China Titanium MetalChina Titanium MetalChina Titanium MetalChina Titanium MetalImport & Export TrendsImport & Export Trends

Furkhat FFurkhat Faizullaaizulla（（Advanced Material Japan Corporation)Advanced Material Japan Corporation)

O t b 9O t b 9 20020077October 9October 9, 200, 20077

F1

Slide 1

F1 my presentation will forcuse on import/export side of China Titanium industry, and its possible effect on other contries.Furkhat, 5/19/2007

Furkhat FFurkhat FaizullaaizullaFurkhat FFurkhat Faizullaaizulla

• Manager of Advanced Material Japan• Manager of Advanced Material Japan Corporation (AMJ)

• AMJ is a leading titanium metal trading ffcompany, head office in Tokyo, with

branches in Beijing, Shanghai, Moscowand Toronto.

Import and export in totalImport and export in total

2006 Import & Export in Total2006 Import & Export in Total2006 Import & Export in Total 2006 Import & Export in Total

It HS C d I t E t N t i tItem HS Code Import Export Net importSponge 81082010 1,608 1,920 -312

Unwrought, powder 81082090 1,244 1,544 -300

Scrap 81083000 686 1,047 -361

Bar, billet, part 81089010 420 1,932 -1,512

Wire 81089020 107 74 33

sheet& coil, thickness<0.8mm 81089031 597 73 524

sheet& coil, thickness>0.8mm 81089032 693 1,171 -478

Tube 81089040 2 171 622 1 549Tube 81089040 2,171 622 1,549

Forging and other 81089090 694 738 -44

Total 8,220 9,121 -901

2007.12007.1--6 Import & Export in 6 Import & Export in T t lT t lTotalTotal

Item HS Code Import Export Net import

Sponge 81082010 501 2,650 -2,149

Unwrought, powder 81082090 88 679 -591

Scrap 81083000 160 324 -164

Bar, billet, part 81089010 252 1,772 -1,520

Wire 81089020 55 115 -60

sheet& coil, thickness<0.8mm81089031

150 126 24

sheet& coil, thickness>0.8mm81089032

310 1,068 -75881089032

Tube 81089040 786 358 428

Forging and other 81089090 173 527 -354

T t l 2 475 7 619 5 144Total 2,475 7,619 -5,144

Total Import & Export Amount TrendTotal Import & Export Amount Trendp pp p

9000

100009 0 0 0

1 0 0 0 0

6000

7000

8000

6 0 0 0

7 0 0 0

8 0 0 0

4000

5000

6000

4 0 0 0

5 0 0 0

6 0 0 0

1000

2000

3000

1 0 0 0

2 0 0 0

3 0 0 0

0

1000

'02 '03 '04 '05 '06

0

1 0 0 0

' 0 2 ' 0 3 ' 0 4 ' 0 5 ' 0 6

SpongeSponge

Sponge productionSponge production(actual)(actual)

18000

20000

14000

16000

18000

8000

10000

12000

2000

4000

6000

8000

0

2000

58 81 95 96 97 98 99 '00 '01 '02 '03 '04 '05 '06

Sponge productionSponge production(Estimation based on 20% increase rate)(Estimation based on 20% increase rate)

40000

30000

35000

15000

20000

25000

5000

10000

15000

0

5000

'04 '05 '06 '07 '08 '09 '10

Sponge Import & ExportSponge Import & Export(R d i i l di ti b d bli th d t f 2007 1(R d i i l di ti b d bli th d t f 2007 1 6)6)(Red is a simple prediction by doubling the data of 2007.1(Red is a simple prediction by doubling the data of 2007.1--6)6)

(China may export near to 5000t sponge in 2007)(China may export near to 5000t sponge in 2007)Year Import Export Net

import

2002 2147 11 +21363000

4000

2003 2824 73 +2751

2004 1838 57 +1781 0

1000

2000

2002 2003 2004 2005 2006 2007

2005 1718 828 +890

4000

-3000

-2000

-10002002 2003 2004 2005 2006 2007

2006 1608 1920 -312

2007.1-6 501 2650 -2149

-5000

-4000

Sponge Export Share in Total ProductionSponge Export Share in Total Production(still small but increasing)(still small but increasing)(still small but increasing)(still small but increasing)

