Slowing real estate industry and coatings market has also cast shadow on titanium dioxide (TiO2) industry, and continuous fall in TiO2 price has been bothering manufacturers, distributors and economic commentators.

It is asserted that in the latter half of 2013, titanium dioxide market will recover as downstream industries stabilized. But according to Shanghai Titanos Industry Co., Ltd.’s general manager Ning Kecheng, the recovery has upper limit. “It is hard for China’s titanium dioxide industry to back to the top,” Ning says.

Government investment against the global financial crisis used to be a great stimulus for titanium dioxide demands, but the market bubble which reached its peak in 2011 started to burst in 2012, when governments decide to disinvest real estate industry and titanium dioxide’s other downstream industries. TiO2 prices then began to slump.

“China has eyed serious weakness in TiO2 demands this year, and those with backward production capacity are most affected,” Ning says. “Some of them even suspend production.”

According to Ning, small companies in South China face more severe plight, but as the whole country, TiO2 demands are still rising by a reasonable increasing rate of 10% to 15%.

Coatings industry is one of the most important downstream industries of titanium dioxide, and is often viewed as a key to the recovery of titanium dioxide market. However, as TiO2 prices keep declining, most coatings manufacturers, especially small and medium ones, have to lower the stock to the minimum.

Chinese government’s policy restrain on real estate industry—a crucial downstream market of coatings industry—is also an undoubted cause of the depression in coatings industry. Though the just-ended political bureau of the CPC central committee meeting has showed evidence that government is likely to ease the restrains, analysts say the potential demand increase is far from enough to pull titanium dioxide market out.

“It will be a long way for TiO2 Prices to back to those in early 2012, the highest on decade’s record,” Ning says.

Besides the coatings industry, paper-making industry, whose production scale is anticipated to surpass 1,500 billion Chinese yuan, is another big consumer of titanium dioxide.

“This year’s domestic demands and export volume of titanium dioxide should be about 1.7 million tons, while the current output has already exceeded this figure,” Ning says. “Increased demands from paper-making industry would be a great help, but it is not enough to fill the gap alone.”

Though it seems hard for titanium dioxide market to recover later this year with growing downstream demands, Ning Kecheng believes there is still a great opportunity.

“Lowest price indicates best time for industrial structure adjustment,” Ning says. “Once outdated capacity is washed out, the market will restore automatically.”