Buoyant sentiment pervaded many industrial mineral markets
in February, as a wave of full-year earnings results and
sentiment at the 20th Mining Indaba Conference in
Cape Town, South Africa (see pp8-9), pointed to
improving prospects for commodity prices in 2014.
On the project finance side,
banking groups and stock exchanges both predicted that the
mining industry could be due for a revival in terms of
financing as early as Q3 2014, although many cautioned that
investor confidence would be brought back by controlled
spending rather than rapid growth in the sector.
“The feeling at this
year’s Indaba has been generally upbeat,” James
Posnett, manager for listings and business development at the
Australian Securities Exchange told IM.
“The climate for IPOs
isn’t too hot right now, but during the last bust in the
cycle back in the 1990s, Chinese demand wasn’t
there - so the outlook for this cycle is more
optimistic,” he added.
While investment prospects are
tipped to improve, those with an eye on pricing warned that
mineral producers will need to keep a tight grip on supply in
the near term to prevent currently stagnant markets from
tipping over into decline.
Foundry grade chromite, ilmenite
and graphite are some of the minerals most at risk from upsets
to a delicate supply-demand balance, while chemical minerals
including antimony, bromine and soda ash are expected to see
moderate gains over the coming four quarters.
Antimony
A Chinese government crackdown on
mineral smuggling left trioxide grade antimony ingot (99.65%
min, FOB China) prices unchanged at $9,600-9,950/tonne in late
January.
Prices for the material
subsequently rose at the end of the month to
$9,700-9,950/tonne, however.
In-warehouse Rotterdam standard
grade II antimony prices also rose to $9,600-9,850/tonne,
meanwhile, Metal Bulletin reported.
Sources told IM
that they expected an increase in trioxide grade antimony
values into February, but that this is likely to be
gradual.
Bromine
US speciality chemicals producer
Albemarle Corp. said at the end of January that it expects
prices for elemental bromine to be flat in 2014, following the
stabilisation of the market towards the end of last year.
Without giving specific guidance on
price levels, Albemarle’s senior vice president, Matthew
Juneau, said during the company’s fourth quarter earnings
conference call that the chemicals firm had seen prices weaken
during 2013 but that this trend has now levelled out.
“If you look overall at
pricing trends, clearly we have had some price degradation, but
this has broadly stabilised,” Juneau said.
“For 2014 we expect [bromine]
prices to remain flat,” he continued, adding that much
depended on prices set for Chinese bromine. These are typically
5-10% lower than bromine produced in other parts of the
world.
IM’s prices
for bromine (purified, bulk, 99.95% Br, domestic destination,
tonne lot, ex-works US) currently stand at $1.60-1.70/lb
($3.50-3.75/kg).
According to the Sunsirs
commodity index, prices for Chinese bromine stand at around
Chinese renminbi (Rmb) 19,250 ($3,180*)/tonne, having risen by
around 12% in December 2013, but have declined slightly since
the start of this year.
Juneau also hinted that Albemarle
would consider raising its bromine prices if demand trends
permitted, but confirmed that it had budgeted for flat prices
during 2014.
Chromite
Prices for foundry grade chromite
are expected to weaken during the first quarter of this year,
sources indicated to IM in February.
Industry participants at the
20th Mining Indaba Conference said that buying
activity for all grades of chromite had been “quiet”
over the last six months, but that the slowdown in orders for
foundry material was particularly evident.
Sources declined to comment on
rumours reported to IM that prices for foundry
grades (45-46% min Cr2O3, wet bulk, South
Africa) had fallen by $70-80/tonne in January, but did say that
the market had softened.
The picture was confused, however,
by comments from US-based chromite producer, Amcol
International, which stated in January that “pricing for
foundry grade chromite appears to have stabilised”,
without giving any specific price guidance.
Reasons for the apparent
sluggishness in chromite orders were also unclear, although
some speculated that a halt in Chinese industrial activity at
the beginning of February, combined with well stocked
inventories at many foundries, could be to blame.
Both foundry and refractory grade
chromite prices slipped by as much as $40/tonne, sources told
IM in August last year, on the back of falling
demand in metals markets.
Fluorspar
Fluorspar prices entered February
on a persistently stagnant note, according to IM
Data, although the pricing service said it suspected
that values may be higher than currently published levels.
“We are reviewing our acidspar
prices, particularly out of China, but there is very little
activity in the market at the moment so it’s hard to tie
down a market price. We believe prices are higher than our
current levels but we’re still looking to clarify the
range,” IM Data analyst, Andy Miller,
said.