20000

14000

16000

18000

20000

8000

10000

12000

14000

4000

6000

8000

0

2000

'02 '03 '04 '05 '06

China sponge national standardChina sponge national standardChina sponge national standardChina sponge national standardbrinell hardness

Chemical Elements (quality grade)%HBW/10/14700/3

0

Grade Brand

0

No less Than

impurity, No More Than

Fe Si Cl C N O Mn Mg H

No More Thang

0 级MHT-100 99.7 0.06 0.02 0.06 0.02 0.02 0.06 0.01 0.06 0.005 100

1 级MHT-110 99.6 0.1 0.03 0.08 0.03 0.02 0.08 0.01 0.07 0.005 110

2 级MHT-125 99.5 0.15 0.03 0.1 0.03 0.03 0.1 0.02 0.07 0.005 125

3 级MHT-140 99.3 0.2 0.03 0.15 0.03 0.04 0.15 0.02 0.08 0.01 140

4 级MHT-160 99.1 0.3 0.04 0.15 0.04 0.05 0.2 0.03 0.09 0.012 160

5 级MHT-200 98.5 0.4 0.06 0.3 0.05 0.1 0.3 0.08 0.15 0.03 200

Japanese makers standardJapanese makers standardJapanese makers standardJapanese makers standardGrade Ti Impurity

(%min） Fe Cl Mn Mg Si N C H O BHN

Soft 99.8 0.03 0.08 0.002 0.04 0.02 0.006 0.01 0.003 0.05 90

Sponge 99.7 0.04 0.08 0.002 0.04 0.02 0.006 0.01 0.003 0.06 95

Mild 99.6 8 0.1 0.005 0.05 0.02 0.01 0.02 0.004 0.07 100

Sponge 99.5 0.12 0.12 0.01 0.06 0.02 0.015 0.02 0.005 0.1 120

Some makers assay sheet sampleSome makers assay sheet sampley py pChemical Constituents % Brinell

Maker Size GradeLot size Ti Si Fe Cl C N O hardness

A 0.83-25.4 1 7,000 99.7 0.01 0.02 0.07 0.01 0.01 0.07 105

A 0.83-25.4 1 6,000 99.7 0.01 0.03 0.07 0.01 0.01 0.05 105

B 0 83-25 4 02,200

99 70.01 0.026 0.029 0.012 0.008 0.051 97

B 0.83 25.4 0 99.7

B 0.83-25.4 03,000

99.70.01 0.032 0.042 0.015 0.008 0.055 100

C 0.83-25.4 0 2200 99.7 0.02 0.034 0.06 0.02 0.007 0.049 94

C 0.83-25.4 0 2400 99.7 0.02 0.026 0.06 0.02 0.007 0.054 94

D 0.83-25.4 0 3200 99.7 0.013 0.029 0.046 0.01 0.002 0.044 96

D 0.83-25.4 0 2800 99.7 0.011 0.02 0.035 0.01 0.005 0.052 94

New sponge plantNew sponge plantNew sponge plantNew sponge plant

Sponge boom in ChinaSponge boom in China

N t 20 l t i d ti• Near to 20 plants in production• Near to another 20 on construction

Making sponge is just like digging potato?Making sponge is just like digging potato?g p g j gg g pg p g j gg g p

Sponge producing processSponge producing process((TiCl4TiCl4 S )S )((TiCl4TiCl4--Sponge)Sponge)

Illuminate

Melting(High titanium slag)

Chlorine

Chlorination(Crude TiCl4)

Distillation(Pure TiCl4)

Reduction(sponge cake +Magnesium chloride

Pure Magnesium

Titanium sponge cake

Crushing(sponge)

