Domestic TiO2 companies expand despite the market downturn

(Dongfang Titanium), a subsidiary of Pangang Group, is reported to be planning to launch the pilot production for its second phase rutile TiO2 project with an additional production capacity of 60,000t/a in Dec. 2013. The first phase project, with a production capacity of 40,000t/a, was put into operation in 2009. The construction of the second phase project began in 2012, and still needs another investment of USD105.86 million (RMB650 million). The second phase production line is expected to be put into operation in June 2014 and will lift up Pangang Group's TiO2 production capacity to more than 120,000t/a. CNNC Hua Yuan Titanium Dioxide Co., Ltd. (CNNC Titanium) also announced that it will raise about USD35.94 million (RMB220.70 million) for the technical reform project of Jinxing Titanium's existing 100,000t/a TiO2 after-treatment production plant and USD23.57 (RMB144.70 million) for the technical project of Wuxi Haopu's existing 50,000t/a rutile TiO2 fine-finishing production plant. CNNC Titanium was reverse merged by Jinxing Titanium in Jan. 2013. After the backdoor listing, CNNC Titanium's TiO2 production capacity has reached 100,000t/a. At the same time, CNNC Titanium claimed that Jinxing Titanium's after-treatment capacity will reach 200,000t/a and Wuxi Haopu's fine-finishing production capacity will reach 100,000t/a after the technical reform. In late Nov. 2013, another listed company—Jilin GPRO Titanium Industry Co., Ltd. (GPRO Titanium) also plans to raise about USD142.38 million (RMB874.21 million) to construct its 80,000t/a TiO2 project. GPRO Titanium succeeded in its backdoor listing on July 26, 2013, and currently has a TiO2 production capacity of 45,000t/a in operation (please refer to GPRO Titanium succeeds in backdoor listing and starts trading since July 26, 2013 in Titanium Dioxide China Monthly Report 1308 for more details). The construction of the 80,000t/a TiO2 project began in Dec. 2012 and is projected to be completed in H2 2015. The plant will operate at 80% capacity after one year of operation. Whether increasing the production capacity is wise still remains uncertain. However, listed companies can easily raise capital from the stock market to support an increase in production capacity. Under the existing stock market rules, most private investors who subscribe to non-public offering shares can easily profit by selling the shares to public stock market investors at a much higher price. This phenomenon leads private investors to flock to listed companies' non-public offering shares, ignoring the fund-raising projects' profitability and any concerns about raising capital regardless of the market. As a result, listed companies have more opportunities to expand their production capacity than non-public companies when the market is declining. Therefore, listed companies can attempt to expand and gain a greater market share with a mitigated risk of incurring a potential loss, while private investors can access the company and attempt to profit through the stock market. Table of Contents of Titanium China Monthly Report 1312: TiO2 import price declined slightly while the export price enjoyed a rare increase in Oct. Titanium feedstock imports returned to normal while domestic production increased significantly Domestic TiO2 price declined massively from mid-Nov. to mid-Dec. TiO2 companies expand despite the market downturn Domestic TiO2 companies expand despite the market downturn, Domestic TiO2 companies expand despite the market downturn, Domestic TiO2 companies expand despite the market downturn