The mood of delegates attending
IMs Fluorspar 09 (F09) conference, 17-19
November 2009 in Valencia, Spain, was on the
whole fairly positive, although after a year of turbulent
aluminium and steel prices, some members of the fluorspar
supply chain were, understandably, more conservative with their
The keynote speech by UK economics
consultant James King addressed the short-term
and long-term demand scenario for fluorspar in metallurgical
markets both its role in aluminium fluoride
(AlF3) production and as a fluxing agent in electric
arc furnace (EAF) steel.
After berating analysts for missing
every past significant economic dip including the most
recent world recession King gave a comprehensive forecast
indicating that AlF3 markets could account for a 4%
growth in fluorspar demand next year.
This modest rise was countered with
a long-term growth forecast of nearly 50%, with King predicting
an additional 1.05m. tonnes of fluorspar could be needed for
AlF3 production and aluminium smelters by 2030.
A bullish growth figure of 10% was
predicted for steel-related fluorspar consumption in 2010,
while Kings longer term outlook suggested an extra 1.77m.
tonnes of fluorspar could be required for EAF steel production
by 2030 that is, if EAF steel output reaches Kings
estimate of 840.1m. tpa, over 50% higher than 2008
A slightly different
AlF3 supply scenario was presented by
Michael Reynolds, director of MS Reynolds Srl,
during day two of F09, who suggested AlF3 prices are
likely to fall before they increase, owing to a possible export
surge by Chinese producers.
Reynolds proposed that Chinese
AlF3 producers will adopt an aggressive export
policy from 2010, as forecasts indicate that the country
will only require 50% of its AlF3 output next year.
As a result, world AlF3 prices are expected to
reflect Chinas lower production costs.
Should Reynolds prediction
come true, this could have a significant impact on western
AlF3 producers, who would have to compete with
higher exports of lower cost Chinese material.
Working out the calculations,
Reynolds suggested that Chinas 2010 production could grow
to 555,000 tonnes with 370,000 tonnes reserved for
domestic use and 185,000 tonnes earmarked for export.
Considering world AlF3 output was 845,000 tonnes in
2008, China certainly holds a significant share of the pie.
More importantly, if export levels
grow, only 185,000 tonnes of the Wests 338,000-tonne
AlF3 capacity would be utilised; representing a
utilisation rate of around 55% and far below the 75-80% rate
required for companies to survive.
What this could mean is further
market consolidation. As Reynolds summarised: It will be
like musical chairs as utilisation rates fall: someone will end
up on their backside.
Predictions of China increasing its
AlF3 exports may seem inconceivable to some, then,
considering that the country is still fighting a World Trade
Organisation (WTO) challenge by the EU, Mexico and the USA
regarding its export restrictions on key steelmaking
minerals a subject addressed by Dan
Horovitz, partner at law firm Holman Fenwick Willan
LLP, during the last presentation of F09.
Horovitz believes it is a case of
when, rather than whether, China will be forced to change its
trade policies; perhaps even prompting its present export
licensing system to be dismantled.
Unknown to delegates at the time,
reports in China Daily released during the last day of
F09 indicated that China has rejected the EU, Mexico and
USAs call for a WTO investigation into its export
During a meeting with the dispute
settlement panel the latest development in the export
case Chinese delegates reiterated that the countrys
measures related to exportation were consistent with the
principles and rules of the WTO, and that China
consistently respects and abides by the WTO rules and its
One member of the delegation
commented: China is disappointed that the three
complainants choose to move forward with requests for panel
establishment at this meeting ... and [China] is not in a
position to agree to the establishment of a panel at this
Requesting a panel is the next step in the WTO dispute
settlement process after consultations fail. As a panel request
can only be blocked once, if the EU, Mexico and USA decide to
make a second request at a later date, then this would be