November was a month which saw both the long-awaited outcome
of the US Presidential election, and also -
significantly - a change in leadership in China.
While those in China told
IM that the change has been received with a
lukewarm reception domestically, in international markets the
shift gives places a question over direction the country could
take.
The new leader, Xi Jinping, has so
far kept a relatively low profile in the international
community and has been tightlipped about his vision for the
economic direction of the country.
Jinping is a chemical engineer, and
is expected to replace Hu Jintao as president who himself was
trained in hydraulic engineering.
Wen Jiabao, premier, trained in
geomechanics is expected to be replaced by Li Keqiang, holding
a PhD in economics and a master’s and a bachelor’s
degree in law.
With economics on equal footing
with science among China’s top leaders, perhaps there will
be an acknowledgement of the demands for economic reform.
In minerals markets, two sets of
price hikes in lithium and ilmenite were blamed on high input
costs and strong demand respectively, and the producers hinted
that prices look set to climb for the foreseeable future.
Prices for antimony on the other
hand have slowed to a crawl, bringing a sobering tonic to the
bullish predictions of last month.
A spate of quarterly earnings
statements have also seen some of the quieter minerals turn out
as producers announce price increases.
Perlite, diatomite and mica made an
appearance in Imerys’ third quarter report, while soda ash
was hailed as a disappointing performer by FMC.
On a more positive note, Martin
Marietta Materials, Inc said in its third quarter results that
it does “see several positive trends in construction
activity”. Despite this upbeat tone, the company’s
specialities business revenue, which includes the magnesia arm
of the company, was down slightly from last year.
Elsewhere, the UK emerged from
recession during the last quarter, and commodity restocking in
China pushed up shipping rates.
Slowing economic growth for the
seventh consecutive quarter in China and flat figures for steel
output were matched by bleak outlooks from some of the biggest
hitters in the mineral and downstream industries.
This mixture of fortunes has been
reflected in the pricing news IM obtained from
the market over the last month.
Graphite
Graphite prices
have remained stable in recent weeks, market sources informed
IM in November.
The steadying of the graphite
market, which had been sliding since May as a slow-down in
demand began to deflate the mineral’s two-year price
bubble, had been widely predicted by market analysts and
observers.
“Additional supply will be
needed to feed the demand for the 180 end products that require
graphite,” Chris Berry, founder of the market research
firm House Mountain Partners LLC, said, citing forecasted
growth in demand from “next generation technologies
(batteries)” underpinned by strong existing consumption
from the steel industry.
Lithium
FMC Lithium Corp. said that it
would be hiking lithium metal prices by 10% and the prices of
some of its lithium end products by 8%, in a measure to pass on
rising raw material and transportation costs.
The rise would be made from 1
November, the company said, which will see increased global
prices for n-butyllithium and s-butyllithium and all specialty
organic products by 8%.
Earlier this year, FMC increased
its prices for lithium salts, citing a need to offset
production costs and reinvest in the company.
Commenting on the increasing cost
demands being faced by the company, Chris Senyk, FMC’s
global marketing director, said: “During 2012 continued
raw material price pressures and rising transportation costs
has made this price increase necessary”.
But, Senyk insisted, “FMC
continues to manage costs aggressively while reinvesting in our
business”.
Ilmenite
Prices for ilmenite have continued
to grow in a market where many end-users are switching to
cheaper inputs (such as ilmenite rather than rutile), according
to ilmenite producer IRC Ltd in its Q3 results.
The company said prices were rising
32% year-on-year, reaching $284/tonne for Q3 2012 from
$212/tonne in Q3 2011.
Prices rose by $4/tonne
quarter-on-quarter, even though other feedstock inputs, such as
rutile, were under strong pricing pressure.
“Demand for ilmenite
concentrate remains strong (...) IRC is seeing great interest
from new potential customers - several trading houses from
Japan have shown a keen interest and potential deliveries for
2013 are being discussed,” the company added.
Antimony
Prices for antimony trioxide, which
rose strongly during the third quarter of 2012, have slowed as
the market enters Q4, IM has learned.
Antimony trioxide and ingot prices
have remained mostly stagnant during the first part of October,
especially in the US, sources said.
Low US orders for antimony were
reported for the initial weeks of Q4, and little to no change
in demand is anticipated in the near-term.
The sluggishness in the US market
has been attributed to uncertainty over the country’s
fiscal outlook and downstream instability in the antimony
supply chain.
Europe-based trading sources
maintained that antimony prices were firming up in Europe, and
that softening was limited mainly to Chinese antimony, owing in
part to the poor quality of some of the material being
imported.
Asian sources told
IM that the antimony market was “cooling
off” and that the price of stibnite (Sb) was
weakening.
Fluorochemical
prices up
Fluorochemical prices in China have
increased meanwhile, on the back of higher demand from
downstream coolant markets and buyers stockpiling raw materials
before mines shut down for the winter.
The domestic fluorspar price
increased by almost 10% in the space of a single week in
November to Chinese renminbi (Rmb) 1,600/tonne
($256/tonne).*
The price of hydrofluoric acid also
edged up, while downstream coolant products, including R134a
and R125, remained stable.
The price increases buck the
downward trend seen in many other chemicals and petrochemicals
markets, but is likely to be a mark of seasonality rather than
an unexpected shift in the supply-demand balance.
