Magnesium prices skyrocket, how should sponge titanium companies respond?
The price of magnesium ingot has risen sharply, which is rare in history. Once the price surge becomes a "mad cow", it often cannot be held back. The current surge of magnesium ingots may be like the price of sponge titanium rose from more than 40,000 yuan/ton to 250,000-300,000 yuan/ton from the end of 2004 to 2008, an increase of about 7 times. In the past two years, the price of vanadium has also skyrocketed. Of course, any madness will eventually return to normal. Stimulated by the skyrocketing magnesium ingots, the titanium market has three states-
The semi-process titanium sponge enterprises can no longer carry it, and where should the production go?
The whole process titanium sponge enterprise also seems uncomfortable, and the cost is still rising!
The orders of titanium processing material enterprises are a bit unstable, and the current military products are weak!
A set of data comparison
——On December 31, 2020, the price of magnesium ingots was 15,500-15,600 yuan/ton. On September 22, 2021, the price of magnesium ingots was 62,400-62,500 yuan/ton. More than 4 times the increase.
—— On December 31, 2020, the price of titanium tetrachloride was 6500-7000 yuan/ton. On September 22, 2021, the price of titanium tetrachloride was 7800-7900 yuan/ton. Up 1300-1400 yuan.
——On December 31, 2020, the price of sponge titanium was 64,000 yuan/ton. On September 20, 2021, the quotation of sponge titanium was 67,000-70,000 yuan/ton (the quotation has been stopped at present).
Cost Analysis of Sponge Titanium
Magnesium ingot and titanium tetrachloride are the main raw material costs for the production of sponge titanium. According to the theoretical data that 1.1 tons of magnesium ingots and 4 tons of titanium tetrachloride are required to produce 1 ton of titanium sponge, the cost of this sponge alone is close to 100,000 yuan per ton.
The production cost of titanium sponge is not only the cost of raw materials but also various costs such as management costs, financial costs, depreciation costs, water and electricity costs, labor costs, etc. In this way, the cost of titanium sponge per ton may exceed 100,000 yuan, 110,000 yuan, or even 12 yuan. million.
The cost composition of titanium sponge enterprises is also different. The cost of titanium sponges in private enterprises is slightly lower than that of state-owned enterprises, and the cost of titanium sponges in full-process enterprises is significantly higher than that of semi-process enterprises. The production of 1 ton of titanium sponge in a full-process enterprise requires about 0.15 tons of magnesium ingots, and a half-process enterprise needs about 1.1 tons of magnesium ingots.
Factors affecting the price of titanium sponge
There are many factors that affect the price of titanium sponges, and the main influencing factors are as follows:
First, the price of raw materials is promoted. For example, the rise of the main raw materials magnesium ingot and titanium tetrachloride will inevitably affect the price of sponge titanium, as well as the increase in electricity costs, labor costs, financial costs, etc. These are the factors that affect the price of sponge titanium.
2. Rigid demand in the downstream market There will be a new field of application growth on the basis of the stock, and the incremental demand will inevitably stimulate the price of sponge titanium. For example, the expansion of the field of military products and the expansion of the application field of civilian products in recent years are all factors that stimulate the increase in production and price of sponge titanium.
3. The change in the production capacity of sponge titanium affects the price change. In recent years, the demand for sponge titanium in the downstream market has obviously shown a flexible growth trend, but the price of sponge titanium has not returned to the price of 250,000-300,000 yuan/ton between 2004 and 2008, and it can only be 55,000-300,000 yuan in the past two or three years. The range of 80,000 yuan/ton fluctuates (a lot of time fluctuates around 60,000 yuan/ton), the reason is that the production capacity of sponge titanium is expanded too fast, and the actual output has increased significantly: about 85,000 tons in 2019, 123,000 tons in 2020, originally expected Around 150,000 tons in 2021. At present, due to the soaring rise of magnesium ingots, sponge titanium enterprises are facing production restrictions, production reductions, and even some suspensions. The output of sponge titanium in 2021 may increase slightly on the basis of 2020.
The awkward titanium sponge market
Magnesium ingots have skyrocketed, and the price of sponge titanium has become inevitable, and it is not a tentative increase of 2,000 yuan in the past, but must be an increase of tens of thousands of yuan per ton. No matter how the price of sponge titanium is adjusted, the current situation of sponge titanium is very embarrassing. The reasons are as follows:
1. The sharp rise in upstream raw materials has caused the cost of sponge titanium to exceed 100,000 yuan/ton. The current price of 60,000-70,000 yuan/ton is impossible to continue. The only option must be a substantial price adjustment, and the price must exceed 100,000 yuan/ton. Tons of above to maintain production.
