Industrial Analysis

China is the wild card of global titanium market
Hou Kuan-Chih – Metal Industries Research & Development Center

1. Status of the Industry

The rapid development of the titanium industry in China over the past few years has aroused increasing concern around the world. Since 2004, its annual titanium sponge production has achieved multiple growth rates, and in 2006 it produced up to 18,037 tons of titanium sponge, accounting for 13.7% of global titanium sponge production. The growth made it the fourth country (only after the U.S., Commonwealth of Independent States and Japan) having the capacity to produce more than 10,000 tons of titanium sponge. In addition, China, for the first time, broke through 10,000 tons and reached 12,808 tons of titanium production in 2006, representing a growth of 28.6% from 2005; its demand for titanium reached 13,880 tons, constituting the world’s most rapid development of the titanium industry. In view of China’s titanium industry development in 2006, we find that their three key indicators in 2006 all broke through the 10,000 ton level. These figures show that China’s titanium industry is making its global debut as one of the major titanium countries. Figure 1 shows the trend analysis of China’s titanium processing capacity from 2000 through 2006. On the other hand, China is going to be a major global titanium consumption country, too. Other than its existing demand for steel, chemicals and power, China is also facing many new requirements. First of all, its titanium demand for aviation has been increasing, followed by sports recreation products. The titanium used for sports recreation has experienced tremendous development in China in recent years; for instance, it is applied to golf clubs, badminton rackets, tennis rackets, up-scale bicycles, racing cars, and fitness appliances, etc. Thus, titanium turns out to be a symbol of nobility and durability. Moreover, China has also accelerated its marine development. Given titanium’s anti-corrosive characteristic, expectations are that titanium will continue to have great growth potential. To compound matters, China has also been devoting its efforts to applying titanium alloys to cars which may result in reducing a car’s weight by 10%, lowering friction wear and tear and air resistance, as well as enhancing engine performance. Currently, titanium material has been applied to some car components, including connecting rods, valve springs, input/exhaust valve, turbochargers, suspension springs, and exhaustion systems, etc., to replace steel components. If these kinds of application can continue to be widely promoted, an attractive and huge market will be formed.

2. SWOT analysis

China has a wealth of titanium treasure with the world’s no. 1 reserve of more than 300 million tons and its mineral production places are more collective. Such a resource advantage puts China in a strong position to continue its titanium industry development. China has also supported such development with favorable policies. So far, it has listed titanium and titanium alloys as high tech products to be developed with priority, and given support to the related production businesses for their development of the titanium industry. With its policy objectives, China will advance from a country with the richest titanium reserves to a global frontrunner in titanium processing and application. To promote the application of titanium material, China has established a special



Industrial Analysis

taskforce for leading the promotion in order to provide China’s titanium industry with a stable and healthy development environment. Furthermore, in terms of technology, China has many institutes engaging in the research and development of titanium alloys, e.g. Beijing General Research Institute for Non-ferrous Metal founded in 1952, Northwest Institute for Nonferrous Metal Research built in 1965, Shenyang Metal Institute of Chinese Academy of Science, Beijing Institute for Aviation Materials, and Luoyang Ship Material Research Industry. In recent years, some schools, such as Beijing University of Technology and Northwest University of Technology, etc., have also accelerated their research on titanium alloys. For the enhancement of trade, they have plowed technology and capital into research on, and development of, the production of titanium sponge and titanium processing. For example, by incorporating AZYT’s titanium smelting technology with Baoti Group’s processing technology for titanium sponge, both parties have made great progress. In other cases, the technology center of Baosteel’s Special Steel Company, Zuudee Baoji Titanium Industry Co., Ltd. and investment into R&D in an attempt to speed the enhancement of titanium alloy smelting technology and production With China’s rapid economic development, titanium is increasingly demanded in a variety of fields. As shown in Chart 2, the chemical field still takes the major share in titanium application in China, whereas the aerospace industry has comparatively less demand for it. However, following China’s policy support and encouragement, more titanium is expected to be applied to the aerospace industry. Also, with the establishment of power stations along China’s coastal areas, titanium alloys will enjoy better development in those areas. In recent years, titanium has been increasingly applied to architectural constructions, as the result of China’s promotion in this respect. For instance, 368 tons of titanium was applied to the construction of Beijing Grand National Theater, the domes and outer walls of Hangzhou Theater as well as National Museum which have been built recently with titanium material. In addition, titanium alloy material has also started to be applied to some tech products such as, handsets and NB cases, etc. Undeniably, China has also faced many problems in its development of the titanium industry. A typical example is the supply of titanium ingots. Some small titanium ingots have experienced saturation or oversupply. While cold hearth melting technology has come to maturity in foreign countries, China has remained at a preliminary stage. Thus, it still relies heavily on imports of titanium strips, which leads to its failure to meet its demand for titanium thin plates, titanium tubes and titanium composite plates, etc. In addition, China is apparently insufficient in its development of new titanium alloy material in relation to high-heat titanium alloys, high strength titanium alloys, low-cost titanium alloys, low-temperature titanium alloys and medical titanium alloys, etc. Also, the product specifications are too limited. While the titanium industry is currently thriving in China, their titanium businesses are generally lacking in cooperation and coordination which limits their ability to compete with major international giants. Moreover, the trade in China generally cannot plunge ever more capital to work with their research institutes to solve key technical problems.



Industrial Analysis

3. Brief summary

In view of the facts mentioned above, China’s titanium industry is expected to continue its forward strides for a few years to come, and as the industry keeps growing, China’s titanium industry will possibly dominate the global titanium industry in the future. As a whole, its potential in the global market is significant.

Fig. 1: Trend analysis of China’s titanium processing capacity from 2000 through 2006
Unit: metric ton 單位:公噸
100,000 90,000 80,000 70,000 60,000 50,000 40,000 30,000 20,000 10,000 0 2000 2001 2002 2003 2004 2005 2006
Chinal market 大陸市場 Global market 全球市場 Market share 佔有率

16% 14% 12% 10% 8% 6% 4% 2% 0%

Data source: Compiled from the ITIS plan sponsored by the Mental Center of China Nonferrous Metal lndustry Association Titanium Branch

Fig. 2: Application of titanium processing material in China’s domestic market in 2006
Others 16%

Sport/Consumer Goods 24%

Chemical 37%

Chemical Aerospace Ships Metallurgy Power Medical Salt

Marines 1% Salt 4% Medical 1% Power Metallurgy 3% 2% Ships 2%

Marines Aerospace 10% Sport/Consumer Goods Others

Data source: Compiled from the IT IS plan sponsored by the Mental Center of China Nonferrous Metal Industry Association Titanium Branch