<article><p class="lead">Limited spot availability, higher prices of titanium tetrachloride (TiCl4) and concentrate feedstock and renewed demand from the mill product manufacturing sector have bolstered Chinese titanium sponge prices to an eight-month high. </p><p>Market participants expect the market to extend its uptrend in January-March because of higher production costs and renewed buying interest from mill product manufacturers. But market activity is expected to slow in the next two weeks because of the lunar new year holiday.</p><p><i>Argus</i> assessed 99.7pc grade sponge prices higher at 61,000-67,000 yuan/t ($9.46-10.39/kg) on 21 January, on higher offer prices from producers and keen buying interest from mill product manufacturers. The assessment was last highest on 21 May 2020.</p><p>Domestic major producers raised offer prices by Yn2,000/t yesterday to Yn67,000/t for 99.7pc grade sponge and Yn66,000/t for 99.6pc grade material because of higher production costs, low inventories, and increased buying interest from mill product manufacturers.</p><p>TiCl4 prices were assessed stable at Yn6,800-7,000/t yesterday, their highest level since 22 April 2020, on limited spot availability as most producers have cut run rates in recent months because of higher prices for chlorine gas feedstock and thinner profit margins.</p><p>Prices of 46pc grade titanium concentrate were assessed stable yesterday at Yn1,920-1,950/t ex-works with 13pc value-added tax unpaid. Prices may move higher in the coming weeks in view of renewed buying interest from sponge and dioxide producers as most are set to restock concentrate feedstock for the lunar new year holiday.</p><p>Most sponge producers signed contracts at the end of December for delivery in January delivery, and this limited spot availability. They were unwilling to make concessions on offer prices in recent weeks given higher costs and expectations of higher demand from mill product manufacturers.</p><p>Sponge producers expect long demand from the mill product manufacturing sector to rise in the coming years, supported by output expansion projects in the downstream purified terephthalic acid (PTA), caustic soda and sodium carbonate industries, as well as increasing demand from the aerospace, marine, automotive, biomedical sectors.</p><p>Sponge producers have been increasing output since April following a recovery from the impact of the virus outbreak, with domestic output of 112,380t in 2020, an increase of 27,380t or 32.21pc from 85,000t in 2019.</p><p>China is expected to add 30,000-40,000 t/yr of new sponge capacity this year, following launches of production projects under construction by Baoji Lixing Titanium Industry, Sichuan Shengfeng Titanium, Lomon Billions Xinli and Xinjiang Xiangsheng, as they look to take advantage of the higher prices and buoyant demand from the mill product manufacturing sector. </p><p>China imported 4,722.50t of titanium sponge in 2020, down by 33.85pc from 7,139t in 2019, official customs data show, after some mill product manufacturers increased their usage of domestically produced sponge during May-September 2020 as domestic prices were at a discount over international prices. A supply surplus in China and a fall in demand from outside of China had weighed on domestic prices. </p><p>China's titanium sponge exports in 2020 fell by 33.75pc from a year earlier to 693t as consumers outside of China reduced purchases during the Covid-19 pandemic.</p></article>
