GUANGZHOU, China - In 2016, China’s titanium dioxide (TiO₂) industry experienced enormous price rises and high demand, a rebound from the market in 2015, according to analysis by market intelligence firm CCM.

China’s TiO₂ industry showed many significant price increases throughout 2016. The last price rise in 2016 was by Henan Billions, the company that merged with Sichuan Lomon earlier in the year. The company raised the prices of all products for its overseas clients as well as for domestic demand in December of 2016.

Price increases took place many times during the year, which led to a recovery of China’s TiO₂ industry after 2015, resulting in high profits and greater output in 2016. However, not only did TiO₂ prices show a large price boost in 2016, but also many of the raw materials for TiO₂, which actually limited the profits of Chinese producers.

According to CCM, the main reasons for the strong rise of the TiO₂ industry in China were high overseas demand and market manipulation by some manufacturers.

The overseas demand for Chinese TiO₂ and the resulting export value rose up 17.30% in November 2016, compared to the year before. Looking at the monthly output of China’s TiO₂ industry, of about 200,000 tonnes, the export share of the production reached almost a third of all products.

The main downstream industry for TiO₂ products is the coating industry. Therefore, the boom of the TiO₂ industry is bound to the performance of the coatings industry. The real estate industry in China was able to increase sales by 25.5% from January to August 2016. Following the growth of China’s real estate industry, the related coating industry was also able to see a year-on-year rise of 6.92% from January to July 2016.

Some of China’s suppliers have manipulated the market, according to CCM. One of the common measures was to limit production, artificially shortening the supply and raising the prices. This behavior of Chinese manufacturers points to the need to improve some regulations in China’s market.

The analysis predicts that high prices are likely to continue in 2017, due to the environmental inspections in China and the resulting short supply of TiO₂. The company predicted that it is possible some smaller companies will have to completely shut down their production in the future because they will be unable to implement required waste disposal and cleaning solutions.