China’s Titanium Gained Great Support Both Nationally and Locally

On August 3, 2011, Kunming Iron & Steel Holding Co., Ltd. announced that it would invest RMB 1.89 billion in a titanium deep processing project, which is the largest titanium project with an annual output of 20,000 tons.

The project will benefit from thermal power and seawater desalination in short term, demand recovery of basic chemical industry in medium term and start of the Large Aircraft Project in long term. Thanks to the fastgrowing economy and support from governments at all levels, titanium industry chain will grow at high speed during the 12th Five-Year Plan period.

In the 12th Five-Year Plan for Strategic Emerging Industries jointly formulated by NDRC and MIIT, etc., titanium has been listed as a new material of high priority. It is reported that authorities concerned are considering unveiling new policies to implement access management for the sponge titanium sector. Large projects without distinct technical features or classified as repetitive construction will not be approved during the 12th Five-Year Plan period.

Like rare earth that has recently drawn wide attention around the world, titanium is also a kind of rare resource. Featuring small density,high thermostability, corrosion resistance, excellent biocompatibility, non-magnetism and ductility, titanium may be widely used in nuclear power, aviation, military industry, chemical industry and other emerging areas. Titanium is often called “aerospace metal, “sea metal” or “all-purpose metal”. Application and industrial development level of titanium has become a key indicator to measure comprehensive strength of a country. China has her unique advantage in developing titanium industry. Statistics show that China boasts abundant titanium resources of titanium dioxide, with the total reserves up to 965,000,000 tons, ranking No.1 in the world.

However, China has relied on titanium import over time. Especially recently, titanium strip,coil and welded tube have been imported increasingly, and moreover, major titanium exporters, such as USA and Japan, dominate titanium product price and supply by means of blocking core technologies, thus greatly inhibiting China from developing its relevant strategic industries. How to deepen research, development and industrialization of titanium deep processing technologies has become a major issue for China to develop its national economy and national defense.

Therefore, titanium has been listed as a new material of high priority by Strategic Emerging Industries of the 12th Five-Year Plan jointly developed by NDRC and MIIT, which has entered the stage of solicitation for comments and is to be issued. After this, support policies for the industry chain will be put in place.

At the same time, some provinces are formulating or have already formulated specific development plans on the titanium industry chain, of which the 12th Five-Year Development Plan on Yunnan Titanium Industry has been completed and is expected to be released in the near future.

Yunnan put forward a plan that it will develop the titanium industry focusing on Yunnan Metallurgy Group, Yunnan Copper and Kunsteel and backed by titanium mine resources in neighboring areas. According to the plan, Yunnan will primarily build Wuding-Luquan and Wuhuachangkou titanium concentrate, high titanium slag and sponge titanium raw material production areas, Lufengyangjie titanium dioxide (prepared in chlorination method) and sponge titanium production areas as well as Lufengtuguan -Anninglubiao titanium ingot,plate &coil, titanium products and titanium alloy production area and build Wuhuachangkou titanium industrial cluster at an appropriate time.

Before that, Baoji, another area that is rich in titanium resources, has released its Construction and Development Plan on National New Material & High-tech Industrial Base.

One of the key points of Baoji’s plan is to develop a titanium research and development system. Funded by the government, Baoji Hi-tech Zone will create a public technology service system of “China Titanium Valley” by means of encouraging colleges, universities and research institutions to cooperate with enterprises within the cluster, setting up R&D facilities such as technology transfer center and joint laboratory, etc.; focusing on BAOTI nationallevel R&D center and titanium application technology innovation incubation center (special business incubator of titanium) and centers for post-doctoral studies.

The plan states clearly that, by 2015, the city is expected to build 5-8 national-level, provincial R&D centers and engineering centers as well as 3-5 special business incubators, achieve annual sales revenue of RMB 65 billion and export earnings of USD 1 billion. The city aims to build the industrial cluster of “Baoji·China Titanium Valley” into a world-renowned hightech new material industrial base with unique features and strong competitiveness and the largest titanium trade center with full range of products in China.

According to the plan, Baoji proposes to build 10-15 key enterprises by 2015, 15-20 enterprises with the average output value over RMB 0.1 billion and 3-5 enterprises with the average output value over RMB 1 billion.

