Graphite and fluorspar prices are rising for the first time
in 20 months as Chinese consumers begin to slowly restock
inventories in preparation for an increase in industrial
activity this year.
Fluorspar, both acid and
metallurgical grades, is on an upward trend after falling
throughout 2012, with prices in China rising by an average of
$10 to $30/tonne per month, market sources said.
Acidspar prices hit a low of
$300/tonne last year, while metspar fell as low as $230/tonne.
There is an expectation that prices will recover strongly
during the next six months from some of the lowest levels seen
since 2007.
IM Data expects
acidspar prices could rise as much as 25%.
A leading flake graphite supplier
in China also confirmed that prices were once again on the rise
and following a similar pattern to fluorspar, but remained
cautious about future demand.
Grades expected to be the most
susceptible to price increases are -100 mesh/90% C and +80
mesh/90%C. These increases are not likely to be as strong as
fluorspar, but certainly in the region of 10% as steel and
refractory producers look to restock ahead of a more active
year.
Across the board, 2012 was a very
poor year for industrial minerals prices, and certainly the
worst since 2009 (see pp.65-66). Demand evaporated as
construction and auto manufacturing activity slowed and
depressed major markets such as steel refractories (graphite)
and aluminium (fluorspar) and consumer products including
fridges and air-condition units (fluorspar).
The lack of new builds resulted
from a market bereft of confidence in all three major regions -
China, Europe and the US. However, renewed hope has come after
some of the world’s leading economies announced various
initiatives to stimulate GDP, and these are expected to lead to
activity and restocking of mineral inventories in early
2013.
Japan is the latest country to
announce economic stimulus, with a $224bn package focusing on
rebuilding the country after the 2011 earthquake and tsunami,
new technology companies and small businesses.
China took action in September 2012
with a $150bn stimulus package and a promise to build 60 new
major infrastructure projects. The aim was to underpin
China’s 7.5% GDP growth target, and has breathed life back
into the domestic economy filtering down to the minerals
sector.
The timing was critical for the
country’s flagging steel industry - a major consumer of
mineral-intensive refractory bricks and linings - which has
been over-developed in recent years and struggled to handle
over capacity.
At that time, hot rolled coil
prices fell to an 18-year low, with mineral prices experiencing
a similar downward trend. Iron ore prices - a good proxy for
industrial activity - fell to $88/tonne, which is a three-year
low, according to the Financial Times.
Graphite has been more resilient
than many commodities. Prices for 94%, +80 mesh flake graphite
were at $1,400/tonne (CIF) at the start of 2013, and were 30%
higher than pre-recession 2008 levels, despite falling from
all-time highs of $2,500/tonne in 2011.
Fluorspar has fared less well, with
acidspar, 97.5% CaF2, DAP, falling to a low of
$300/tonne in December 2012, 35-40% lower than pre-recession
2008 levels.
2012 exports volumes of graphite
and fluorspar - two of China’s leading non-metallic
mineral products - showed improving trend throughout H2 2012,
to reach near parity with 2011 in November.
Natural graphite exports - flake and amorphous - improved
from a 67%-drop compared with 2011 levels in June, to just 13%
in November. Metallurgical grade fluorspar (metspar) volumes,
however, were still 44% behind 2011 levels in November, and
have not yet reflected the positive turn for prices.
Recovering to 2011 levels
Export volume difference of natural graphite and metspar:
2012 v 2011
Source: IM Data
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