One of Chinese famous titanium sponge manufacturer is taking a more realistic view of expansion after years of rapid growth,while key mill product companies are looking to jump-start a "Titanium Valley" focused on value-added products.

  Earlier expansions in China's sponge industry-tied to the country's torrid growth in gross domestic product (GDP)-will take a backseat to investment geared to specific "market features," Benson Quan, president of Walnut, California-based Wellmet International Inc, said last week at the International Titanium Association's annual conference in Chicago.

  "GDP-chasing is not very popular in China now" in the wake of post-2012 overcapacity, Quan said, whose company is the exclusive U.S. sales agent for Chinese titanium sponge producer Zunyi Titanium Co.

  China's titanium sponge production jumped to about 80,000 tonnes in 2013 from about 8,000 tonnes in 2005, Quan said, noting that the country's GDP growth rate of 7.7% last year was down from more than 14% in 2007.

  While Chinese sponge producers had been aiming to reach an annual capacity of about 150,000 tonnes, Quan indicated that this target has receded as producers were forced to reduce output after 2012. Current domestic conditions are "difficult," he said, noting that large producers have cut back, and smaller and uncompetitive producers have shut down.

  China's actual titanium sponge capacity is currently 109,000 tonnes, according to Zhang Jie, vice manager of the foreign trade department at China's Baoji Titanium Industry Co.

  The country's titanium sponge output reached only 81,171 tonnes in 2013, Zhang said. About 20,000 tonnes of that was attributed to Zunyi Titanium, Quan said, adding that the company has an annual capacity of 34,000 tonnes.

  Meanwhile, China is looking to build "a new beginning" for its industry with a "Titanium Valley" project aimed at establishing a base for production, as well as for research and development, over the next five to 10 years, Zhang said.

  The initiative-led by Baoji-affiliated Baoti Group Co, and with the approval of various government agencies-is designed to form an industry "cluster" that will account for 80% of China's total titanium output and 20% of global production, as well as 40% of the country's mill product exports.

  The effort will focus on such value-added products as capillary tubes, precision bar and wire for aerospace fasteners, pipe, tube and forgings. Baoti Group looks to encourage development of high-temperature, particle-reinforced and combustion-resistance alloys, along with low-cost titanium for sports and other nonaerospace markets.

  Industrial and other nonaircraft demand accounts for the bulk of Chinese consumption. This stands in contrast to the USA, where most titanium is consumed by aerospace. The chemical industry accounted for 58% of China's mill product market in 2013, followed by metallurgical applications, 14%; and aerospace and aviation, 11%, Zhang said.

  Chinese titanium mill product production was 44,453 tonnes last year, about 10,000 tonnes of which were exported, according to Zhang.

  Neither he nor Quan forecast the 2014 market in China.