Price Briefing: March 2010

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Published: Thursday, 25 February 2010

Major pricing developments and analysis. This month: rare earths, rare earths, soda ash, titanium dioxide, calcine alumina, graphite

Rare earths

January and early February saw price rises for many rare earths serving different markets, as a steady demand returns and supply tightens. Neodymium oxide prices (99%) have firmed up from $21/kg, bulk FOB China to $26-28.6/kg whilst praseodymium oxide prices have risen from $21.5/kg, to $24-26.7/kg same basis, both on an increase in demand for magnetic materials. At the same time, lanthanum oxide (99%) prices bounced back to $5.5/kg, bulk FOB China, with one indication as high as $5.8/kg, whilst cerium oxide, 99%, is at levels of $4.2-4.6/kg for bulk purchases FOB China.

By mid February it seemed as though the steep upward price trend may have started to tail off. Reported price indications were rises of under $1/kg for neodymium and praesodymium oxides, but this could have been reflecting a quieter market during the Chinese New Year celebrations. Certainly further price increases are expected for both materials in the next quarter.

Potash

Potash prices were also on the move. The announcement that BPC placed $25/tonne on spot prices for standard and granular grades in Brazil and Asia from March augers well for rising price levels. Elsewhere, both PotashCorp and Kali+Salz AG put forward price hikes which were to take effect in early March, as demand for potash starts to pick up.

International marketing agency, Canpotex announced that it had settled a spot contract for 350,000 tonnes with the Chinese. The actual price was undisclosed, but thought to have been at least $375/tonne, some $25/tonne higher that the BPC/Chinese deal at the end of 2009. This is yet another sign that potash prices might have turned a corner. There is also a move towards shorter quarterly and spot contracts in the potash industry, after the major fluctuations experienced last year.

Soda ash

Soda ash prices also firmed in Asia and particularly in China. Prices have reportedly soared by >20% over the last three months, and look to go higher still. Dense and light synthetic soda ash is between $170-200/tonne, FOB China. However, soda ash production costs in China have been rising faster, and many producers have been making a loss over the last year. Analysts reported that soda ash prices are unlikely to rise too much further owing to worries about surplus capacity.

Titanium dioxide
pigment

There were more upbeat signs in the marketplace last month as TiO2 pigment producers looked to a more positive 2010. Sales volumes have improved over the last couple of months, and as a general indicator of economic growth, this bodes well for many other minerals used in markets such as construction, coatings and automotive sectors. Pigment prices have yet to show any significant recovery, although prices in Asia firmed slightly.

To dampen the spirits though, five TiO2 pigment producers have been served with a federal antitrust class action by Haley Paint Co. in the USA which alleges the companies conspired together to fix price levels (see p.26; IM 16 Feb 2010: US TiO2 price-fixing allegations).

On the back of the increase in pigment volumes, ilmenite feedstock prices are picking up, and the spot market prices are rising. Indications are in China, prices are $105-125/tonne, excluding tax whilst indications in Europe are closer to $120-130/tonne.

Calcined alumina

Contracts for non-met grade alumina in the USA have been settled at pretty much 2009 levels, with some downward movement within the quoted price range There has been a slight price rise in the market for wet filtercake, which is typically one of the markets most sensitive to price increases in the metallurgical alumina market. However, generally the non-met alumina industry is very cautious, seeing a marginal increase in demand and return to buying from the refractories companies. In the US, bulk prices for calcined alumina (98.5-99.5% Al2O3), FOB refinery are $550-600/ tonne, whilst ground calcined alumina, same basis is $700-800/tonne.

Graphite

Graphite prices have risen over the last month, as they often do at this time of the year, as Chinese production levels dip during winter months. However, this year, exceptionally severe weather in China combined with low inventories going into the winter has seen supply tighter than normal. Also, Chinese domestic demand has not slackened for graphite in steel refractories, which has soaked up material.

There is still upward pressure on graphite prices, particularly at the lower end of the price ranges for 94-97% C material, fine and medium, CIF Europe. There have been various indications lifting prices by between $100-200/tonne, although other sources have kept prices at the same levels. Little will be fixed now until after the Spring Festival in China, but we could anticipate an easing of some prices, as with normal fluctuations during the year.


Neodymium oxide and Praesodymium oxide, bulk FOB China



Graphite, crystalline, 94-97% C, CIF UK Port



Solid lines = top of range; broken lines = bottom of range