On July 10th, the United States announced that it would impose a 10% tariff list on about 200 billion US dollars of Chinese products, which also indicates that the Sino-US trade war will be upgraded again. Although the $200 billion commodity taxation plan will not be implemented until the end of August, it is necessary to understand how the program affects us, how much impact it has, and then prepare adequately.
First, let's take a look at the Titanium related products involved in the list, a total of 11 items.
2614.00.30 artificial rutile
2614.00.60 Titanium ore and titanium concentrate, in addition to synthetic rutile
2620.99.50 Titanium slag, titanium slag products containing more than 40% titanium
2823.00.00 titanium dioxide
2827.39.30 titanium tetrachloride
2850.00.07 Titanium hydride, titanium nitride, titanium silicide, etc.
3206.19.00 Pigments and coatings containing more than 80% titanium
7202.91.00 titanium alloy, titanium silicon alloy
8108.20.00 titanium semi-finished product, titanium powder
8108.30.00 Forged titanium products
8108.90.00 Titanium-containing products, others
The products listed in the above list are broadly divided into two categories. One type of titanium raw materials listed in the list, such as titanium ore, synthetic rutile, titanium slag, titanium tetrachloride, etc., basically belong to "joining the fun". Because China is a major importer of titanium raw materials, among these products, except for a small amount of exports of titanium tetrachloride, other titanium raw materials are net imports, which are completely unaffected by US taxation. Other products can be classified into the second category, such as titanium dioxide, titanium alloy, titanium semi-finished products, titanium powder, etc. These products are also our main research targets today.
Simply put, the second category consists of two major categories, titanium dioxide and various types of titanium, which are the two largest downstream products in the titanium industry. According to the data, in 2017, China produced a total of more than 2.8 million tons of titanium dioxide and 55,000 tons of various types of titanium; the export volume to the United States was 45,000 tons and 0.16 million tons. In this way, the dependence of titanium dioxide and titanium on the US market is not large, 1.6% and 2.9% respectively. From the perspective of product competitiveness, the price of titanium dioxide exported to the United States is 20% lower than that of foreign products; the price of titanium is about 7%~10%. If the cost of titanium dioxide exported to the United States will increase according to the increase of 10% tariff, it still has certain competitiveness and will not completely lose the US market share. In terms of titanium, if the tariff cost of 10% is increased, the titanium material exported to the United States will basically lose its price advantage, and then lose most of the market, but given that the US market exports only 1600 tons, this part of the product It can be transferred to domestic or other national markets for digestion.
Then, can we conclude that the second round of tariff list has a relatively minor impact on China's titanium industry? I'm afraid not. Because, in the large list of 200 billion US dollars, although there are many products without titanium, they use titanium, such as electronics, building materials, plastics, electrical appliances, valves, fasteners and so on. Therefore, the conclusions obtained from the products with titanium in the above-mentioned one item inevitably lead to deviations. We should also go deep into the statistics of all the products using titanium in the list to get a more realistic conclusion.
From the products listed in the list, the products related to titanium mainly include: chemicals, household appliances, pigments, textiles, pipeline valves, clothing bags, building materials, plastics and rubber, paper products, mechanical products, electronic products, Fasteners, etc. Most of these products use titanium dioxide-containing coatings or titanium materials such as titanium tubes and titanium screws. After reviewing the customs data and the data of various industry associations, the author found that the impacts of these products are different. The overall impact is relatively limited, and some products may be subject to greater impact, and individual products may be beneficial. Relevant data show that China's products that rely heavily on the US market include furniture, home appliances, clothing bags, rubber products, and some petrochemical products, all of which are more than 10% dependent. In addition, some products such as paper products and plastic products are more than 5% dependent on the US market. These products currently have no obvious price advantage. Once they are imposed with tariffs, they will be quickly replaced by other countries' products, which will lead to a backlog of domestic products and a high risk of production reduction. The reduction in production of these products will lead to a decline in the amount of domestic titanium dioxide, but has no effect on the amount of domestic titanium. Therefore, we can initially conclude that if the second round of Sino-US trade war breaks out, it will have a slight impact on the direct export of titanium dioxide and titanium in China in the short term, which will have some impact on the downstream application of domestic titanium dioxide, but it is generally controllable. It has no effect on the downstream application of domestic titanium materials.
In the long run, the impact of trade wars on China's titanium industry may be the development of potential markets. In 2015, Nanjing Baose received an order for equipment from the US PTA project, worth 250 million yuan. In the past two years, some chemical markets in the United States are in the period of expansion, becoming the second largest producer in the world after China, and the total scale of new projects is relatively large. Chinese companies may lose the opportunity to become equipment providers and lose potential customers because of tariff policy restrictions. In recent years, my national enterprise is developing civilian daily titanium products. With the continuous improvement of product quality, some products have been sold to Europe, and the arrival of tariff barriers may affect the future development of overseas markets. Therefore, looking for more future market development space may be a place where Chinese enterprises should focus more on strengthening.