefore, the growth of external demand hedges the pressure of domestic demand on prices, and even provides price driving force when the supply side is slightly tight.
At the price level, the average export price runs along the evolution path of the domestic market price as expected, and the increase is narrowed and the difference between the average export price and the average import price is stable in a certain range in the short term. We also continue to remind operators that the current export market is still facing the contradiction of "price rise → run on foreign demand → price reduction hedging". In the future, on the premise that there is no further rise in the price of foreign markets or imported products, Zhuo Chuang information believes that under the background of the trend of price difference returning to the mean value, it is difficult to reproduce the wide rise of export prices.
According to the export data by place of shipment, from January to February, Henan, Sichuan and Shandong provinces still accounted for the top three places of origin in export shipments. Among them, the shipment volume of Sichuan Province increased by more than 40% year-on-year and that of Sichuan Province was close to 30%, showing the strong export supply capacity of the two producing regions, and the growth of Shandong and Anhui provinces was also close to 15%.
From January to February, the top three trading partners changed compared with December last year, among which Belgium doubled month on month and increased nearly five times year-on-year. According to Zhuo Chuang information, this increase in trade volume is not unrelated to the strong demand in the local market in Europe. At the same time, there is basically no room for improvement in the utilization rate of plant capacity of foreign suppliers in Europe, and with the impact of force majeure, there is still a demand gap at this stage, Therefore, the domestic top suppliers not only increased the order delivery volume in the European market, but also took the initiative to supplement the local inventory in order to meet the demand gap that will continue for some time. Belgium is an example of domestic suppliers increasing the export delivery volume to meet the demand gap in a specific market.
Question 2: the import volume from January to February contracted significantly compared with December. Does this mean that domestic demand contracted during the period?
Answer 2: finally, the performance of China's import volume of titanium dioxide from January to February may support the sluggish domestic demand mentioned above. In other words, the year-on-year contraction of import volume by more than 20% means that the consumption demand for titanium dioxide in domestic downstream high-end application scenarios also begins to show a weak trend with the overall domestic demand, which can be seen from table 1, Since the second half of 2021, under the background of continuous quarterly letters from foreign suppliers, the month on month increase of average import price in January and February is very limited.
By summarizing the import and export data from January to February, we found that the external demand of the domestic titanium dioxide market still maintained a relatively strong growth state. Under this influence, the weakness of domestic demand did not make the supply and demand game unbalanced, and thus did not exert sustained and significant downward pressure on the market price. At this stage, the recovery of domestic downstream demand stock in March is very limited, and the demand side did not have a positive impact on the market price under the influence of force majeure, Combined with the actual performance of major terminal industries such as real estate after the year, the industry's expectations of medium and long-term domestic demand are not optimistic, and it is difficult to correct and improve in the short term. Therefore, under the condition that there is no long-term and significant decline in construction on the supply side, we believe that the rise and fall of domestic titanium dioxide market price will keep pace with the maintenance or growth of foreign demand.