Analysts say that demand of China’s aviation sector for titanium is relatively low due to the following reasons: first, all civil-use trunk liners of China are imported; second, some new military aircrafts have not gone into mass production yet; third, titanium has not been heavily used in military aircrafts that have gone into mass production. Generally, the proportion of titanium in airframe is no more than 5% and that in engine no more than 20%. All of these situations will be improved gradually in the next 5 years, thus constantly driving the demand for titanium.

Apart from aviation manufacturing, titanium is also widely applied in seawater desalination during the period of the 12th Five-Year Plan.Currently, there are 140,000 seawater desalination plants in more than 150 countries and regions across the world with an output of 35,000,000 tons/day. As of 2010, global titanium consumption of seawater desalination sector has reached approximately 2,750,000 tons. Given the average annual compound growth rate of global seawater desalination of 10%, all seawater desalination plants across the world need 359,500 tons of titanium in the upcoming 10 years and 36,000 tons annually on average, of which, new seawater desalination projects in China need 8,025 tons and 16,050 tons of titanium in the next 5 and 10 years respectively, with an average annual demand for titanium of approximately 1,600 tons.

In addition, by virtue of its excellent corrosion resistance and thermostability, titanium has become the most promising light material in the development of the automobile industry. Titanium can be used in many fields such as connecting rod, crankshaft, intake valve, vent valve and steering rack, etc. In the next 10 years, 3,000 tons of titanium will be consumed annually in the field of nuclear power; LNG factories and transport ships will also consume large quantities of titanium.

Experts pointed out that, backed by abundant resources, the titanium industry chain, i.e., “ti-tanium mine - high titanium slag - sponge titanium - titanium ingot - titanium”, has taken shape. Currently, production capacity of China’s titanium industry is next only to USA,Russia and Japan, ranking No.4 in the world.

China’s titanium mine resources are mainly deposited in western regions of China, such as Sichuan, Yunnan and Guangxi, etc., especially Panzhihua, where Pangang Group Steel Vanadium & Titanium Co., Ltd. is located.

It is reported that, titanium concentrate price remained at a level of approximately RMB 500 yuan/ton during the period of 2006-2009; nevertheless, it began to rise in 2010 and increased by about 65% in the same year. In 2011, titanium concentrate price soared from RMB 1000 yuan/ton at the beginning of the year to RMB 2300 yuan/ton at the end of July, up by 130%in a period as short as half a year.

Analysts believe that, as the titanium industry prospers, titanium concentrate price is expected to keep rising in the next few years, which will directly benefit the enterprises with titanium resources.

As a downstream product of titanium concentrate, sponge titanium also performs well in the industrial boom.

According to relevant statistics, affected by short supply of upstream titanium concentrates,the whole industry chain from titanium concentrate through sponge titanium to titanium ingot has experienced price hike since March 2011,of which sponge titanium price rose by more than 70% than that at the beginning of the year,while titanium concentrate went up by 130%than that at the beginning of 2011.

Experts pointed out that, price increase of sponge titanium was significantly less than that of titanium concentrate primarily due to the overcapacity of sponge titanium.

At present, there are 10 plus sponge titanium factories in China, and cut-throat competition exists in mid and low-end market.

To cope with this situation, authorities concerned are considering releasing new policies to implement access management for the sponge titanium sector. Large projects without distinct technical features or classified as repetitive construction will not be approved during the 12th Five-Year Plan period.

In the same time, relevant authorities plan to cut the production capacity of sponge titanium down to 100,000 tons/year during the period of the 12th Five-Year Plan, while keep zero grade of sponge titanium above 70%; encourage advantageous enterprises to carry out consolidation actively to eventually form 3-5 world-class corporations (with sponge titanium or titanium ingot output above 10,000 tons).

An insider of China Nonferrous Metals Association said, after more than 50 years’ development, China’s titanium industry scale remains No.1 or No.2 in the world, but most products are of medium and low quality, and even not available in certain varieties and specifications, and thus cannot meet the demand of industrial development of the country.Therefore, we shall focus on enhancing technological innovation, improving product quality,developing new products as well as optimizing technical and economic indicators, so as to promote product quality and optimize industrial structure.

According to the vision of authorities concerned such as MIIT, China will focus on small high-precision titanium alloy rod and wire during the 12th Five-Year Plan period, so as to satisfy the demands of aviation and medical sector; besides, it will research titanium and titanium alloy extrusion technologies, so as to meet the demand of aerospace, ships and marine oil and gas exploitation for pipes, and build an industrial cluster or enterprise with production value over RMB 10 billion.