Prices briefing: May 2010

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Published: Monday, 26 April 2010

Major pricing developments and analysis. This month: barytes, rutile, antimony trioxide, metspar, bromine

Barytes

Barytes prices are firming due to a number of factors both in China and India. In parts of south west China there is a severe drought, the worst in decades, which is affecting the barytes producing provinces of Yunnan, Guizhou, and Sichuan. Barytes supply is tight and stocks are low at the ports.

Chinese drilling grade barytes prices have firmed by $1/tonne taking drilling grade, API, lump prices up to $65-68/tonne FOB China, and they could have further to go if the situation does not improve.

In the meantime, buyers are turning to Indian material. Indian barytes prices too are firming, due in part to the recent strengthening of the Indian rupee against the dollar. In addition, exporters have seen demand increasing from the Middle East. Power cuts in India have also forced producers to turn to diesel, which has increased production costs. Combined these factors have pushed Indian drilling grade barytes, lump, SG 4.2, up to $70-72/tonne from $67-70/tonne, FOB Chennai, and ground material in big bags up to $90-95/tonne, same basis.

Rutile

Leading mineral sands producer, Iluka has announced the end of “cap and collar” pricing agreements for its high grade titanium dioxide products at the end of 2010. These products are sold by their TiO2 content, and in the suite of mineral sands, rutile has the highest.

For over a decade, Iluka in common with other major rutile suppliers, has had contractual agreements which have set a floor (collar) and a limit (cap) on high grade titanium dioxide prices each year. Historically, this has meant that titanium dioxide minerals pricing has increased by CPI plus levels. However, this move will mean that prices are unrestrained for Iluka’s high grade product suite, making them more reactive to prevailing market conditions. The move will mostly affect rutile prices, which is predominantly sold into pigment manufacture.

Antimony trioxide

Antimony and antimony trioxide prices are rising day by day, as the supply squeeze really begins to bite. Chinese antimony trioxide traders are getting increasingly frustrated at a lack of antimony ore and metal supply, and can only watch as prices spiral upwards.

Up to now, the small antimony smelters have been the main channel for overseas antimony metal and trioxide supply. However, the government of Hunan province is closing 30 smaller antimony smelters this month and has also decreed that antimony ore can now only be sold to 5-8 specific metal smelters, which must have a minimum output of 5,000 tpa. This effectively means that the Twinkling Star operations are the main buyer for antimony ore.

Normally this wouldn’t be an issue except that Twinkling Star has had to cut back on its own markets in order to supply China Minmetals commitments, according to one source. Of Twinkling Star’s 1,300 tonne production of antimony trioxide each month, it has had to reassign some 550-800 tonnes to China Minmetals, which has meant shortages for other buyers.

So with supply squeezed, prices are rising. One trader told IM that they could reach $1,000/tonne, as prices increase step by step over the next month. This week, antimony trioxide prices leapt up about $1,000/tonne for material shipped to Rotterdam, whereas material FOB China has jumped by $1,250/tonne. Antimony trioxide typically 99.5% SbO3, is now between $7,900-8,000/tonne, FOB China for 20 tonne shipments.

Metspar

Improving Chinese domestic demand for metallurgical grade fluorspar (metspar) is putting some upward price pressure on Mongolian material. This combined with the rise of the renminbi against the dollar, has pushed prices for 85% CaF2 metspar up by $20-30/tonne, FOB China. The market for metspar is expected to grow further in 2010, which should keep prices firm, despite some predicted increases in supply.

Bromine

Chinese bromine prices are firming, with domestic prices increasing by more than 25% since the beginning of 2010. Bromine, large contracts, bulk, CIF Europe is priced at $2,400-2,750/tonne, whist prices for Chinese bromine have risen from $2,250 to $2,850/tonne in the first quarter.


Drilling grade barytes, lump, SG 4.20 FOB Chennai




Drilling grade barytes, API, lump, FOB China


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