Price Briefing October 2010

By
Published: Monday, 27 September 2010

Major price hikes for vermiculite in store for 2011; Iodine pricing stable; Chinese dead burned magnesia prices remain strong; soda ash; potash

  • Vermiculite
  • Chinese magnesia
  • Iodine
  • Soda ash
  • Potash

Alison Russell

Vermiculite


Vermiculite prices are set to rise significantly in 2011. Shortages of certain grades, particularly coarse grades, are becoming a real issue for European consumers, with key producers unable to satisfy demand. Price hikes could be as much as high as 30%, which will be a shock to the system. Many buyers perceive vermiculite as a low value product, but are now having to reshape their view.

Demand for vermiculite has been growing, driven in part by eco-trends for natural materials. The main growing end-uses include insulation and sound-proofing. Substitute materials could erode vermiculite’s market share slightly, but much of this has already happened where it was an easy option.

New production is coming on to the marketplace from Gulf Resources’ operation in Uganda, which was commissioned mid-year. This will have a capacity of 20,000 tpa of vermiculite when fully operational, including the coarse grades required by the market. However, it will not be enough to satisfy all the demand. Not all vermiculite operations around the world, including those in the USA and Brazil, produce the coarse grades.

Put together, this means that the price rises will have to be taken on board to a large extent by consumers if they want the material. Negotiations are underway for next year’s contracts, and they won’t be easy.

Iodine

Iodine pricing is stable, despite an uptick in sales in the first half of the year. There is plenty of supply and there are also a number of producers who could be attracted to reopen should prices run higher, such as operations in Russia, Turkmenistan and Azerbaijan. However, some of the sales increase in the first half could be restocking of inventories following the downturn, and sales in the second half of 2010 are not expected to be quite as strong.

Global iodine sales fell by around 10% last year, in the teeth of the global economic crisis, despite the fact that many of the markets it serves are more “recession proof” such as healthcare, pharmaceuticals, nutrition and biocides. Growth in Asian markets has been dramatic over the last decade, mainly because of iodine’s use in optical polarising film for LCD screens.

Contract prices for the first half of the year have been $27-30/kg ex-works Chile, whilst list prices are steady at $30.80-31.80/kg.

Chinese magnesia

Chinese dead burned magnesia prices are remaining strong, despite the fact that many buyers for refractory companies are proceeding with caution at the higher price levels. However, if buyers are in the market then they are finding themselves paying top prices for material. IM has had reports of 90% MgO dead burned magnesia priced as high as $500/tonne FOB China, although most indications are closer to $450/tonne same basis.

Supply for export is still tight with limited availability of export tonnage. However, only about half of the licences for export quota for the second half of the year have been used so far, in early September. This should mean that theoretically there are export licences still available, but getting hold of them is another matter.

Soda ash

One of the leading natural soda ash producers, US company, FMC Corp has announced an off-list price hike of $10/s.ton for its dense soda ash, which will take effect from 1 November. This follows a similar increase of $10/s.ton, in early July.

Export demand for US soda ash has been strong in the first half of the year, and demand has recovered in some parts of the domestic flat glass industry and in the detergent market.

The company’s list prices remain unchanged at $260/s.ton for bulk soda ash, FOB Westvaco or Granger, Wyoming for dense material, whilst packaged soda ash is still $325/s.ton for 50lb bags and $315/s.ton for 200lb bags same basis. The off-list pricing is negotiated individually by company, but US soda ash is currently priced at $140-180/s.ton, bulk, ex-works USA for large contracts.

Meanwhile in Europe, soda ash prices are steady. Competition from the naturally sourced Turkish material has put a dampener on any price rises for the second half of the year.

Potash

Canadian potash giant, PotashCorp has raised list prices for the fourth quarter for ex-warehouse/potash centre material in the USA. The company is looking for a $450-50/s.ton increase over Q3, and took effect immediately or as contracts permit. This puts the list prices at $440-450/s.ton for granular material (60% K2O) loaded in to trucks or railcars.

Potash demand in North America has picked in 2010, enough for PotashCorp to put up prices. Potash prices remained balanced in the second and third quarter at $390-400/s.ton, after dipping slightly in the first quarter.

In Europe, prices are steady going into Q4, with no upward price pressure at the moment according to market sources. European potash prices are holding at €300-310/tonne ($380-400) for standard grade potash in bulk.


Iodine crystal, 99.5% min, drums, $ per kilo spot & contract



Chinese DB magnesia, 90% MgO, lump, FOB China



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