Recent titanium dioxide
(TiO2) price hikes by major producers are unlikely
to be accepted by pigment endusers, analysts told
IM.
“While TiO2 prices
have come down with a variety of non-integrated producers (...)
I do not see [the recently announced] price hikes sticking in
the near-term,” Hassan Ahmed, of Alembic Global Advisors
said.
Managing director and senior
analyst at Wells Fargo Securities, Frank Mitsch, agreed,
telling IM that it is unlikely that the price
increases will be accepted.
“Utilisation rates need to
reach ~85% to support price increases, a level unlikely to be
reached until Q3 [2013] at the earliest,” Mitsch pointed
out in a recent note.
These price increases are important
to a number of producers which are being squeezed by high raw
material costs, Ahmed explained: “If the price hikes do
not stick I expect near-term profitability to be break-even to
negative in Q1 2013.”
“That is unsustainable and
should result in certain producers announcing another round of
price hikes in an attempt to recover losses,” he
added.
TiO2 pigment prices are
holding in the range of $3,200-3,500/tonne (bulk volume, CIF
US), according to the IM prices
database.
Pigment producers squeezed
The industry began a steep downturn
in the second half of 2012, driven by end-user destocking but
it is believed that this is coming to an end: “By the end
of Q1 or early Q2 re-stocking should result in more normal
inventory levels. This coupled with the entrance into a
seasonally stronger demand period should result in market
improvements,” Ahmed said.
Ore costs however continue to
squeeze pigment producers which are trapped between these
escalating costs and pressure from large endusers to keep
prices low.
The cost of production for the
industry has more than doubled over the past 20 years, mainly
due to ore costs, Mitsch recently said.
In 2012, ore prices rose
approximately 65% with the most notable gains in both chloride
and sulphate slag. Further gains are expected in slag while
natural and synthetic rutile could see falls of around 13%.
TiO2
substitution
One prevailing concern for pigment
producers is the current trend of major end-users looking to
substitute TiO2 pigment for cheaper
alternatives.
This has not been previously
explored because TiO2 white pigment has no direct
substitutes.
PPG is leading the charge and
managed to reduce its consumption by 4%/can in 2012 while DOW
Chemical has begun commercial production of EVOQUE extender
technology which, the company says, can reduce TiO2
consumption by 20%.
A number of other production
initiatives are being explored including further filler and
extender technologies including CMP’s Snowpaque flash
calcined kaolin which promises a reduction of up to 25%.
Barite
Prices for Chinese barite have
fallen again this month as demand in drilling markets remains
low, US sources have told IM.
Worldwide oil and gas exploration
dropped month-on-month (m-o-m) in all major regions, excluding
Latin America, during March 2013, according to oilfield
services company Baker Hughes.
“Reduction in barite pricing
in the market has been due to slow demand based on softness of
the drilling markets,” one source said.
Barite is used as a drilling fluid
additive, which acts as a weighting agent in the formation of
drilling mud. The mineral increases the hydrostatic pressure of
the drilling mud allowing it to compensate for high-pressure
zones experienced during drilling.
The softness of barite also
prevents it from damaging drilling tools during drilling and
enables it to serve as a lubricant.
Although the demand for barite in
the drilling market has softened, other factors contributing to
price declines in China include increased competition and a
call for lower-gravity barite, sources have said.
“Alternately, many new sources
continue to be available from Mexico for the North American
markets. Although the Mexican grades are lower specific gravity
products, much of the active drilling in North America requires
low weighted drilling muds and can use lower gravity
barite,” one source explained.
Prices for Chinese barites, API
drilling grade, unground lump have contracted from a range of
$130-140/tonne to $155-130/tonne.
Chinese barites, API drilling
grade, unground lump, CIF Gulf Coast have also dropped from a
range of $155-160/tonne down to $147-154/tonne.
Antimony
trioxide
Prices for antimony trioxide have
slid lower as softer prices for antimony metal continue to put
pressure on suppliers to offer cheaper source material,
IM has learned.
Antimony trioxide (typically 99.5%
Sb2O3, 5-tonne lots) CIF Antwerp/Rotterdam fell from a range of
$9,900-10,000/tonne to $9,600-9,700/tonne, according to
sources.
Price ranges also narrowed
downwards for both FOB China (20-tonne lots) and ex-works USA
material of the same purity, both of which fell from
$9,600-10,000/tonne to $9,600-9,700/tonne.
Antimony ingot prices were
unchanged, sources said, at $10,400-10,800 for FOB China, and
$11,000-12,000 for CIF Rotterdam metal.
Metal makers report lower
average prices
Despite steady prices for antimony
ingot, sources have indicated that metalloid antimony has yet
to make up ground it lost in the final months of 2012.
United States Antimony Corp. (USAC)
released its full year 2012 financial statement in March,
stating that it had seen an average fall of $1.19/lb ($0.54/kg)
in the price of antimony.