November is traditionally the peak
buying season for the Chinese downstream coolant market as
downstream users, such as air-conditioning and automobile
manufacturers, actively stock up coolant products to prepare
for the May peak selling season.
Chinese mineral production also
slows down over the winter season, when the freezing
temperatures mean mining becomes impossible. This generally
causes a short-term rise in the spot price.
Rare earths
Rare earths prices continued to
slide in October and November as China, the world’s
biggest producer and consumer of the minerals, reported the
seventh consecutive quarter of slowing economic growth.
Prices for heavy rare earths have
been least affected, with dysprosium oxide slipping slightly at
the lower end of IM’s price range from
$900-$1,000/kg to $890-$1,000/kg, while Europium prices
remained steady in the $2,020-$2,320 range.
Asian sources told
IM that demand and prices are continuing to
fall gradually as the number of orders placed by buyers
decline.
Destocking causing
dips
Rare earths prices have been
dropping as end users destock inventories accumulated during
the panic buying phase of 2011. This was the general consensus
amongst market participants at the Metal Events Rare Earth
conference in Hong Kong in November.
The 2011 price spike was in part
caused by this market alarm, but prices will not reach this
level again sources indicated to IM.
“It is about stable pricing
both for consumers and for producers,” one source
outlined. “It has to be such, or end users will seek any
available alternatives.”
Pricing stability has become a key
issue in the rare earths industry as prices have dropped off
considerably after their meteoric rise during 2011.
The market could experience another
slight spike in prices in December 2012 as contracts are
secured for H1 2013, which may lead to a measure of panic
buying, sources said.
Overall, rare earth prices are
moving towards more sustainable levels
TiO2
US-based global paint and
speciality materials supplier PPG announced solid results for
Q3 2012, saying it had seen a moderation of price increases for
TiO2 raw material this year, and had even observed some modest
decreases.
PPG has previously stressed the
difficulty caused by higher TiO2 prices and has
implemented measures to reduce its dependency on the raw
material.
The last quarter of the year is
traditionally a weaker pricing environment for pigments as
end-markets slow down but PPG said it is still negotiating it
Q4 TiO2 prices.
One analyst indicated that they
have seen a $0.13/lb drop in TiO2 pigment
prices.
Overall, TiO2 costs are
up year-on-year, according to PPG CEO Charles Bunch, but
relative to the increases seen throughout 2011 pricing has
remained stable throughout 2012.
TiO2 peak
“gone forever”
In Hong Kong, during an industry
conference, delegates learned that the TiO2 price peak
experienced in 2011 was “gone forever”.
Last year was a record year for the
titanium dioxide pigment industry in terms of pricing and
profits, but it was an aberrance that the industry is unlikely
to see again according to David McCoy, managing consultant of
TZMI.
“[2011] was a really high peak
but we are not going to see that again anytime soon,”
McCoy told the TZMI conference.
The increase in profits came from
increased prices - which also compensated when volumes began to
fall in Q4 2011 - and the increased prices were chiefly
motivated by increases from feedstock producers, which were
passed on the consumers.
Significantly, “global pigment
demand has gone nowhere in the past 7 years,” said
McCoy.
Demand for the white pigment has
fluctuated around the 5m tpa mark with the most drastic
movements being in 2010 and 2011.
As such, with no substantial
increase on the horizon, and in fact with a possible decrease
as construction wanes, there is unlikely to be sufficient
demand to soak up the excess TiO2.
TZMI expect no return at all to
growth until the middle and “we are more optimistic than
others,” said McCoy
Perlite, diatomite, kaolin,
mica
The world’s largest industrial
minerals producer Imerys announced last month that it will be
increasing its European prices for perlite and diatomite
products by between 4-8%, effective 1 January 2013.
The hikes will be made by the
company’s Performance and Filtration Mineral division
which will also be raising European prices for all mica and
kaolin products by between 4 and 6%, effective 1 Jan 2013.
Cost pressures through all elements
of the mineral supply chain, from logistics to raw materials,
were cited as reasons for the price increases.
“Price increases are necessary
to achieve a sustainable product platform and meet customer
demand,” the company said.
Imerys also recently increased its
US prices for all diatomite, perlite, cellulose and silicate
products by between 4 and 12%, effective 15 November 2012.
In January 2012, Imerys raised
prices for diatomite and perlite by between 3% and 5% for
European customers.
Soda ash and
lithium
US-headquartered global lithium and
soda ash producer FMC Corp. posted its quarterly earnings in
November, reporting lower than expected prices for soda ash and
a poor performance in its zeolites range.
The lower than anticipated prices
limited the increase in earnings for FMC’s industrial
chemicals division to 1% year on year for the third quarter of
2012.
FMC’s previously announced
increases for its lithium prices (by 10%) and some of its
lithium end-products (by 8%) have now come into effect, having
been scheduled for 1 November.
Additionally, fellow leading
lithium producer Rockwood Holdings said in its quarterly report
this week that selling prices for lithium had been higher y-o-y
during the three months to 30 September.
Ceramic
proppants
CARBO ceramics, another major
player in industrial minerals, also revealed pricing
information this week, saying in its quarterly results that
average proppant selling prices declined year-on-year (y-o-y)
during Q3 2012.
The decreases, combined with lower
sales volumes and higher freight costs meant that CARBO’s
revenues for Q3 decreased 10% to $151.13m y-o-y. Net income for
CARBO fell 35% to $23.89m down from $36.91m in Q3 2011.
