Price Briefing: Natural graphite prices continue to track lower

By Siobhan Lismore-Scott
Published: Tuesday, 28 August 2012

The decline in natural graphite prices - seen in May for the first time in three years - has continued in Europe and North America, although Indian levels appear to have stabilised, market sources told IM in August.

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The decline in natural graphite prices - seen in May for the first time in three years - has continued in Europe and North America, although Indian levels appear to have stabilised, market sources told IM in August.

“Natural flake graphite demand has slowed down, with the biggest brake coming from the Chinese refractory industry,” a North American source said.

The downturn in the global steel industry has been felt by manufacturers of other types of graphite products, such as graphite electrodes and cathodes, in regions as far apart as Germany, the US and Japan, the source added.

Market sources in Europe agreed. Prices have now slipped further since the May falls, one source told IM, attributing this to low consumption in the continent and falling demand from the Asian battery market.

Flake graphite (94-97% C, +80 mesh, FCL, CIF Europe port) prices were seen at down to $1,400-1,800/tonne from IM’s current range of $1,800-2,200/tonne, the source said.

Lower-grade material has also fallen, but less steeply. Both 90% C and 94-97% C (-100 mesh, FCL, CIF, Europe port) flake graphite grades fell by $100/tonne to $1,000-1,300 from $1,100-1,400/tonne, and $1,100-1,400/tonne from $1,200-1,500/tonne respectively, the source said.

Synthetic graphite prices were $5-7/kg compared to Swiss border terms of $7-20/kg, the source added. Prices on the IM database however remain unchanged as not all sources corroborated with the lower prices at the time of going to press.

Indian prices stabilising

Prices for all grades in India have been steady since June, with demand for graphite material remaining stable, local sources said.

Declining exports had triggered uncertainty over the security of graphite supplies to India from China, which has supported internal demand for local material, Indian market participants said.

“China remains an unreliable, emergency source for many companies in India,” one source told IM, adding that this had helped to level out the downward trend in prices which began in May.

Fluorspar

Fluorspar prices were steady despite weak demand from China and elsewhere, market sources told IM.

Chinese sources indicated that prices were leaning towards the upper end of IM’s current ranges.

However, this trend was not observed outside China, industry observers said.

Both European and North American sources said that they could not confirm any upward movement of prices for either acid grade (acidspar) or metallurgical grade fluorspar (metspar).

“The overall market sentiment is quite the opposite,” one market participant said. “Demand in both China and elsewhere is pretty weak. Therefore I don’t see any price increase.”

Another source said that it had seen prices within IM’s current ranges for acidspar, while a European-focused source said that prices for European fluorspar were stable despite challenging economic conditions.

Mined Chinese production for the first six months of 2012 is down 7.5% on the corresponding period last year to 4.2m tonnes, data released in August revealed.

This could account for higher domestic prices of the material within China, market sources suggested, but some remained doubtful that the elevated prices were valid.

Iodine

Prices for iodine remained strong throughout the second quarter of 2012, with some producers seeing a slight rise in contract values in recent weeks, market sources said.

One source said that it had recently seen prices for iodine crystal, 99.5% min, drums, increase to $65-68/kg from IM’s current range of $63-65/kg, although a second source said that prices had remained stable.

Spot prices for iodine crystal, 99.5% min, drums remain unchanged at $60-90/kg, according to IM’s contacts.

Prices are expected to remain strong into the second half of the year, said Sirocco Mining Inc., which has significant iodine interests in Chile.

This statement followed on from Chile’s SQM reporting a 35%-increase in profits for the second quarter of the year, driven partly by a 10%-climb in iodine prices.

With expansion predicted in each of these key markets to 2014, plus an increase in demand driven by optical polarising film (OPF) technology, the outlook for iodine is one of solid growth.

Titanium dioxide

Titanium dioxide (TiO2) producer, Kronos Worldwide Inc., will increase prices by $200/tonne for all customers excluding North America and Europe, effective 1 September 2012.

These increases will be for customers in Asia and Asia Pacific, Latin America, Middle East and Africa.

“The recent increases in raw-material costs necessitate further price increases in order to reach and sustain TiO2 margins that allow for reinvestment,” the company said.

Rutile, ilmenite, and titanium slag are some of the raw materials used to produce TiO2 pigment. These markets have suffered a supply and demand disbalance, which has led prices to increase.

Companies bearing the brunt of these raw-material costs initially passed them on to paint producers - the largest end-market for TiO2 - in the form of price rises throughout 2011. These were possible because paint producers cannot easily use an alternative.

However, paint producers have now been substituting TiO2 for other chemical substances which has led to falling demand for the pigment.

This means that when pigment producers push pigment prices up, paint companies could well further reduce their consumption of TiO2, reducing demand for the pigment overall (see p33).

Previous price increases have not been received well, which could see TiO2 pigment producers struggle to make the paint industry accept further rises.

“We do not believe that the price increase announced by the industry effective in July was very successful. So it appears that TiO2 pricing has stabilised. We do not believe that they’re tracking down,” Christopher Connor, CEO of leading paint company Sherwin-Williams, said.

“I will say that the nomination that the TiO2 suppliers put forward for July did not stick in any geography,” Gary Hendrickson, CEO of paint producer Valspar, told analysts.

Soda ash

The global soda ash market could weaken due to a bearish demand outlook, Tata Chemicals said in August.

While demand for soda ash was stable in the first quarter, “the demand environment could weaken”, the company, India’s largest soda ash producer and global number two, said in its financial year Q1 results.

“Going forward, we see the demand for soda ash and other industrial chemicals weakening due to the global slowdown,” Rukundan, Tata Chemicals managing director, said.

Growth persists in India, however, with Tata saying that local demand will increase by between 5%-7% in the next quarter.

But other sources in India remain divided as to whether or not prices will increase, or continue to slip.

While some producers are citing heightened demand from the glass sector, buyers in India and China are saying that price levels have actually dipped.

Asian prices have slipped from the Q2 level of $220-240/tonne (FOB China, dense and light) reported last month by IM, sources indicate.

Indian producers were struggling to keep up with demand, said Capital Market, citing Tata Chemicals and domestic producers Nirma and GHCL.

This would represent a quarter-on-quarter turnaround for Nirma and GHCL, which both reported that production and demand in each of their chemical divisions in Q1 2012 was significantly lower than 2011 figures.

However, the level reported in June was still in line with market conditions, market sources told IM

Graphite flake