Core view
1. Driven by new and old infrastructure, the titanium dioxide industry is expected to prosper. Recently, the state has successively issued a number of policies to help the development of new infrastructure. The new infrastructure is expected to drive the traditional infrastructure industry to usher in a new round of prosperity. The demand for traditional infrastructure has picked up, and real estate related chemical products such as titanium dioxide are expected to be positive. The demand for titanium dioxide has increased steadily in recent years. From 2017 to 2021, the consumption and export volume of titanium dioxide in China showed an upward trend. The apparent consumption of titanium dioxide in China increased from 2.259 million tons in 2017 to 2.47 million tons in 2021, an increase of 9.3%. The export volume increased from 831000 tons in 2017 to 1312000 tons in 2021, an increase of 57.9%. As an upstream product of the traditional infrastructure supply chain, driven by new and old infrastructure, the demand for titanium dioxide is expected to see further growth in the future. In terms of supply, the supply capacity of titanium dioxide in China has been steadily improved, but the new production capacity in the short term in the future is limited. From 2017 to 2021, China’s titanium dioxide production capacity increased from 3.584 million tons to 4.506 million tons, an increase of 25.7%; The output of titanium dioxide in China increased from 2.875 million tons to 3.616 million tons, an increase of 25.8%. Recently, affected by the supply side reform of the chemical industry, the new production capacity of titanium dioxide is limited in the short term. According to the data of Baichuan Yingfu, the new production capacity of titanium dioxide in China in 2022 is only 60000 tons. In terms of price, the price of titanium dioxide has remained high since 2021. In the first half of 2021, titanium dioxide continued to rise, reaching the highest price of 21050 yuan / ton in recent three years, an increase of nearly 30% over the beginning of the year; In the second half of the year, the price dropped slightly to 19500 yuan / ton, maintaining a high level. Since the beginning of 2022, prices have continued to rise. As of February 11, 2022, the market price of titanium dioxide in China was 19817 yuan / ton, an increase of 2.1% over the beginning of the year. On the whole, driven by new and old infrastructure, titanium dioxide is expected to remain prosperous in the future.
2. As of February 11, 2022, the price index of China’s chemical products reported 5529 points, up 2.4% on a weekly basis. Most chemical products rose or remained flat, with PX up 9.4% and butadiene down 8.9%. In terms of PX, the downstream PTA’s demand for PX remained at a high position, superimposing the rising factors of raw crude oil, driving the rising price of PX. In terms of butadiene, many manufacturers stopped production and the supply of butadiene was blocked; The downstream operation is poor, and the demand side is difficult to continuously support the market.
3. Coal prices have risen steadily in the past week. As of February 11, 2022, the settlement price of China Shipbuilding Industry Group Power Co.Ltd(600482) coal main continuous futures was reported as 805 yuan / ton, up 14.1% on a weekly basis. The rise of coal is affected by two factors: on the demand side, coal demand is strong due to many factors such as the Spring Festival holiday and the Winter Olympic Games. Driven by downstream demand, coal prices continued to rise. In terms of supply, affected by the Spring Festival holiday, the overall operating rate of the industry has decreased and the market supply has decreased; In addition, in terms of import and export, the transfer out of the port was greater than the transfer in last week, and the inventory continued to decline.
4. Market review. In the chemical industry, 23 of the 27 Shenwan tertiary industries rose and 5 fell. Among them, the sector with the largest increase was inorganic salt, with an increase of 12.7%; The sector with the largest decline was membrane materials, with a decline of 4.7%. In terms of individual stocks, the top three gainers were Poly Union Chemical Holding Group Co.Ltd(002037) , Hunan Nanling Industry Explosive Material Co.Ltd(002096) , Tibet Gaozheng Explosive Co.Ltd(002827) , with weekly gains of 61.0%, 28.7% and 27.8% respectively; The top three declines were Aba Chemicals Corporation(300261) , Hunan Zhongke Electric Co.Ltd(300035) , Anhui Estone Materials Technology Co.Ltd(688733) , with weekly declines of 44.0%, 18.0% and 16.4% respectively.
Investment advice
Relevant targets under the prosperity of titanium dioxide market may benefit, such as Lb Group Co.Ltd(002601) , Cnnc Hua Yuan Titanium Dioxide Co.Ltd(002145) , Shan Dong Lubei Chemcal Co.Ltd(600727) .
Risk tips
The investment in traditional infrastructure is less than expected, the safety and environmental protection policies are upgraded, and the price of titanium dioxide fluctuates abnormally.
