Pursuant to 2009 Plan for Execution of Customs Duty, China will further adjust import and export tariff since 1st January, 2009. Take titanium dioxide as an example, the import and export tariff adjustment on titanium dioxide products has not been made as expected by the titanium dioxide enterprises, but its major raw materials, such as titanium concentrate, high titanium slag and sulphuric acid are enlisted in the related tariff adjustment.
As per the Plan, the most favored nation tariff on the imported high titanium slag (titania quality percent is greater than 70%) (Tariff No.: 38249099) is continuously decreased from 6.5% to 0, and that on the sulphuric acid (Tariff No.: 28070000) is decreased from 5.5% to 0 in 2009. In the meantime, the provisional tariff on the exported titanium ore and titanium concentrate (Tariff No.: 26140000) in 2009 is increased up to 10%.
Pursuant to the tax rate adjustment as per stated above, it is evident that the state intends to protect resources-based raw materials. After the implementation of the new tariff plan, the export of titanium concentrate in China will be restricted, while the import of sulphuric acid and high titanium slag will be increased. Regarding the domestic raw materials supply enterprises, the growth of resources will bring about severe competition, especially during the demand depression for product consumption, the domestic prices might be let down therefore. In addition, regarding the titanium dioxide industry that stands in need of these raw materials, visually, the price reduction of raw materials is beneficial news, because the related enterprises that are confronted with huge sales pressure at the bottom line could make more profits from cost decline. However, every coin has two sides. First of all, the price decline of raw materials will provide the downstream products with more conditions to beat the prices down, thus the depressing situation of the industry will be tied in knots therefore; secondly, with the costs of raw materials decreasing, the manufacturers might expand production, but in view of the domestic markets that are faced with serious excess of supply over demand, the increase of resources will further deteriorate the situation and intensify competition among counterparts; thirdly, even if the supply increase of raw materials and the competition arising from the import of raw materials at lower costs fail to result in growth in production, the enterprises that enjoy edge in self-exploited resources might lose competitive predominance in this respect.
However, the continuously depressing situations of the titanium dioxide industry in 2008 resulted in lower rate of operation, and the enterprises that shut down in advance at the end of the year were growing, so it is hard to make settled opinions on the influence of the customs duty adjustment of raw materials. We should wait and see what happens in future.
Take the production of 1t titanium dioxide as an example, if high titanium slag is used as the raw material, it will consume 1.6~1.8t high titanium slag and about 2.5t sulphuric acid; if Titanic iron ore is used as the raw material, it will consume 2.5~2.8t titanic iron ore and 4t sulphuric acid; if these two raw materials are mixed as the raw materials, it will consume about 3.5t sulphuric acid.
