Titanium processing industry out of the predicament must be based on innovation and change

China's titanium industry has experienced rapid development in the past ten years, and the scale of the industry has continued to expand, and it has grown into the world's largest titanium production and consumption market
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However, with the fierce competition of enterprises in the low-end market, price wars and wars of attrition, market profit margins have been sharply compressed, resulting in a serious surplus of low-end titanium products
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This has caused fatal shocks and injuries to some companies, and has also seriously affected the investment enthusiasm of companies and individuals
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In addition, in recent years, market demand has continued to be sluggish, industry development has stagnated, and many titanium processing companies have been on the verge of loss and production suspension
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This development path that only emphasizes scale and not quality has severely hindered the healthy and stable development of China's titanium industry
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Faced with this situation, titanium processing companies must be based on innovation and change to get out of the predicament of survival
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At the Central Economic Work Conference, “de-capacity” was listed as the top of the five major structural reform tasks in 2016
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Faced with the status quo of the development of the industry, "de-capacity" to solve the development problem is put on the agenda
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How to promote the supply-side reform of titanium industry enterprises, eliminate outdated production capacity and excess production capacity, promote enterprise mergers and integration, and truly realize the "Phoenix Nirvana" of titanium processing enterprises? This has led to several thoughts from the author
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Thinking one, can the titanium industry “cut overcapacity” quickly cut the mess?

Premier Li Keqiang said: “The current world economic situation is complex and changeable, the domestic long-term superimposed contradictions are becoming increasingly prominent, and environmental indicators are increasing.
These changes require that we must be determined to resolve them.
excess capacity
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"" resolve excess capacity, should take 'ton output capacity' spirit
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"these statements, indicate that the central" to capacity, "the determination
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But we should also think calmly.
Who defines the excess capacity and how to define it? Is it government departments, banks, industry managers, or asset managers? That is, who decides the rules?

Let us first review the definition of "de-capacity".
In order to solve the unfavorable situation of vicious competition caused by oversupply of products, we should seek ways to transform and upgrade production equipment and products
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In the rapid development of the titanium industry market in the past ten years, a huge domestic titanium industry sales market has been formed.
Since 2012, the domestic high energy consumption and high pollution sponge titanium processing and titanium dioxide manufacturing enterprises have been due to the oversupply of products.
Coupled with the continued weak market demand, many companies have been shutting down and turning around one after another
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Overcapacity has become a bottleneck restricting the healthy development of the industry.
Many companies are in a state of semi-stop production, or have become insolvent "zombie companies".
The existence of these companies has seriously affected the healthy development of the titanium industry
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A large part of "de-capacity" is to eliminate these "zombie companies" that are not suitable for market development and have no development prospects
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In my humble opinion, the selection and definition of these companies takes a long time, and it must not be solved simply and casually with a sharp knife, and at the same time, it cannot be done across the board
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"De-capacity" will not be accomplished overnight, it will go through a slow, arduous and complicated process
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Thinking two, which companies will "de-capacity" in the titanium industry start?

According to the data of the China Nonferrous Metals Industry Association's Titanium, Zirconium and Hafnium Branch, in terms of sponge titanium production, China's sponge titanium production capacity reached 150,000 tons in 2014, and by 2015 The actual production capacity is about 88,000 tons, a significant reduction of about 50%
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In 2015, the actual production of sponge titanium was 62,000 tons, and the actual sales volume was 58,000 tons.
From these data, it is not difficult to see that the production capacity of sponge titanium is severely surplus
.
The declining demand for ordinary titanium sponge in the domestic market and the structural surplus of titanium products have directly caused many titanium sponge enterprises engaged in primary titanium processing to reduce or even stop production
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Therefore, the “de-capacity” of the titanium industry starts from sponge titanium processing enterprises, from enterprises producing low-end titanium products, from enterprises with backward production technology and manufacturing equipment, and from the most powerful primary products on the market.

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At the same time, "zombie companies" interfered with the normal development of the titanium industry, and also had a certain impact and destruction on the titanium industry market
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In this regard, the author believes that in the face of such a situation, it is necessary for some high-energy, low-output, extensive titanium processing enterprises to shut down
.

Thinking three, what can "de-capacity" promote for titanium processing enterprises?

First, "de-capacity" promotes equipment update, technology and management innovation of industry enterprises
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"Innovation" ranks first among the five development concepts put forward in the national "13th Five-Year Plan"
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The titanium industry requires us to show courage and courage.
If titanium processing companies want to survive the fierce market competition and not be eliminated in the new revolution, they must innovate
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Like Baoti Group, it is struggling to open up the market.
The use of titanium alloy plates in the titanium alloy UFO glass observation deck of Shilinxia Scenic Area in Beijing Pinggu has reached more than 20 tons, successfully opening up a new product market
.
Therefore, if an enterprise wants to survive and develop in the fierce market competition, it must have the spirit of eagle transformation, and it must rely on continuous innovation of development concepts, innovation of management mechanisms, and market development to meet the needs of the market and the environment
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Second, "de-capacity" will promote enterprises to deepen reforms and improve quality and efficiency
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As far as titanium processing material manufacturers are concerned, as the country pays great attention to environmental protection, ecology and other livelihood issues and continues to increase investment, traditional civilian titanium materials use a large proportion of chemical, metallurgy, electric power, salt production and other fields , The market share will gradually decrease
.
In the emerging high-end markets, aerospace, shipbuilding, medicine and other fields are showing a momentum of substantial growth.
It is predicted that the demand for titanium in the above three fields will exceed the demand for titanium in the traditional chemical industry in the future
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It is not difficult to see that the domestic titanium material market is in the ascendant and has a booming momentum.
It is time for titanium material processing enterprises to achieve transformation and upgrading
.
For titanium processing enterprises, the new demands, new changes, and new trends of the market are testing the wisdom of our decision-makers.
They are opportunities, tests, and challenges
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Third, "de-capacity" will promote enterprises to strengthen communication and collaboration, complement each other's strengths, and achieve win-win cooperation
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The titanium dioxide market has ushered in a "five consecutive rise" this year.
Thanks to the national destocking policy, the real estate market has been prosperous in production and sales, and the effects of mergers and reorganizations and reforms and innovations between enterprises have begun to show
.
Other titanium-related companies compete fiercely in the low-end market, and companies hold down prices.
In a cruel market environment, meager profits will become the norm for corporate profits
.
High-end titanium application markets, such as aerospace, nuclear power, medical equipment, seawater desalination, and other fields have high technology content, high R&D costs, high barriers to entry, and difficulties in enterprise intervention.
These factors will inevitably accelerate the pace of mergers and reorganizations and win-win cooperation among enterprises
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