The price of magnesium rises sharply, how will the titanium industry respond.

The current surge in magnesium ingots could be similar to the seven-fold increase in titanium sponge prices between late 2004 and 2008, which rose from more than 40,000 yuan per ton to 250,000-300,000 yuan. Vanadium prices in the last two years have also been insane, but any frenzy will eventually return to normal.

Sponge titanium cost analysis
Magnesium ingot and titanium tetrachloride raw material are the main cost of titanium sponge. According to the theoretical data that 1.1 tons of magnesium ingot and 4 tons of titanium tetrachloride are needed to produce 1 ton of titanium sponge, the cost of titanium sponge alone is close to 100,000 yuan/ton.

The cost of titanium sponge is not only composed of magnesium ingot and titanium tetrachloride, but also management costs, financial costs, depreciation costs, water and electricity costs, labor costs and other costs. In this way, the cost of titanium sponge per ton is more than 100,000 yuan, 110,000 yuan or 120,000 yuan has been objectively constituted.

The cost composition of titanium sponge enterprises is also different. The cost of titanium sponge of private enterprises is slightly lower than that of state-owned enterprises, and the cost of titanium sponge of full-process enterprises is obviously better than that of semi-process enterprises. Full-process enterprises need to supplement about 0.15 tons of magnesium ingot to produce a ton of sponge titanium, and half-process enterprises need about 1.1 tons of magnesium ingot.

There are many factors about the price of titanium sponge, and the main influential factors are as follows:

I. Raw material price rises. For example, the main raw materials magnesium ingot and titanium tetrachloride rise will inevitably affect the price of titanium sponge, as well as the rise in electricity costs, labor costs and financial costs, etc., which are all factors affecting the price of titanium sponge.

Second, the downstream market needs the application growth in new fields on the basis of the stock, and the incremental demand is bound to stimulate the price of sponge titanium. For example, in recent years, the expansion of military products and the expansion of civilian applications are factors that stimulate the production and price increase of titanium sponge.

Three, the change of titanium sponge production capacity around the price change. In recent years, the downstream market just need titanium sponge is flexible growth obviously, but the price of titanium sponge is back to less than 2004-2008, 250000-300000 yuan, the price of this two or three years in 55000-80000 yuan only range (fluctuates up and down a lot of time is in 60000 yuan), the reason is that titanium sponge increases production capacity quickly, real output increase too fast: Around 85,000 tons in 2019, 123,000 tons in 2020 and 150,000 tons in 2021. At present, due to the soaring magnesium ingots, sponge titanium enterprises are facing production limits, production cuts and even some production stoppings. The output of sponge titanium in 2021 May be slightly increased on the basis of 2020.