2. The upstream raw materials force titanium sponge enterprises to adjust prices. In addition to the military market downstream, orders for the civilian market have decreased significantly since May. Therefore, the embarrassing situation of sponge titanium is that the price must rise sharply while facing the civilian market. Orders fell.
3. When the price of sponge titanium rises sharply, the titanium market will change in fluctuations, and the downstream and downstream may produce alternative thinking of materials after three or five months. The market has an invisible hand regulating the mutual development of industries.
4. When the domestic sponge titanium price is greatly adjusted, will the import of foreign sponge titanium increase?
5. After the price of sponge titanium soared from 2004 to 2010, resulting in serious overcapacity and a sharp drop in price, the country once purchased and stored tens of thousands of tons of sponge titanium and titanium ingots. When the price of sponge titanium exceeded 100,000 yuan/ton, 110,000 tons Yuan/ton, 120,000 Yuan/ton, will the state reserve titanium be put on the market? It is less likely to be released as a strategic material, but it does not rule out the possibility of releasing it to regulate the market.
How does the titanium industry respond to the "surge" of magnesium ingots?
According to the reporter's understanding, due to the skyrocketing rise of magnesium ingots, the price and cost of sponge titanium have been inverted, and sponge titanium companies have stopped quoting. At present, the market has suspended the sale of sponge titanium. Of course, the suspension of sales of sponge titanium is not because the supply is in short supply, but the loss of sales, especially now that the production of sponge will cause a large loss. Therefore, only by sharply adjusting the price can we accumulate energy for survival and development. Otherwise, the snowball will become smaller and smaller, and we will face life and death. Magnesium ingots are soaring, how should sponge titanium companies respond? How to face the future is a subject that should be solved!
Based on the views of enterprises, the reporter believes that:
It is inevitable for sponge titanium enterprises to reduce production and shrinkage. This is the general trend of market adjustment and is also a correction to the rapid expansion of production capacity in recent years. During the "14th Five-Year Plan" period, the sponge titanium industry is facing reshuffling and reorganization, which is the general trend.
According to the skyrocketing rise of upstream raw material magnesium ingots, the price of titanium sponge should be adjusted as soon as possible, and the method of suspending quotations and suspending sales is contrary to market rules, which is not conducive to the production of the downstream market, but will lead to "downstream and downstream" customers looking for as soon as possible. Substitutes are very unfavorable to the development of the titanium industry in the long run.
In the future, we should further devote our energy to technological innovation, quality improvement, and high-quality development. The current titanium sponge market is "insufficient in high-end and surplus in low-end". Therefore, fine quality and light quantity are the general directions of the efforts of sponge titanium enterprises.
After the price of sponge titanium has been greatly increased, attention should be paid to the change in the quantity of imported sponge titanium. Don't let the price increase of sponge titanium lead to "fishermen benefit" for foreign sponge titanium enterprises.
Measures to deal with the current situation
The increase in the price of magnesium ingots is not only stimulated by factors such as coal price increases and environmental protection process factors but also has a certain relationship with the expansion of the market for magnesium metal applications in recent years. Therefore, how the future trend of magnesium price changes is not only influenced by the factors of coal and environmental protection, it is very likely that the expansion of magnesium application fields will also become one of the important factors affecting the price in the long run in the future. For the current situation that the soaring magnesium ingot has forced the cost of sponge titanium to exceed 100,000 yuan/ton, here are some suggestions from titanium companies:
1. Pay close attention to the follow-up work of environmental protection management in the magnesium industry and the information on the commencement of magnesium smelting plants. The price of magnesium ingots has skyrocketed this time, and there are some irrational factors. The environmental protection shutdown and power cuts will affect the price of magnesium ingots in a short period of time. the state is unsustainable. It is necessary for enterprises to take short-term production and stop production measures.
2. Downstream enterprises of titanium sponges should support the development of "national titanium" and minimize the import of foreign titanium sponges.
3. For the time being, the state should not put the state-stored titanium sponge and titanium ingots on the market, giving time for the sponge titanium enterprises to adjust and develop.
4. The national macroscopic layout of titanium sponge industry development, raising the entry threshold, supporting upstream and downstream restructuring to become bigger and stronger, long-term planning, and scientific development.
No matter how soaring magnesium ingots, the development of the titanium industry is still promising, but the future development needs to be more refined, finer, better, and more specialized. Only those titanium and titanium processing materials companies that pursue high-quality development will go far and far. Long time, good walk. The soaring rise of magnesium ingots has only accelerated the pace of adjustment of the titanium industry, which is a boost to the optimization of the development of the titanium industry and a boost to the high-quality development of the titanium industry. In the future, only the strong will remain strong in the development of the industry. Because there are only collapsed enterprises without collapsed industries.
