Tianfeng Securities: In the context of anti-involution, focus on investment opportunities in the titanium dioxide industry

According to the Zhitong Finance APP, Tianfeng Securities released a research report stating that the global titanium dioxide CR4 will be 44% in 2024, with major producers including LB Group, Chemours, Tronox, and Venator. In recent years, multiple overseas facilities have been shut down, providing opportunities for Chinese companies to continuously increase their global market share. From January to August 2025, the average operating rate of domestic titanium dioxide was 70%. Under the dual pressure of exports and domestic demand, industry inventory has rapidly accumulated, and the price trend of titanium dioxide has significantly declined. As of September 19, the price difference for domestic sulfate titanium dioxide products was 5,278 yuan/ton, the lowest since 2006. In the context of "anti-involution," it is recommended to focus on leading companies with integrated layouts, particularly LB Group (002601.SZ). The main points of Tianfeng Securities are as follows: China is the world's largest producer of titanium dioxide, and the shutdown of multiple overseas facilities brings development opportunities for Chinese companies. Since 2000, the increase in global titanium dioxide production capacity has mainly come from China, which is the world's leading producer of titanium dioxide. In 2024, China's titanium dioxide production capacity will account for 56% of global capacity. The global titanium dioxide CR4 will be 44% in 2024, with major producers including LB Group, Chemours, Tronox, and Venator. The shutdown of multiple overseas facilities in recent years has provided opportunities for Chinese companies to continuously increase their global market share. China's titanium dioxide supply pattern is characterized by "one strong leader + multiple strong players + long tail," and industry policies impose requirements on energy consumption and processes. There are many domestic titanium dioxide companies, with only eight companies having a production capacity of 200,000 tons or more, accounting for 58% of the total domestic capacity. Among them, LB Group ranks first with a production capacity of 1.51 million tons, holding a market share of 26%. The "Key Energy Efficiency Benchmark Levels and Baseline Levels in Key Industrial Sectors (2023 Edition)" and the "Guidance Catalog for Industrial Structure Adjustment (2024 Edition)" impose requirements on the unit energy consumption and processes of titanium dioxide. Companies with low-cost, mature large-scale chlorination titanium dioxide technology, co-production processes, and energy efficiency benchmark levels have a competitive advantage. Domestic demand for titanium dioxide is strongly correlated with real estate, while external demand still presents certain opportunities. Tianfeng Securities found a positive correlation between housing starts and completions and the apparent consumption of domestic titanium dioxide. Since August 2023, the Eurasian Economic Union, the European Union, India, Brazil, and Saudi Arabia have successively initiated anti-dumping investigations against China's titanium dioxide industry. However, factors such as the high external dependence of titanium dioxide demand in some major exporting countries and considerable economic growth still leave certain opportunities for China's titanium dioxide external demand. The price difference in the titanium dioxide industry is currently at a historical low. From January to August 2025, the average operating rate of domestic titanium dioxide was 70%. Under the dual pressure of exports and domestic demand, industry inventory has rapidly accumulated, and the price trend of titanium dioxide has significantly declined. As of September 19, the price difference for domestic sulfate titanium dioxide products was 5,278 yuan/ton, the lowest since 2006. The proportion of outdated production capacity in the titanium dioxide industry is about 20%. On July 16, 2025, the Ministry of Industry and Information Technology and four other ministries issued a notice on conducting a baseline assessment of outdated facilities in the petrochemical and chemical industry, with Hunan Province following up on the assessment. According to data from Zhuochuang Information, the proportion of production capacity in China's titanium dioxide industry that is over 20 years old is approximately 19% Target Aspects In the context of "anti-involution," focus on leading enterprises with integrated layouts, and recommend paying attention to LB Group (002601.SZ): 1) The company's main products are titanium dioxide, sponge titanium, zirconium products, and lithium battery anode and cathode materials, among which titanium dioxide has a production capacity of 1.51 million tons/year and sponge titanium has a production capacity of 80,000 tons/year, both ranking first in the world. The company has formed a green industrial chain that integrates the mining and processing of titanium minerals, the manufacturing of titanium dioxide and titanium metals, and the comprehensive utilization of derivative resources. 2) The company is the only titanium dioxide production enterprise in China that spans the entire titanium industry chain, possessing high-quality mineral resources and deep processing capabilities, with products covering the entire titanium industry chain. The company holds multiple mining rights, ensuring a stable supply of titanium concentrate for production. Risk Warning Risks of raw material price fluctuations, safety and environmental risks, and risks of continued economic downturn triggered by overseas economic decline