This, the company said, had
contributed to a loss of $558,536 made by USAC last year.
China’s second-largest
antimony producer Chenzhou Mining saw its profit decline by
0.7% to Chinese renminbi (Rmb) 537m ($85.6m*) for the full year
2012, which it attributed to lower pricesÊfor the
metal.
According to the US Geological
Survey’s 2013 Mineral Commodity Summary for antimony,
metal prices averaged $12,839/tonne last year, down 12.7% from
2011.
Leo Mills of London-headquartered
RJH Trading told Metal
Bulletin’s Asia Minor
Metals Conference in Hong Kong at the end of March said that
rapid increases for antimony since 2006 had led buyers of the
material to seek alternatives.
He added that economic recovery in
major consuming regions would be crucial to future price
strength, saying that demand from Europe is expected to be weak
this year, while USA and China will be the key to price
movements.
“The macro economy news from
the eurozone is very unstable. USA and China will be crucial to
the market,” he said.
“If the [eurozone] industry
uptake increases, long-term orders for raw materials will
increase and spot material premiums will rise,” Mills
concluded.
Fused Zirconia
Fused zirconia prices across a
range of grades have remained unchanged despite falls in zircon
sand prices, sources indicated to IM.
However, the collapse of zircon
sand prices from heights of over $2,000/tonne is proving
beneficial to the fused zirconia industry as the reduced prices
of this feedstock lead to a cheaper end-product and better
profitability for the companies involved.
Energy prices still remain an
important factor for fused zirconia producers and they remain
vulnerable to zircon sand prices as no economically viable
alternatives exist.
Monolithic fused zirconia (CIF
European port), both refractory grade and ceramic grade, have
remained stable at between $6,500-7,800/tonne and
$3,800-4,800/tonne, respectively.
Structural ceramic/electronic grade
of fused zirconia (contract price CIF European) main port has
also remained steady at between $4,600-6,000/tonne.
Refractory grade stabilised fused
zirconia (CIF European port) also remained at a consistent
level with prices ranging between $6,500/tonne up to
$7,800/tonne.
In glassmaking refractories,
monoclinic fused zirconia is added with zircon to form
alumina-zirconia-silica (AZS) refractories used to line glass
tanks for flat glass manufacture.
Steelmaking refractories also use
monoclinic fused zirconia as the main raw material for
producing stabilised zirconia refractory materials.
There is no readily available
substitute for zircon in over 80% of applications.
Potash
Uralkali, one of the world’s
largest potash producers has said that the potash market in
2013 continues to face several challenges, highlighting India
as a particular area of concern.
“India will remain the focus
of concern this year. In spite of having considerable upside
potential, Indian potash demand continues to be impacted by
changes in retail pricing and the subsidy policy,” the
company said.
In 2012, faced with a depreciation
of the Indian rupee against US dollar and a reduction in 2012
subsidies, farmers found it harder to meet potash prices,
leading to a drop of 40-45% in local consumption, Uralkali
noted.
“In 2013, despite some
improvement in potash demand, Indian imports are expected to
still be well below the record 6.3m tonnes imported in
2010,” it continued.
India’s budget for FY2013/2014
was announced at the end of February, with a proposal to slash
the subsidy on potash by a further 19% for FY2013/14.
The average potash price has
increased by 25% year on year domestically, Uralkali said, to
$254/tonne. The export price had increased only 5.4%,
meanwhile, to $370/tonne.
Zeolites
United States Antimony Corp., which
produces antimony and zeolite, said in its full year 2012
financial results released in March that it had sold similar
volumes of zeolite in 2012 compared to 2011 (around 12,105
tonnes), but that the average sales price per tonne had
increased by 25.9%, or $43.76, from $168.83/tonne to
$212.59/tonne.
Market for Mining
Chris Hinde*
The world economy continued to
drift last year, with global growth falling to 2.3% from 3.8%
in 2011 (and 5.1% in 2010). The malaise was worst in the
‘advanced’ economies, which grew by only 1.3% last
year, from 1.6% in 2011. Unfortunately, the emerging,
developing, countries also recorded one of their weakest
economic growth rates in ten years, with an overall increase of
only 5.1% in 2012.
The lacklustre economic performance
was attributed to uncertainty in Europe and the economic
slowdown in China, where the growth rate dropped from 9.3% in
2011 to 7.9% in 2012. This decline in GDP growth is attributed
to a shift away from intensive manufacturing and capital
investments, toward expenditure in the service sector (and
intangible assets such as human capital).
In spite of these disappointments,
a better overall outcome is projected for 2013. We anticipate
an improvement in economic growth, the restoration of fiscal
authority in the US, and a stronger euro zone.
*Chris Hinde is editorial director at InterraRMG, which is
hosting the Mining on Top Africa event on 25-26 June 2013 in
London (see p27 for details).