Present Situation and Tendency of Development of China’s Titanium Industry

1. Significant Resource Advantages

With the development of economic globalization, the titanium industry embraced the peak of its development and began to transfer from rough handling to fine processing. The titanium has a widespread distribution among more than 30 nations all around the world. With the current smelting technique and methods, the titanium resources with industrial value were ilmenite (rock ore and placer) and natural rutile, among which ilmenite accounted for the majority. Across the globe, Austria, South Africa, Canada, China, and India were the major exporters of the titanium; while China, with about one thirds of the global titanium reserves (mainly distributed in the areas of southeast provinces and south Fujian Province of China), enjoyed significant titanium resource advantages.

2. Being a Major Producer of Titanium Sponge

Despite the rapid development of titanium industry in China, the industry of the country is still in lack of the competitiveness compared with the international titanium industry. In 2013, the exporting titanium sponge of China, with 0.34% of decrease YoY, amounted to 81,171 tonnes and taken up 37.8% of the world’s total.

3. Market Demand on Titanium has been in Uptrend

The profound characteristic of prolonging equipment life for several times provides the development of titanium industry with huge potential. The domestic and overseas demands on titanium took a great leap forward. The strong demand not only derived from the traditional industries of metallurgy, chemical engineering, electricity, and salt manufacturing, but also came from the increasing usage of the titanium on the fields of aerospace, sports and entertainments, and daily essentials; furthermore, the fast development of new energy industry also provides new energy materials of vanadium-titanium with emerging market.

Characteristics of Development of China’s Titanium Industry — Take the Titanium Industry of Baoji as an Example

Titanium industry enjoyed a quite rapid growth in China, among which the Baoti Group and Zunyi Titanium were equipped with a thorough system consisting of a set of procedures including exploiting, refining, processing, applying, and researching for the industry. Baoti, as the core of China’s titanium industry, has established a titanium industrial system with the most systematic processing units and the highest professional level.

1. Tendency towards Industrial Clustering

Driven by the Baoti Group and backed on Baoji National New High Tech Industries Development Zone, Baoji-China Titanium Valley was listed as one of the national key industrial clustering zones by the Ministry of Science and Technology on June 2007. The output value of titanium industry in Baoji was around RMB20 billion, accounted for three fourths of the domestic gross value. There are about 1,000 domestic manufacturing and processing enterprises of titanium, among which more than 400 situated in Baoji. And in Baoji, the enterprises of deep-processing of titanium were more than 200, the others were for trading and rough processing. With the industry scale of titanium ranked No.1 across the country, the industry has absolutely been the dominant industry in Baoji and played an important role in accelerating the economic development of the region.

2. Developing Industry Chain of Titanium Step by Step

Baoti Group, with a thorough titanium industrial system, has launched a series of products in regard to wrought titanium, titanium alloys, titanium and titanium alloy powder, and titanium equipment, among which the new materials research on titanium alloy materials, Ti-Ni memory material, and superconducting materials, has been in the advanced level in China. The enterprise has also made effort on expanding the field of new materials through developing, processing, and producing the titanium material.

Analyzing the Problems of China’s Titanium Industry from the Perspective of Industrial Organization

Although the international competitiveness of China’s titanium sponge has been all the way improving, China has not been a dominant power in terms of titanium yet. There are various problems on the industrial layout, products structure, and technique innovation.

1. Small Enterprise Scale, Low Market Concentration

With the development of economic globalization, there formed some titanium tycoons with global resource allocation optimization, huge production scale, and stronger competitiveness of products in the titanium industry. Compared with those large-scale enterprises, such as Precision Castparts Co (PCC) of the US and VSMPO-AVISMA of Russia (with the annual output of 28,855 tons in 2013, accounted for 14% of world total output), the level of concentration of the titanium industry of China was very low and the scale of enterprises was too small, and thus resulted in the unreasonable resource allocation and inefficient competitiveness.

1. Producer of Low-end Product, with Needs to Largely Import High-Value-Added Product from Abroad

On one hand, with the small profit space, the products of the middle and low level of domestic titanium enterprises faced huge overcapacity; on the other hand, the production of the high-value-added and highly sophisticated products were insufficient and therefore large import is necessary to guarantee the domestic supply. The techniques in the fields of thick plate (above 50mm), sheet(below 0.5 mm), welded pipe, long pipe, large-size bar, titanium strip, section bar, and waste titanium retrieve apparently fallen behind the advanced level of the industry.

3. Lake of Competitiveness

Although currently China has already been in the leading position in terms of the titanium production, the domestic titanium enterprises still lack of international competitiveness, very few of which enable to achieve the average annual capacity of more than 10,000 tonnes. Generally speaking, there is a huge gap between the domestic enterprises of China and the international titanium tycoons in terms of the profit, technology, and quality of the products. When it comes to the domestic enterprises, there are various problems including the unreasonable product structure, low utilization ratio of the resource, lack of the technology innovation, and yet-to-be-improved labor productivity.

4. Analyzing the Problems of China’s Titanium Industry from the Perspective of Industrial Concentration 

First of all, the low industrial concentration intensified the competitions between enterprises, which would lower the investment of technological innovation and development and against the implement of economies of scale, and thus caused the small size of the majority of the enterprises, low labor productivity, high average cost, and low profit margin. Secondly, due to the low concentration and small-size enterprises, the products were generally lack of competitiveness with unreasonable product structure and low market value. Thirdly, the low concentration weakened the negotiation ability for the titanium industry as a buyer in purchasing the required raw materials and energy sources, and thus intensified the situation of rising raw material costs under the resource-challenged circumstance.

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