With bearish headlines flashing across screens in May it
would be logical to come to the conclusion that all markets,
minerals ones included, were failing.
As IM went to
press it was still unsure if Greece was to stay in the Euro or
leave. While Greece is home to many industrial mineral deposits
and companies - S&B, the bentonite, bauxite and
perlite producer is based there - its exit from the Euro
could have far-reaching consequences for other economies and
markets.
The vote on 17 June will be closely
monitored around the world - that goes without saying
- although many industrial minerals companies articulated their
concern in May.
“Europe remains a
concern,” Rio Tinto Minerals’ chief commercial
officer, Bob Katsiouleris, confided to IM.
“Especially southern Europe -
notably Italy and Spain. Countries which have been
traditionally excellent markets for borates in ceramics and
frits are seeing very, very low periods or points of
demand.”
The Cookson Group also said that it
expected weaker demand in its main end markets in Europe this
year in its interim management statement.
The bearishness in the Eurozone and
the UK was reflected in the Manufacturing Purchasing Managers
Index (PMI) indexes, which slipped again in May. The Office of
National Statistics also revealed that GDP in the UK fell by
0.2% in the first quarter of 2012, led by a fall in
construction.
But despite all this doom and
gloom, industrial minerals companies - for the most
part - posted positive results in their first quarter
assessments.
“Despite the fear of a deep
recession in Europe expressed in the course of the exacerbating
sovereign debt crisis, the steel market, and consequently the
refractories market, showed a surprisingly robust development
in Europe,” world-leading refractories group RHI AG
explained.
Also in Europe, industrial minerals
giant Imerys alluded to the constraints being felt at the
moment in its Q1 results, released at the end of April.
End markets for its products have
recorded slow growth in Europe, the French conglomerate
admitted, but growth in steel markets was still up year on
year. And dry bulk shipping costs for industrial minerals were
also on the rise again, analysts reported.
Lithium
One industry which made little to no mention of the
macroeconomic climate was lithium, which, judging by
producers’ results issued over the course of May, expected
demand to remain healthy.
SQM, the largest lithium carbonate
producer in the world, posted a 36% increase in profit in its
first quarter results.
Rockwood Lithium, a division of
Rockwood Holdings Inc., announced that it was increasing the
price of all of its lithium salts products by $1,000/tonne.
The changes are effective 1 July
2012 and will encompass lithium carbonate and lithium
hydroxide, Rockwood said.
Prices of lithium hydroxide
(56.5-57.5% LiOH, large contracts, packed in drums or bags, del
Europe or US) are at around $7/kg according to the
IM prices database. Lithium carbonate, (large
contracts, del continental US) are in a range of
$2.50-3/lb.
The announcement, unsurprisingly,
was welcomed by Galaxy Resources, which quoted First Analysis
Securities Corp. who said the price increase equated to a 22%
rise.
The company said in its first
quarter results that sales in its lithium segment had increased
year on year.
It also recently announced plans to
invest $140m in a new lithium carbonate production plant in
Chile.
Prices in the lithium market are
stable at the moment - according to market participants,
but as one told IM: “I expect more will
jump on that particular bandwagon,” signaling that
increases may be expected from other producers come July.
Energy bites
Imerys Performance and Filtration Minerals released a statement
in early May stating that it had “no choice but to
implement a system of energy surcharges (ESC) across its range
of European products as contracts allow”.
The level of the surcharge
applicable to each product will be calculated based on
independently published indices for the cost of natural gas and
oil, from the ICE website. ICE is an energy exchange and
pricing service.
In soda ash, as with other markets,
energy remains a problem.
European soda ash producer Novacap
told IM that despite higher pricing in soda
ash markets: “Prices are not high enough in order to
recover normal margins,” CEO Pascal Bandelier
exclaimed.
“The current situation is
slightly improving, but absolute figures are still very
high,” he added.
Soda ash prices are - for
now - stable, but companies hinted that prices may rise in
the next quarter to offset energy price hikes.
FMC Chemicals Group pointed to
stronger prices in soda ash driving the company’s profit
for the first quarter of the year. Profit was at $46.1m, up $6m
when compared to Q1 2011.
Elsewhere, in talc markets, sources
told IM that prices have increased ahead of
all expectations as energy and mining costs bite.
In July 2011, IM
reported that talc prices were expected to increase by between
2-5% as per historical trends.
