By March most companies had
submitted their end of year accounts with differing forecasts
for the year ahead. While a producer is unlikely to emphasise a
fall in sales or volume, most seen so far have been relatively
bullish when mentioning prices.
News out of China showed how
quickly the market can change. In the space of one week the
rare earths market forecast was bearish, then stable, then
bullish Ð and this all from one company.
What is clear is that despite
economic uncertainty elsewhere, in minerals markets there are
still good times ahead.
TiO2 rising
Several leading producers of titanium dioxide (TiO2)
have announced price increases of over $200/tonne. This month
Kronos Worldwide posted impressive 2011 results, underlining
increases in sales revenue.
“Even with reduced sales
volumes, we implemented significant TiO2 selling
price increases in 2011, including in the fourth quarter, and
set a new record for TiO2 segment profit,” CEO
Steven Watson said. DuPont, Huntsman, Cristal Global and Kronos
have all announced price hikes for 1 April 2012.
Rutile
IM heard from the rutile industry this month as
sources warned that rutile prices could top $4,000/tonne in the
second half of this year.
For once this perceived uptick in
demand was not due to an increase in TiO2
applications but as rutile’s role as a welding feedstock
mineral that is used in newer welding technologies.
Sources from the industry confirmed
to IM that welding grade rutile prices Ð
higher than those for pigment grades Ð are expected to
increase steadily during 2012 as the industry moves towards
flux-cored wire technology.
Prices for welding grade rutile,
reported at $3,000-3,100/tonne during Q1 2012, are expected to
continue their rise to reach $3,300-3,500/tonne during Q2 and
even $4,000+/tonne during H2.
“Given that welding grade
rutile is higher priced than pigment grade, we could see more
feedstock producers aiming for the welding sector,” a
leading mineral producer told IM.
Iodine
A year on from the Japanese earthquake disaster and some
minerals are still showing the effects of market
disruption.
Iodine prices had remained in a
range of $29-33/kg (crystal, 99.5% min, drums, spot &
contract) for two years but levels spiked following the tragic
Fukushima nuclear disaster.
“The Tohoku earthquake, water
shortages in Chile and robust demand combined to create a
perfect storm, blowing iodine spot prices up to record
levels,” IM wrote in its Iodine feature
in November 2011.
Prices at the moment are at a
midpoint of $75/kg for spot prices and $50/kg for contract
(see graph, p.89).
But in March SQM released its
results, arguing that it believed iodine prices would not come
off and instead would actually continue to increase through
2012.
Rare earths
In rare earths, Chinese analysts predicted a “boom
season” to occur in rare earths markets in May or June
this year.
The forecasted upturn has been
attributed to a perceived surge in demand for wind power,
lighting equipment, LED, home appliances and air
conditioners.
Analysts cited the Chinese
government’s “Non-ferrous Metal 12th
Five-year Plan”, announced in February, which highlighted
the need to develop industries (such as those mentioned), which
will require a large amount of rare earths.
Metals analysts still emphasised
the need to remain cautious due to the ongoing European debt
crisis, but said that the situation was expected to
improve.
“It is estimated that in the
second and third quarter the economics in the west will get
better, which will stimulate the export of rare earths and
their products and support the prices.” Wei Yishan,
Shanghai Metals Market analyst forecast.
Fire sale to end
A new policy introduced by the Chinese government and available
from March 2012 will see companies separated into three groups
within the rare earths market: rare earth production, smelting
and separation, and trading.
Each group will have to receive a
code prior to submitting an invoice to the government. The
government decides whether or not the company should receive
the code.
As many trading companies were
concerned about the application process for the invoicing
system they recently partook in a “fire sale”. This
is now seen to be ending and prices are expected to
stabilise.
Media reports out of China
stipulate that a large number of rare earths exported were done
so illegally. It is hoped that the new invoicing system will
curb this activity, in particular in the heavy rare earths
market.
Data from consultancy the
Industrial Minerals Company of Australia (IMCOA), estimated
global demand for rare earths (total) in 2011 at 58,000 tpa, up
from 52,500 tpa in 2010. The export quotas in 2011 from China
were at 30,184 tpa. Of that, heavy rare earths made up less
than 15,000 tpa, Chinese customs data shows.
Perlite
As discussed in February, perlite prices were indeed placed
higher in March on the back of higher input costs. However,
with demand falling off in the market, traders say prices are
unlikely to continue to rise.
Perlite prices out of Europe have
increased by €5/tonne, taking levels to a
€70-75/tonne range, from a range of €65-70/tonne.
Volume in this market is still
relatively low, with most pegging this latest increase purely
on increased mine costs. Costs at the mine face have risen by
between 3-5%, producers told IM.
Levels are not expected to remain
high in this market, due to a fall off in demand brought on by
the uncertain economic future in Europe and increased
competition.
“There is more competition
which should suppress any further increase and may lead to
erosion of the above increase - time will tell,” one
trader hypothesised.
Vermiculite
Vermiculite prices were bullish throughout 2011, and the trend
appears to be continuing into 2012.
South Africa, bulk, FOB Antwerp,
vermiculite prices have risen to a range of $400-850/tonne, up
from $230-450/tonne at the start of the 2011.
“I expect vermiculite prices
will continue to rise, albeit at a slightly slower pace. Our
product right now goes exclusively to Europe,” Mark
Arnesen, Gulf’s recently appointed CEO, told
IM.
“As Europe pulls out of this
financial crisis, which you have to believe it will, so too
should the demand for vermiculite strengthen,” Arnesen
added.
Antimony trioxide
Following a frisson of excitement in February, March saw
antimony trioxide prices falling off, following complaints that
recent higher prices were unsustainable, market sources told
IM.
The price of the flame retardant
mineral edged up on the back of a curtailment of supply out of
China. Traders in China denied that there was a shortage of
supply in the area and claimed that the price was being held
unnaturally high.
Supply slowed out of China after
smelters in Hechi and Yizhou city, Guangxi province, were
ordered to close following a cadmium poisoning incident.
Others said that the price of
antimony trioxide was coming off as there was an oversupply in
the market.
“This was the first price
increase in a while. But people are now seeing that the
international situation is not getting better and so
manufacturers are decreasing the price a little,” one
source said.
ONE TO WATCH
Barytes
Anyone with half an eye on minerals markets will know that the
price of barytes and other oilfield minerals has increased in
line with stronger demand on the back of heightened exploration
in North America. But sources are indicating that the price of
chemical grade barytes out of China is also rising.
ONE TO WATCH
Rare earths
Rare earths demand within China is rumoured to be increasing.
The recent drop off in prices has made it
“acceptable” for several end users to pick up orders,
local press reports suggest.
Magnetic material producers
Beijing Zhong Ke San Huan High-tech admitted to reporters that
it was replenishing stocks while prices were low. Domestic
praseodymium prices are now around $53.69/kg.
ONE TO WATCH
Iodine
Despite relatively recent assurances that the iodine market has
flattened out following hikes at the same time last year,
recent communication with the market suggests that levels are
picking up again.
“The base level has
increased slightly in line with demand,” one source
divulged at the end of March.
Rare earths prices
Rare earths prices
Titanium dioxide prices
