Combined operations and streamlined offerings in the Chinese titanium dioxide market could restrain the possibilities of oversupplies in the Asia-Pacific region.

Demand for titanium dioxide in the region is relatively low compared with other markets, a scenario forcing rutile and ilmenite producers to supply outside Asia. A successful suppression of the impending supply saturation could help the white pigment market recover from a two-year sag.

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According to experts, the struggles of the market to become relevant on the global level are forcing China to restructure and introduce radical market realignments.

"As the policy and relevant national environmental protection, industrial policy and market driven, titanium dioxide industry in China will go through to the production process, catalyst industry upgrade, improve the chlorination process titanium pigment proportion, and enhance industry concentration. In the next five years, the titanium dioxide industry in China will usher in a wide range of restructuring, integration. Nuclear titanium white, kingburg titanium industry in the recent acquisitions and unfolds have intention to herald the titanium dioxide industry consolidation," one analyst wrote on Titanium Expo's official website.

Several mergers and acquisitions have kicked off in China since 2014.

Titanium-focused companies in China have been raising offers due to low inventory. This move, which economists tag as 'risky,' is giving the local market a substantial market share loss against European and American competitors. TiO2 producers in these regions offer lower prices, which is sensibly more attractive to consumers, especially to those that operate in the region.

In April, TiO2 exports from major Chinese suppliers were priced at $1,900-2,000/tonne, with the prices most likely to increase by around $50 per ton in May.

Asia-Pacific prices are expected to increase gradually as the market consolidation reduces the supplies coming from China. This will also calm the Asian market, as smaller producers in the region will have the opportunity to sell their products in and outside the region.

Experts agree that the concentration of assets in China will be an essential factor in creating better price trends in the Asian titanium dioxide market.

The economic recovery in the United States and the EU region has intensified the demand for Chinese titanium. The country exported 376 kt of titanium dioxide in 2014, which 48 percent higher than its export records in 2013.

The growing global demand for the mineral will also be supported by veteran players such as Australia's BHP Billiton-Richard Bay Minerals and West Africa's Sierra Rutile.

In 2017, the emergence of up-and-coming titanium miner White Mountain Titanium Corporation (OTCQB:WMTM) is also expected to augment the supply segment. The company owns the Cerro Blanco Property, a 17,041-hectares rutile deposit in Santiago, Chile. The property is considered as one of the largest and most promising titanium dioxide facilities in the world today.

Some market players believe that the global titanium prices are expected to show an uptrend in the beginning of the third quarter. This will start as soon as buyers begin to exhaust their inventories during peak downstream demand in the second quarter.

The M&A trend in China must continue in the years to come to maintain the balance in the Asian region.  

China is the second biggest economy in the world today with a GDP growth of 7 percent in 2015.  

TagsChina titanium supply demand, China consolidation, Chinese titanium dioxide market, oversupply in the Asia-Pacific region, China markets struggling, rutile, White Mountain Titanium, Cerro Blanco property, global demand