Testing and packing

Electrolysis(magnesium + Chlorine)

The Back GroundThe Back GroundTi ore and concentrate import & export (t)Ti ore and concentrate import & export (t)Ti ore and concentrate import & export (t)Ti ore and concentrate import & export (t)

(in 2006, 67% import from Vietnam, 27% from Australia)(in 2006, 67% import from Vietnam, 27% from Australia)Year Import Export2003 251,112 72,3212004 593,276 26,6482005 500,982 26,3442006 708,251 58202007.1-6 567,565 13,253

• Now China is a net Ti ore import country, in 2006, imported 708,251t, this is p y, , p , ,30% of total domestic consumption. In 2007 first half, China already import 567,565t.

• China is the second largest titanium dioxide producing country (860,000t in 2006) after US2006) after US.

• China has a huge TiO2 (paint) industry to support TiCl4 supply. Only about 6-10% of total Ti ore are used in Ti metal industry.

• That mean Ti sponge production is supported and the cost is linked with p g p pptitanium dioxide and coating market in China.

Sponge competitivenessSponge competitivenessSponge competitivenessSponge competitiveness• Making sponge is not as easy as digging potato, but it is

much easier then Western and Japanese’s think aboutmuch easier then Western and Japanese s think about that.

• Some expert said whole production line for 3000t/y need b t 40 illi USD b t t t f tit i hl idabout 40 million USD, but start from titanium chloride

(TiCl4), only need 4 million USD in China.• Off course, less environment cost contribute much but

the fact is, you can’t ask people living in a developing country like China doing business with developed country’s environment standard.

• Chinese sponge manufacturers are making progress on quality too (Grade 0 is 70% more, O, N content is low ).

Mill productsMill products

Mill Products ProductionMill Products Production(Actual)(Actual)

14000

10000

12000

6000

8000

2000

4000

058 81 95 96 97 98 99 0 '01 '02 '03 '04 '05 '06

Mill Products ProductionMill Products Production(Estimation based on 20% increase rate)(Estimation based on 20% increase rate)

30000

20000

25000

15000

20000

5000

10000

0'03 '04 '05 '06 '07 '08 '09 '10

Total Mill Products Import & ExportTotal Mill Products Import & ExportTotal Mill Products Import & ExportTotal Mill Products Import & ExportYear Import Export Net import

2002 2962 860 2102

2003 3787 1108 +26792003 3787 1108 +2679

2004 4197 1310 +2287

2005 5700 2513 +3187

2006 4682 4610 +72

Mill Products Import & Export Amount Mill Products Import & Export Amount TrendTrendTrendTrend

2500

3000

3500

Wire

1500

2000Bar/billet/parts

sheet<0.8mm

sheet>0.8mm

Tube

0

500

1000 Forging/others

02002 2003 2004 2005 2006

Mill Products Net import trendMill Products Net import trend(main exporting items are Bar/billet and sheet thicker then 0.8mm)(main exporting items are Bar/billet and sheet thicker then 0.8mm)

3000

1500

2000

2500

3000

0

500

1000Bar/billet/parts

sheet<0.8mm

sheet>0.8mm

Tube

-1500

-1000

-500 2002 2003 2004 2005 2006 Forging/others

-2000

Mill products competitivenessMill products competitivenessi ld k ti ld k tin world marketin world market

• Strong withg– Sponge/ingot– Bar/billet

Seamless tube– Seamless tube– Thick Plate (>0.8mm)– Metal Powder

• Can not produce or still weak with– Coil (this may change in 3 years)– Welded tubeWelded tube– Casting products– Aviation products

Trade with countriesTrade with countries

Sponge Import by CountriesSponge Import by Countries(2006 1608t)(2006 1608t)(2006, 1608t)(2006, 1608t)

Japan25%25%

U kuraine45%

Taiw an7%

Kazakhsatn13%N etherlands

6%Sw iss2%

Russia2%

Sponge Export by CountriesSponge Export by Countries(2006 1920t)(2006 1920t)(2006, 1920t)(2006, 1920t)

