Rare earths bucking the trend as other markets decline

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Published: Thursday, 26 September 2013

The majority of the industrial mineral industry is still waiting for the post-summer resumption of buying activity to take effect, pricing information gathered by IM in September suggests.

By IM Staff

The majority of the industrial mineral industry is still waiting for the post-summer resumption of buying activity to take effect, pricing information gathered by IM in September suggests.

While most markets - graphite and fluorspar in par-ticular - were characterised by a stagnation during the first few weeks of September, the second half of the month saw some industries reach tipping point, leading to price falls for flake graphite and acidspar in response to week demand.

Pro-ducers of rare earths and soda ash, meanwhile, had something to be cheerful about, with buying activity tipped to re-turn to these industries on the back of the global economic recovery.

Antimony metal range narrows upwards

Purchasing activity by China Minmetals Corp. stemmed the slide in antimony metal prices in early September while antimony trioxide prices remained unmoved.

The lower end of the antimony price range ticked up by around $100/tonne for low bismuth antimony, to $10,200-10,500/tonne, and standard grade II antimony, to $10,100-10,400/tonne, according to Metal Bulletin, while Chinese sources reported strength in prices of antimony ingot (99.65% min).

State-owned China Minmetals began buying up antimony stocks from both Chinese and European warehouses in July in an effort to support prices which dropped steeply earlier in the summer.

Antimony prices covered by IM remain within their current ranges, with sources expecting values to hold firm in the short-term but with potential rises in store later this quarter if Chinese demand picks up.

Producers hike bromine product prices

US chemicals producer Albemarle Corp. raised the price of its SAYTEX CP-2000 brominated flame retardant by 15% in September for all shipments, effective immediately, or as contracts allow.

Albemarle did not say why it was raising the price of its flame retardants, but has upped the price of a number of its bromine products in recent months after highlighting narrowing margins caused by a decline in the price of elemental bromine this year.

Other bromine producers including Israel Chemicals Ltd (ICL) and Chemtura-subsidiary, Great Lakes Solutions, have also recently cited pricing pressure for bromine as a result of weakness in bromine product end markets, such as manufacturing and construction.

The price of bromine remained relatively steady throughout July and August, indexes tracking the mineral show, but has declined slightly since the end of August.

Chromite slips by up to $40/tonne in August

Chromite foundry and refractory grade prices have slipped by as much as $40/tonne, sources told IM at the end of August, on the back of falling demand in metals markets.

Traders and suppliers confirmed that they had seen prices fall across the market, with the largest discrepancy between IM’s published and realised prices in August being in chemical grade (46% Cr2O3, wet bulk FOB South Africa), which one source said could be 40% above market values.

Elsewhere, even the most bullish of producers accepted that prices had fallen; adding that they thought further reductions would take place in Q4 2013.

Prices began to fall off as demand for chromite waned on the back of a bearish steel and refractories market.

Fluorspar market stagnant going on weak

Fluorspar remained largely quiet once again during September, although there have been some signs that acidspar markets may be weakening.

Prices for acidspar, 97% CaF2, dry filtercake, CFR, China to Japan, reportedly fell 8.6% at the beginning of September, according to IM Data.

Continuing stagnation of fluorochemical markets continues to erode the value of higher purity fluorspar grades, the data service said.

Metspar prices were unchanged at the time of going to press, although IM Data is following up reports that prices could be falling again.

Graphite supply out of kilter with demand

Disagreement over the future direction of graphite prices divided the market at the end of August as market commentators offered differing opinions on the supply-demand balance.

Stephen Riddle, CEO of Asbury Carbons, hinted that price increases are unlikely to materialise in the foreseeable future, arguing that the market is weighted on the supply side.

“I do not agree that there is any limited supply, or supply issues,” Riddle said.

“The market has a surplus of supply of most qualities. We know of drop-off in worldwide demand - mostly from the refractory users and with biggest drop in demand coming from Chinese refractory industry - on the flake-type graphite side, and also of a big drop-off in demand from Japan for amorphous-type graphite,” Riddle said.

“The growth markets are still way too small to pick up this added excess supply,” Riddle added.

This analysis proved to be correct when, in mid-September, flake prices fell by roughly $50-100/tonne on average, according to figures collected by IM Data.

The data service said that a lack of significant upturn in demand has been met with increased production, particularly in China, in preparation for the winter season which has compounded the excess supply in the market.

High purity (94-97%), large flake graphite (+80 mesh) is now between $1,250-1,300/tonne on a CIF basis shipped into Europe.

Prices of medium flake material (94-97% C, -100 mesh, CIF, Europe), the more commonly traded product for industrial steel refractories, slipped to $850-950/tonne, IM Data said, while lower grade flake (85-87% C, +100 -80 mesh, FCL, CIF, Europe) prices were down to $700-800/tonne.

Amorphous prices, meanwhile, remained unchanged.

Gloomy prospects for iodine producers

Iodine prices are likely to remain stable for the rest of the year,

although at weaker levels than have been reported this quarter, sources indicated to IM in September.

South American contacts reported spot and contract prices in the $55-60/kg range, but sources in Europe and Asia said that customer demand is not supporting prices at this level.

European contacts said that prices appear to have settled in the range of $48-52/kg, with buyers in the fine chemicals and pharmaceuticals industries buying at the $50+/kg end of the market.

Meanwhile, Chinese domestic iodine prices have been reported as being around $46/kg owing to low customer demand.

