Since April 2025, the operating rates within China's titanium dioxide industry have been on a gradual decline. As of last weekend, the overall industry operating rate has fallen below 60%. Titanium dioxide prices currently remain in a downward trend, with downstream demand entering a seasonal lull. The market is characterized by weakness on both the supply and demand sides.

Demand from downstream sectors is expected to remain relatively weak in July. Consequently, a significant rebound in the price level of titanium dioxide appears unlikely. However, with strengthening cost support and increasing expectations of production cuts by manufacturers, titanium dioxide prices may potentially stabilize and cease their decline during July.

Titanium Dioxide Market Resumes Decline on First Trading Day After Dragon Boat Festival

On the first working day after the Dragon Boat Festival, the domestic titanium dioxide market experienced a wave of price adjustments. Numerous producers lowered their offers, with leading manufacturers implementing notably significant reductions. This move was primarily driven by the need to correct previously maintained high price levels, which had created substantial downward pressure.

The current negotiated price range in the domestic titanium dioxide market stands at RMB 13,300 - 14,200 per tonne. Market transactions are predominantly focused on mid-to-low-end products. While rumors of even lower prices exist, these have not yet formed a widespread trend and remain within the non-mainstream price segment. Compared to pre-holiday levels, market prices have declined by RMB 150 per tonne, representing a 1% decrease. This price movement clearly signals the prevailing downward trend in the market.

Trading volumes observed over the first and second working days post-holiday showed an increase. This uptick stems from the following factors: Downstream consumers hold a bearish outlook on future market conditions, compounded by persistently sluggish end-user demand. Consequently, downstream players have consistently maintained low raw material inventories. Following the clarification of the new monthly pricing policies at the start of the month, downstream consumers engaged in some replenishment activity to meet production requirements. However, this restocking was largely driven by immediate production needs ('just-in-time' purchasing) rather than representing significant inventory building activities. This pattern underscores the cautious stance downstream players maintain regarding the market outlook.

Price Declines and Falling Operating Rates: The Burden on Titanium Dioxide Producers

Throughout the second quarter, the entire market remained in a downtrend. Current prices have fallen below production costs, leaving the majority of producers operating at a loss. Losses range between RMB 500 to 1,000 per tonne.

Despite producers reluctantly resorting to selling at lower prices in an attempt to stimulate demand and reduce inventories, market response has been tepid. Inventories continue to accumulate. To avoid greater losses from excessive inventory buildup, an increasing number of companies are opting to cut production and lower operating rates. As of last weekend, the domestic titanium dioxide operating rate was sustained at only around 65%.

Furthermore, based on the current market situation and company plans, many producers are expected to further reduce operating rates in the coming period.

Producers now face a difficult dilemma: On one hand, cutting production and lowering operating rates can alleviate inventory pressure, but it simultaneously increases the per-unit cost of production. On the other hand, maintaining high operating rates amidst low selling prices and weak demand forces producers to endure the heavy burden of sales losses.

June: Weakness Persists; July: Potential for Stabilization

As June begins, downstream order activity paints a less-than-optimistic picture, largely aligning with expectations. Procurement volumes for titanium dioxide within the coatings and plastics industries are exhibiting a steady pattern with a downward bias.

Although procurement for July orders is still some time away, insights gleaned from purchasing plans released by major downstream players indicate they also hold a pessimistic outlook regarding end-user demand in July. Consequently, demand-side factors fail to provide support for titanium dioxide prices.

Currently, the price trend of sulfuric acid – a key raw material – warrants close attention. Given the immense cost pressure facing titanium dioxide producers, any fluctuation in raw material prices directly impacts production operating rates. The June-July period represents the traditional demand off-season. While phosphate fertilizer exports provide some support to the sulfuric acid market, the negative impact of persistently weak domestic demand is more pronounced.

Furthermore, the sulfur market (a feedstock for sulfuric acid) faces downward price pressure. High sulfur prices have triggered strong resistance from downstream buyers. Compounded by the onset of the seasonal demand lull, procurement volumes have decreased. However, considering overall supply remains relatively tight, the downside potential for sulfur prices is limited. Sulfur prices are likely to consolidate at lower levels.

This relatively weak performance in sulfur, coupled with reduced demand, makes a modest decline in sulfuric acid prices highly likely during June and July.

For the titanium dioxide market, while the modest decline in raw material (sulfuric acid) prices exerts downward pressure, operating rates are projected to remain constrained at around 60% or potentially lower throughout June and July. This significant production curtailment is expected to gradually provide underlying support. Consequently, titanium dioxide prices are forecast to begin bottoming out and consolidating at lower levels by late July.

Looking at broader chemical sector expectations, increased downstream restocking activity anticipated by late August should inject upward momentum into chemical markets. Within the titanium dioxide sector, sustained low operating rates are poised to gradually bring supply and demand into better balance. Riding the coattails of this broader chemical market upturn, titanium dioxide prices hold the potential for an increase starting in late August.

Close monitoring of export market developments remains essential, as these could significantly impact the outlook.