But market sources in May said that
in certain areas of the world the costs of mining, energy and
transport have escalated so much that in some areas, notably in
South Africa, prices have doubled.
Prices for Chinese talc (normal,
200 mesh, ex-store UK) are now at around $307-327/tonne,
China-based sources claim. For 350 mesh, prices were at
$312-337/tonne. This, sources said was due to higher energy and
freight costs.
Prices for talc mined and processed
in South Africa have risen extraordinarily, sources claimed;
and energy costs, in particular, are the reason behind the
hike.
Electricity prices in South Africa
have rocketed in the last three years - by 54% and
another 20% price hike is expected in June.
This has led to some claiming that
prices need to increase by up to $200/tonne across the
board.
But for some, rising energy costs
meant only one thing - an uptick in the need for oil and
gas exploration, and oilfield minerals.
Bentonite producer Amcol admitted
that its leap in revenue from its oilfield
services (24% growth year on year in Q1 2012) was down to
higher selling prices.
Higher selling prices comprised
roughly 78.3% of the increase in gross profit, the company
added.
Bentonite prices edged up in
January this year, according to the IM
database, with most grades increasing by around $10/tonne or
more.
Titanium dioxide
While some industries were experiencing an uptick, news out of
China suggested that the recent bull run experienced in
titanium dioxide (TiO2) may be ending.
Analysts in China said that
domestic TiO2 prices were ticking lower on the back
of falling demand in construction and paint industries in
China.
Domestic ilmenite has dropped from
RMB 2,500/tonne ($397/tonne) at the beginning of 2012 to a
range of RMB 1,700-1,800/tonne ($270-286/tonne) with some
producers being quoted at RMB 1,300/tonne ($206/tonne), market
sources confirmed.
In April 2012, the average Chinese
TiO2 producers’ capacity utilisation decreased
to 60% and some small-sized factories even shut down,
Investment Advisor said.
Yet Chinese Customs statistics show
that the export of TiO2 in January and February rose
by 20.5% year on year. The figures show that China exported
67,574 tonnes in the first two months of the year but imported
just 11,397 tonnes. This is a decrease of 44% y-o-y.
Supply already outstrips demand. In
the paint and coatings market, which claims a 60% share of
TiO2 output, utilisation is only expected to grow by
10% in the Chinese 12th five-year plan. Conversely,
it is expected that 40% of total capacity will fall by the
wayside.
Elsewhere, the TiO2
market looked very healthy. Rio Tinto outlined how higher
prices in industrial minerals had led to the group investing in
its titanium feedstock business.
Sierra Rutile also had a time for
reflection with the release of its 2011 results. In this, the
company outlined that former “waste product” zircon
revenue quadrupled to $11m in 2011.
The company stated that it had
moved to monthly spot pricing in rutile markets for 2012 as
prices rose rapidly from the end of 2011. This is a company
looking ahead, rather than back as it seeks to expand its
project in Sierra Leone.
Graphite
Prices for natural graphite have started to fall for the first
time since March 2009 following slowing demand from major
industrial markets and a stuttering Chinese economy.
High quality flake grades have
fallen by up to 12% as the strong demand from the last 18
months.
Traders in the European market are
attributing the declines to an industrial slowdown from the
continent’s biggest consumer, Germany.
“Germany has experienced a period of high consumption
recently so a small fall is to be expected,” one major
trader told IM.
ONE TO WATCH
Sulphur
Prices are expected to remain strong until 2013, as the market
tightens.
ONE TO WATCH
Graphite
Graphite prices were assessed lower at the end of May,
but some market participants believe another dip will take
place in July as more supply comes on the market.
ONE TO WATCH
Potash
As Uralkali predicts stability in the Russian market and India
reduces subsidies for fertilisers, some predict a step down in
fertiliser mineral prices. For more discussion, see
p.20-21.
ONE TO WATCH
Bauxite
Market participants recently indicated that IM
should change its grades and only report the following (lump
0-30 mm bulk, FOB China):
- Shanxi Round Kiln
86/2/3.15
- Shanxi Rotary Kiln
86/2/3.15
- Guizhou Round Kiln
86/2/3.20
- Guyanese RASC
86/2/3.20
We would appreciate any feedback
on this. Please send to Siobhan Lismore, Prices Editor, at: slismore@indmin.com
Graphite flake prices come off
Borates grades, May 2011-May 2012
