Prices continue to fall as the summer lull takes hold

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Published: Monday, 22 July 2013

Barite prices move down as demand softens; Ilmenite producers continue to struggle

IM Staff

Despite the summer months bringing the excitement and anticipation of a holiday, those working in many industrial minerals markets are still being chilled by falling prices and a lack of demand.

For many industries the period beginning at the end of May and running to the beginning of September marks a slower season; one where markets plod on at a pace that is sustainable until business picks back up towards the final quarter of each year.

However, for some mineral markets, price drops that have been experienced since the beginning of the year look set to stay, and some industry observers agree that this could affect end-of-year profits for some.

Yet it’s not all doom and gloom, as optimism persists in many of these industries and some companies’ activities suggest that the seasonal lull - which has in some cases been exaggerated by the economic downturn synonymous with recent years - will soon end and prices will begin to rise once more.

Barite prices move down in China and Morocco

Barite (barytes) saw prices fall for drilling grades in both China and Morocco in July as demand for in the oilfield market remained soft.

In China, sources suggested to IM that several factors, including the weakened supply and demand for barite as well as exchange rates, could be behind the price drops for API unground lump grades.

Sources also advised that drilling-grade barite, API unground lump, FOB China, SG 4.1 and SG 4.2 grades were also being sold at different levels, with SG 4.1 selling between a range of $110-130/tonne and SG 4.2 between $120 and $140/tonne.

IM has since added the SG 4.1 grade to its list of prices, and expects to do the same for API grades in Morocco and India.

In Morocco, sources suggested that the reason behind the price drops is that at least three of the major producers have 300,000 tonnes in stock, meaning there is an oversupply in a sluggish market.

Iodine prices slide to $55/tonne

Prices for iodine also dropped this month, slipping below the $55/kg mark for large contracts, sources have reported to IM.

This represents a further softening from the average price in Q1 2013, which producers including US-based Iofina Plc and TSX-listed Sirocco Mining Inc., said had fallen by around 15% from the $65/kg-level seen a year earlier.

Chile-based Sociedad Quimica y Minera SA (SQM) reported slightly stronger iodine prices in its first quarter earnings statement at the end of May, saying that prices had remained flat with Q4 2012 values, which were closer to $60/kg.

Smaller contracts and spot prices for iodine may still be holding above $55/kg, but this is likely to be for the minority of orders, sources said.

The weakness in prices has been broadly attributed to new supplies of iodine coming on stream in Chile in the second half of 2012.

Market participants have stressed that the long-term outlook for the iodine market remains robust, however, as consuming industries such as pharmaceuticals and x-ray contrast media continue to expand.

Based on market information, IM has moved its ranges for both spot and contract iodine prices down to $55-59/kg, down from previous ranges of $59-65/kg for spot orders and $59-62/kg for contracts.

Ilmenite prices continue to fall

The ilmenite pricing situation continued this month as Michael Carvill, CEO of Irish ilmenite miner Kenmare Resources Plc, told IM that declining ilmenite prices are becoming a problem for producers of the titanium dioxide (TiO2) feedstock mineral.

“It seems to me that ilmenite producers at this level will generally lose money,” he said.

Carvill added that he doubts that current ilmenite prices are feasible in the long run.

“We don’t believe that ilmenite prices can sustain themselves at these present levels - it’s not enough. I think that they are going to have to return to higher levels,” he explained.

Far Eastern ilmenite producer, IRC Ltd, saw its prices slip by 15% during Q2 2013 down to $233/tonne and sold more than it produced, eating into the inventories it accumulated during the recent period of weak market demand.

The company produced 38,155 tonnes ilmenite during the quarter, up 33% year-on-year driven mainly by the installation of two new ilmenite separators installed during 2012.

“At the end of June this year, we had a record quarter for mining and were marginally ahead of our iron ore production targets and on track to meet our ilmenite production targets,” noted Jay Hambro, executive chairman of IRC.

“The price for ilmenite concentrate deteriorated sharply at the end of the first quarter and into the second quarter, before recovering slightly,” the company said.

“The average achieved selling price was $233/tonne, a 15% decline compared to the previous quarter,” it added.

Ilmenite prices did rise during the TiO2 feedstock pricing boom of 2011 and early 2012 - reaching more than $300/tonne - but, as with the higher-grade feedstocks, have slipped back down again, reaching as low as $264/tonne.

“Ilmenite has experienced a price decline. I think that the price decline is not as extreme as rutile or synthetic rutile because it hadn’t seen that level of price appreciation that they had,” Carvill told IM.

Salt supplies in North America

Australia-based salt producer Ridley Corp. announced this month that Penrice Soda Holdings has terminated its take-or-pay salt contact after finalising the decision to halt the production of soda ash.

Penrice is now supplying its soda ash customers through a joint venture (JV) with SASS Victoria Australia, called Pro Asia Pacific.

There has been an oversupply of salt on the market since last year as warmer-than-expected winter weather in the US meant many supplies of de-icer salt were left almost fully stocked (see p17).