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Favorable Policies For Titanium Tube Industry Are Unveiled Frequently in 2016

For the titanium tube industry in 2016, the widespread loss in the industry in 2015 will quicken the adjustment pace of product structure in the tube market, and create new industrial situation; furthermore, the “One Belt, One Road” plan in the “Thirteenth Five Year” Plan will also boost demand in the tube market. Meanwhile, due to the tremendous base in capacity and output, and excessively long absorption time; coupled with heavy mental pressure in the industry, it’s temporarily difficult to raise market confidence. Overall speaking, in 2016 the domestic titanium tube industry tends to be weak in overall situation, the rebounding buoyancy is too weak to stop the falling momentum.

According to incomplete statistics, in 2015 China’s titanium sponge capacity is 95000 tonnes, up by 1.74% on Y-o-Y basis, titanium sponge output is 60,500 tonnes, down by 2.2% on Y-o-Y basis, apparent consumption of titanium sponge is 70,400 tonnes, down by 4.7% on Y-o-Y basis. Based on the above, it can be inferred that in 2015 China’s capacity utilization rate of titanium sponge is 75.8%, output surplus is 10,100 tonnes. Moreover, in 2015 key large and medium-sized titanium alloy enterprises are expected to lose nearly 10 million yuan in main business, whole year average profit per tonne titanium is estimated to be minus 120 yuan. Surplus capacity is expected to be absorbed in 3-5 years; besides large titanium factories have suffered loss, against the background of declining economic growth, it has clearly become the weakness in the economy of the “Thirteenth Five Year Plan”. If no measure is taken, in the future it will not only affect the industrialization progress, but also aggravate the burden of domestic economic development.

How will the titanium tube industry evolve? Currently the biggest predicament of titanium tube industry is large number of private titanium factories, excessively low-end quality of products, and highly intensive industry deployment; products and tube factories are distributed in a very unbalanced manner, there is obvious concentration trend. In the future, the priority for the tube market is to reduce private tube factories, increase production ability and market share of large tube factories. A certain number of factories with too poor equipment, singular production ability, inferior products, and small size need to be eliminated, this is inevitable, and also imperative. If the existing production model is retained blindly, with product structure still focusing on plain carbon, in the future the tube market will continue to decline, and more high-end products will have to depend on international market, more low-end products will flood the local market, until eventually becoming scrap, which has no value. For plain carbon seamless tube, the next year is a transition year for absorption of capacity, prices may fall below 2000 yuan/tonne, the overall situation allows of no optimism; furthermore, alloy tube, along with seamless titanium tube with precious metals will become mainstream products in the market. For welded tube, the market trend will continue to fluctuate, but the overall trend is not optimistic. In particular, products like scaffold and galvanized tube will receive unprecedented pressure from demand, after all next year the real estate market will be a year of stock absorption, newly constructed and newly invested projects will be very rare.

About Industry response, as the state government unveiled one after another policies, repercussion came from all sides, especially in recent days the share prices of titanium alloy and coal companies continued to soar, which can be counted as a stimulation and boost to traditional industries. On the other hand, industry phase-out will inevitably prompt some enterprises to exit the market, the production lines will also shrink, product structure will undergo change; what’s more, industry restructuring and M&A is the primary task, perhaps more personnel will face redundancy. But it’s inevitable, we must endure temporary pain for the sake of long-term development. Of course, asset restructuring, personnel settlement, product upgrading, and equipment disposal will bring great difficulties and contradictions to the nation, the government, and titanium factories, therefore, in the short term, it’s almost impossible for the titanium market to receive immediate results, tremendous capacity base still needs time to be absorbed, excessively large enterprises all the more need more time to make adjustments. At least for the titanium market in 2016, the predicament still exists, in the future the titanium market will continue to seek transition in fluctuation.