COMMENT: How relevant is LME Week for industrial minerals?

By Siobhan Lismore-Scott
Published: Thursday, 17 October 2013

“People are not just looking at metals now,” says one trader

Last week the metals world came to London for 2013 LME Week, taking place in what one person called one of the hardest years in metals markets.

 

But what does LME Week have to do with industrial minerals? Well, nothing and everything. As is well known many industrial minerals are used in refractories for steel making, which means that there is a natural relationship between the markets. Bauxite, alumina, chromite and titanium are used for their non-metallurgical purposes as well as their met-grade uses.

 

But quite apart from this, is there another link – is LME week becoming more relevant in industrial minerals as metals traders look to other markets?

 

Put simply, not really. Traders being traders, there is always an inclination to deal in anything that will make money. This has become more apparent this year over others, but this doesn’t necessarily mean that droves of people are now looking specifically at industrial minerals.

 

It does mean that those who have always looked at one type of market could well be open to looking at a new opportunity.  Several traders said they were now looking at iron and minor metals, which in the past had been ignored. One trader said he was dealing in almonds, whereas another admitted he had invested in some carbon credits.

 

“I think that it's definitely true that people are not just looking at metals now,” one trader told IM.

 

“In the past you'd get someone visiting a plant and they would only be interested in what they were covering, and you'd ask if they thought to enquire on ferroalloys or iron and they'd invariably say they hadn't. Now there's an appreciation that people are looking at any in,” the trader added.

 

According to Gerard Lyons, e conomic adviser to the Mayor of London, the economy is growing and could still see the best 30 years of growth it has ever seen.

“Despite the global crisis we have seen growth,” he said, pointing to the world growth, during his keynote speech Divided, disconnected but still growing.

 

“The disconnect is that not everyone is sharing in the success,” he added pointing to the wealth divide in China and youth unemployment in the west.

 

Transparency is fundamental

 

Not unlike industrial minerals markets, transparency and the cost of regulation formed the basis of a lot of the presentations given. Garry Jones, the new head of the LME, told those at the opening talk that what was needed was “better regulation, not more regulation”.

 

This has been key to many recent seminars in industrial minerals – not least at IM’s recent China roundtable, where the cost and dubious impact of consolidation and regulation had left markets at times more prone to manipulation, or slowed growth completely.

 

An example of this is in talc markets, where markets are hampered by government involvement, explained Jia Xiu Zhuang, Haichen MinChem Co. Ltd.

 

 

More industrial minerals discussed

 

While there wasn’t a significant step change towards looking at industrial minerals over metals, there was definitely interest in other markets.

 

When pressed, most admitted that they didn’t realise markets being looked at fell under this category; lithium, rare earths (“a dead story,” snorted one trader), and chromite sand were only reluctantly agreed to fall under the industrial minerals label.

 

But those who were now dealing in industrial minerals were looking at oilfield minerals, which is unsurprising as it is expected to be a good growth area, but also at sulphur, agriminerals such as potash and held an interest in minerals which can be used as fillers.

 

However, as one trader said, “these [industrial minerals] are a harder story to sell because there's no metallurgical attachment. You have to be able to sell it on a basis that people understand what it is and how it can be used.”

 



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