Sources were generally downbeat about longer-term prospects for iodine, saying that the market had been quiet and that the price buoyancy seen in 2011 and the first half of 2012 had all but petered out.

Iodine producers and traders were however hopeful that most of the excess iodine produced in South America over the last 12 months has now been absorbed by the industry.

Lithium prices going up, says SQM

Despite negativity in other areas of its portfolio (see below), Chile’s SQM said in its latest earnings report that that prices for lithium carbonate have been strong this year, rising 9% year-on-year in the second quarter.

ICL backs future potash demand growth

The end of August saw some rare positivity expressed in the potash industry.

ICL stated that it was optimistic that the prices and demand for potash will pick up in the long term, and confirmed that it intends to go ahead with the development of the Danakil Valley potash project in Ethiopia, in a joint venture with TSX-listed Allana Potash.

The news was a welcome ray of hope given the recent volatility in the potash market and the forecast by Russian potash giant, Uralkali, that prices could fall below $300/tonne.

However, ICL’s enthusiasm was somewhat countered by more sobering analysis from SQM, whose CEO Patricio Contesse said in the company’s second quarter earnings that Uralkali’s announcement could have a negative impact on potash prices.

Average prices for potassium chloride and potassium sulphate have decreased around 8% y-o-y over the six month period, SQM added.Ê

Elsewhere, North American phosphate producer Mosaic Co. lowered its expectations for both potash and phosphate as a result of market uncertainty caused by the Belarusian Potash Company (BPC) break-up in August.

“In the short term, [...] dealers are cautious and are deferring purchases. As a result, we have lowered our price and volume guidance for both the potash and phosphates segments for the third calendar quarter of 2013,” said Mosaic CEO, Jim Prokopanko.

Potash prices are expected at around $330 to $340/tonne including transportation and distribution costs, while the gross margin rate is expected in the low to mid 30% range.

Its third quarter guidance has been revised to 2.6m to 2.8m tonnes, and phosphate prices are expected at around $430-$440/tonne for the period.

Prokopanko added, however, that despite the short-term lower demand, the long-term fundamentals for the fertiliser market are still the same.

Rare earths climb on China stockpile rumours

Rare earths prices entered September on a reassuringly upward trend, and remained at higher levels throughout the month, indexes tracking the minerals showed.

The price of praseodymium oxide jumped more than 10% to around $89/kg at the end of August, up from a range of $75-80/kg at the start of the month, while neodymium oxide prices were trading at the upper end of IM’s range of $57-62/kg.

Europium oxide prices approached $820/kg mark in early September and dysprosium oxide prices were steady around the $400/kg mark.

Both oxide and metal values remained robust during September, even though buying activity was reported to be limited, as traders held off from giving quotations in anticipation of an announcement that the Chinese government intends to create a national stockpile of rare earths.

Recovery could be in store for soda ash

Soda ash producer OCI Resources said in September that demand was starting to return to the soda ash market as the global economy begins to recover.

Kirk Milling, CEO of OCI Enterprises, which operates the Wyoming Green River facility in the US, told IM that he expected soda ash demand consumption to increase in line with economic improvement in both developing and established markets.

Prices are expected to move higher on the back of extra demand from Australia and Europe where Penrice and Solvay recently announced they were taking plants offline, he explained.

Meanwhile, fellow US Soda ash producer, FMC Wyoming Corp., announced in mid-September that it will increase the price of two soda ash grades sold to South African customers by $30/tonne, with immediate effect, or as contracts allow.

The increase applies to FMC Wyoming’s Grade 260 “dense” soda ash and Grade 100 “light” soda ash sold to South African customers.

FMC Wyoming said that the move was necessary in order for the company to recover increasing costs and continue to invest in its soda ash operations.

At the time of going to press, FOB Westvaco and FOB Granger, Wyoming, list prices for bulk material stood at $275/s.ton for dense grade, $280/s.ton for Grade 100 and $290/s.ton for AbsorptaPlus.

FOB Westvaco, Wyoming, prices for packaged soda ash list prices were at $340/s.ton for dense and $245/s.ton for Grade 100 in 50lb loads.

For 2000lb loads, prices stood at $330/s.ton for dense and $335/s.ton for Grade 100.

Titanium dioxide and feedstock prices fall

Asian TiO2 prices are falling, according to sources in the industry who have pointed to slack demand in China, Korea and Taiwan.

Reporters in Asia said that FOB prices for TiO2 were currently in arrange of $3,340-3,355/tonne, while FOB Anatase prices were in the range of $3,505-3,520/tonne.

The IM Prices Database, which contains one CFR Asia price, listed the level as being at between $2,700-3,000/tonne at the end of August.

Demand for TiO2 feedstocks was also subdued during the second quarter of 2013 due to a destocking cycle by the pigment industry, according to Irish mineral sands miner, Kenmare Resources.

However, demand has returned in some areas, with Kenmare pointing to a slight improvement in demand from Europe and the US over the last two quarters due to an increase in construction in these regions.

Rutile and ilmenite producer Sierra Rutile reported that lower mineral sands prices had decreased its revenue by 33% for the first six months of 2013, when compared to the same period in 2012.

Average realised prices fell from $2,522/tonne in H1 2012, to $1,265/tonne, but volumes were 40% higher, Sierra Rutile said.

Full information on all IM’s prices can be found on the pricing pages (pp52-54) and online on the IM Prices Database.