On August 12, China’s titanium dioxide manufacturer CNNC Huayuan released its 2024 semi-annual report, highlighting impressive growth in the first half of the year:
Revenue: 3.151 billion yuan, a year-on-year increase of 42.29%.
Net Profit: 304 million yuan, up 42.09% compared to the previous year.
Net Profit (excluding non-recurring items): 253 million yuan, a significant rise of 64.38%.
Cash Flow: Operating cash flow turned negative, reporting -99.34 million yuan.
CNNC Huayuan stated that the revenue growth in the first half of the year was primarily driven by an increase in both the sales volume and prices of titanium dioxide products, which in turn boosted net profit levels.
According to research from the IBUYCHEM Research Institute, the titanium dioxide market in the first half of 2024 faced challenges such as a sluggish global economy and slow recovery in end-user demand. This resulted in a “weak supply-demand dynamic with prices rebounding from low points.”
Key insights include:
- In the first quarter of 2024, the increase in downstream inventory needs led to a rebound in titanium dioxide prices, with leading companies driving growth.
- In the second quarter, domestic demand weakened, resulting in significant shipping pressures. Many domestic producers reduced output and prices, leading to a drop in market prices.
- Throughout the first half, the average market price for rutile titanium dioxide remained stable compared to the beginning of the reporting period.
Looking ahead, the titanium dioxide industry is expected to continue experiencing a “steady weak supply-demand dynamic” in the second half of 2024. The international leading market position and the solidifying operational advantages of top companies are anticipated to facilitate the clearance of outdated production capacity and further restore profitability in the industry.
In the first half of the year, CNNC Huayuan reported substantial revenue from its titanium dioxide sales, totaling 2.669 billion yuan, accounting for 84.70% of the company’s total revenue, and achieving a year-on-year growth of 38.60%. The logistics segment contributed 207 million yuan, or 6.57% of total revenue, while sales from phosphate rock reached 87.22 million yuan, yellow phosphorus sales amounted to 150 million yuan, and iron phosphate generated 395,000 yuan.
Industry Overview
Domestic titanium dioxide production was approximately 2.4 million tons, reflecting a growth of about 20% year-on-year. However, with a decline in apparent consumption and increased production capacity, the industry faced low operating rates. As the cost-performance advantage of Chinese titanium dioxide products becomes increasingly prominent, exports are expected to rise, with an estimated annual export volume reaching 40% of domestic production, helping alleviate supply-demand pressures.
Profit Margins
CNNC Huayuan’s titanium dioxide products achieved an average gross margin of 18.51%, up 4.05% from last year. The gross margin for domestic sales was 19.45%, an increase of 5.37%, while the margin for international sales was 18.94%, growing by 0.93%.
Export Performance
In the first half of the year, CNNC Huayuan generated 1.343 billion yuan from international sales, making up 42.62% of total revenue, with all products being titanium dioxide, marking a significant year-on-year growth of 44.79%.
Capacity Planning
According to insights from HZinfo, CNNC Huayuan plans to expand its production capacities, with current titanium dioxide capacity near 550,000 tons/year and planned capacity at 700,000 tons/year. Phosphate rock has a current capacity of 500,000 tons/year, while yellow phosphorus currently stands at 30,000 tons/year, with a 90,000 tons/year upgrade project expected to be operational by 2024. Iron phosphate has a current capacity of 100,000 tons/year, with plans to increase to 500,000 tons/year.
