The Capacity of Titanium Sponge, with 60% being Excessive, still Expanding, Enterprises Suffering Huge Losses.

While the demand far surpasses the supply, the manufacturers of titanium sponge at home are still busy with fervently expanding capacity.

Reporter learned from ChaoyangJinda Titanium Co., Ltd (hereinafter referred to as Jinda Titanium)that it invested 370 million yuan in a titanium sponge project with an annual output of 10,000 tons. It has completed its initial work of project approval, planning, designing and land requisition. If the project successfully goes into operation, the enterprise based in Liaoning province will increase its capacity to 20,000 tons within three yeas.

It is not rare for enterprises in places like Liangshan of Sichuan and Jinchang of Gansu to have initiated titanium sponge projects as Jinda Titanium did.

“The total capacity of titanium sponge at home has reached 150,000 tons, whereas the real demand is less than 60,000 tons, which will result in closedown of some companies producing titanium sponge.” said a senior management member in an interview by the China Business News on April 7th.

Jinda Titanium is a private titanium sponge enterprise founded in the August of 2006, which is invested by ChaoyangJinda Industrial Limited Company. The present annual capacity is 10,000 tons. Apart from this capacity, the afore-mentioned project is a new one established in another place with an annual output of whole-process and high-quality titanium sponge being 10,000 tons. The construction period lasts from August 2012 to August 2015.

On April 7th, a raw material supplier of Jinda Titanium said to the reporter that they used to produce titanium sponge only with purchased raw material of titanium tetrachloride. Now the cost of titanium sponge is rather high and they want to be involved in the whole process.”

Cost advantage is the reason for Jinda Titanium to consider the whole process. “For example, if the cost was 60,000 yuan, it will be 50,000 yuan if we are involved in the whole process.”

Also in this year, more titanium projects are being planned. In Liangzhou, Sichuan, a feasibility analysis of titanium sponge production line, whose proposed investment is 800 million yuan, has been completed. According to estimation, its normal annual sales income will be 2 billion yuan and the pay back period will be 5 years. As one of its major projects of nonferrous metal deep processing, Jinchang of Gansu Province has started working on improving its 15,000-ton follow-up capacity of smelting titanium sponge. Notable is that as these titanium sponge projects are being initiated,some related enterprises at home have being suffering losses.

According to the data released by the titanium,zirconium and hafnium branch of China Nonferrous metals Industry Association, the capacity of titanium sponge in China in 2012 would reach 148,500 tons, up by 15.6% over 2011.According to statistics from 22 enterprises, the capacity of titanium ingot in China in 2012 would reach 105,800 tons, up by 10%over 2011.

However, while the capacity of titanium sponge ever increases, the demand for it has not substantially increased. The imbalance between supply and demand causes its price to constant-ly drop. At present, the market price of titanium sponge is 62 yuan per kilogram, with a tendency to further drop. In contrast, 7 or 8 years ago,the price was about 200 yuan, the highest level being 300 yuan.

The above mentioned supplier of Jinda Titanium said that enterprises now in operation all suffer losses. There is a serious oversupply of titanium sponge at home, because the total capacity has reached 150,000 tons, while the real demand is less than 60,000 tons. In the future,there will certainly be some enterprises going bankrupt.

Zhangyujing, analyst of titanium industry with Baichuan Information Office said that at present, the supply of titanium sponge in the market certainly exceeds its demand. “The enterprises must improve the quality of their products and competitive strength. Some enterprises without competitive strengths should be reorganized.”

The MIIT has started researching and formulating admission standards for titanium sponge,aiming to restrict new projects of this industry.