Korea38%

U SA34%

B elgium

Spain3%

B elgium7%U K

15%

N etherlands3%

Unwrought Import by CountriesUnwrought Import by Countries(2006 1244t)(2006 1244t)(2006, 1244t)(2006, 1244t)

Russia14%N etherlands

2%

O thers2%

2%

U kraine82%

Unwrought Export by CountriesUnwrought Export by Countries(2006 1544t)(2006 1544t)(2006, 1544t)(2006, 1544t)

Japan22%

O thers16%

U SA9%

B elgium13%

Taiw an40%

Scrap Import by CountriesScrap Import by Countries(2006 686t)(2006 686t)(2006, 686t)(2006, 686t)

kazakhstan11%

Japan1%

Russia40%

Kirgyzstan48%48%

Scrap Export by CountriesScrap Export by Countries(2006 1047t)(2006 1047t)(2006, 1047t)(2006, 1047t)

O thers4%

U SA49%

U K40%

N etherlands7%

Main exportersMain exportersMain exportersMain exporters• Sponge

• Zun Yi• Fu shun• Chao Yang Bai Sheng• Chao Yang Bai Sheng• Hua Sheng (BAOTI Group)

• Mill products• Mill products

• BaoTi• Shanghai No.5• WTT• BAIM

Government policy onGovernment policy onGovernment policy on Government policy on import and exportimport and exportimport and exportimport and export

Import & Export TariffImport & Export TariffImport & Export Tariff Import & Export Tariff

It HS C d I t E tItem HS Code Import ExportSponge 81082010 3 0Unwrought, powder 81082090 3 0Scrap 81083000 3 0Bar, billet, part 81089010 8 0Wire 81089020 8 081089020sheet& coil, thickness<0.8mm 81089031 8 0sheet& coil, thickness>0.8mm 81089032 8 0Tube 81089040 8 0Tube 81089040 8 0Forging and other 81089090 8 0

Ti products import/export policyTi products import/export policyTi products import/export policyTi products import/export policy

• 13% export tax rebate rescind on 2006/9/15 for sponge, ingot, powder and scrap.

• Convert business prohibited on 2006/11/2 for sponge, ingot, powder, scrap and some alloys.

• Export quotes in placed on 2007/1/1 for sponge, ingot, powder, scrap and Ferro-Ti in provincial levellevel.

• Rumor about export tax

ConclusionConclusion

Characters of China sponge import and exportCharacters of China sponge import and exportp g p pp g p p

• Sponge production is continually increasing, quality is getting better, but its influence mainly limited on g g yadditives in steel industry now. For sure it will invade titanium metal melting fields in the world market too.

• Sponge production cost is going up in China because of i i f t i l d t b t Chiincreasing of raw materials and energy cost, but Chinese manufacturers will try to manage its competitive cost.

• Sponge makers will continually focus on domestic k t b t h t fi d f t it i f imarket but have to find some safety exit in foreign

market too• For China, sponge export mean export natural resource

and electricity power This is not policy maker like toand electricity power. This is not policy maker like to know.

Characters of China titanium mill products Characters of China titanium mill products import and exportimport and exportimport and exportimport and export

• Mill products production is growing mainly driven by p p g g y ydomestic needs, export is increasing as well

• New investment and expansion are based on domestic market development and will focus on technology i timprovement.

• We will see continuous increase in production and export volume in coming years

• Now the target is coil, welded tube and aviation/military alloy

• China is putting pressures to Japan and West manufacturers to develop new technologies to stay in business

• Everybody talk about China but no bodyEverybody talk about China, but no body know the exact data in production or trade in Chinain China.

B t Chi i l i• But we sure China is enlarging as a titanium market to receive and playing bi l t t hibigger role as a exporter to ship.

AgainAgain

It i t t h t i fl d it• It is not a mater how you get influenced, it is how you get involve.