IM’s
fluorspar prices for acid grade fluorspar (wet filtercake) are
currently at around $420/tonne on a CIF Rotterdam basis;
$310-330/tonne on an FOB China basis; and $350-550/tonne for
various grades on an FOB Tampico, Mexico, basis.
Graphite
Indications from the amorphous
graphite industry suggest that the prices could be weakening,
IM Data said in February, while the Chinese
holiday shutdown reduced the amount of trading information
available for analysis.
In the flake graphite market,
prices appear to be stable, but IM Data warned
that the high availability of ready-mined material could prompt
prices to fall once the industry starts up again later this
month.
Amorphous graphite prices are
currently around $500-550/tonne on a CIF Europe basis, while
the highest value flake material (94-97% C, +80 mesh) is priced
at $1,250-1,300/tonne, also on a CIF Europe basis.
Ilmenite
Prices for the titanium dioxide
(TiO2) feedstock mineral ilmenite are unlikely to
rise significantly in the foreseeable future owing to the
existence of large, ready-for-market stockpiles at many mines,
industry commentators have told IM.
“There is a lot of ilmenite
around, both easily mineable and ready-mined, so there is
unlikely to be a major increase in prices in the medium
term,” Abraham Rozendaal, professor of earth sciences at
Stellenbosch University, South Africa, told
IM.
“If prices go up by 5-10%,
then producers will start to sell stockpiles. There is enough
ilmenite ready to flood the market, so if this happens then
this will bring the price back down again,” Rozendaal
said.
Industry participants at Mining
Indaba also confirmed to IM that there was a
glut of ilmenite production being kept out of the market at
present, but said that projected future demand for ilmenite
should see these stockpiles come down before the end of the
decade.
Professor Rozendaal said that
although current estimates based on today’s ilmenite
production levels coupled with projected future demand indicate
the emergence of a 500,000 tonne supply gap by around 2020, the
realisation of this deficit depends on how much additional
production comes online in the future.
Phosphate
Phosphate prices appear to be
steadying after falling throughout 2013, market reports
indicate.
Russian phosphate-based fertiliser
producer, PhosAgro, said in its full year 2013 earnings report
in February that prices for phosphate-based fertilisers are
beginning to normalise, as the effects of Urakali’s
decision to exit Belarusian Potash Co. have subsided and demand
returns ahead of planting seasons in key markets.
In late January, Canada’s
PotashCorp. revealed that challenging fertiliser market
conditions had affected the company’s financial
performance in 2013.
Prices for the company’s
phosphate-based fertilisers fell by over $100/tonne during the
final quarter of last year to $455/tonne, down from $577/tonne
in Q4 2012.
“Fertiliser products
experience the largest decline, with average realised prices
down by 28%, while prices for our more stable feed and
industrial products were down 8%,” PotashCorp. said.
Prices for Moroccan phosphate
(70-72% BPL, long term contract, FAS Casablanca) were at around
$103/tonne in February, compared with values of $170/tonne the
same time a year ago.
Potash
PotashCorp. also said that the
average potash price fell to $282/tonne for the Q4 2013 and to
$332/tonne for the year because of competitive pressures in all
potash markets.
“Increased supply capability
combined with relatively constrained demand resulted in
continued price erosion through the last three months of
2013,” PotashCorp. said.
Prices are expected to stabilise
above $300/tonne this year, however, following the agreement of
benchmark potash supply contracts to China by both
Russia’s Uralkali and Canada’s Canpotex.
Salt
Prices for chemical grade salt are
expected to hold up in 2014 as demand from key importing
regions and end markets looks set to be robust.
Decline in the quality of
Chinese-mined salt is supporting Australian solar salt import
volumes at a steady level, while import values have increased
from $42/tonne in 2008 to around $50/tonne in 2013, marking an
annual growth rate of 3.7% in prices.
In the regionalised de-icing salt
market, recurring bouts of extreme cold weather in North
America have pushed up prices for de-icing salt this year, with
shortages leading to some suppliers quoting values of as high
as $176/tonne, compared to the usual price of around
$50/tonne.
Soda ash
Demand for soda ash continued to
improve into the final quarter of last year but was met with
tighter supply availability, helping to lift prices for the
glass and soap raw material.
According to China Customs
statistics released in November 2013, China exported soda ash
totalling 120,000 tonnes during the preceding month, down 20.8%
year-on-year (y-o-y) and 30.6% lower month-on-month
(m-o-m).
The average export price rose to
$194.60/tonne, up 2% m-o-m and marking the fourth consecutive
monthly increase, although this figure was still down by 5.2%
on last year’s average tonnage value.
Recovering demand for soda ash did
not materialise until the second half of last year, when a
domestic glass industry boom in China began to squeeze the
market for both light and dense soda ash.
Global supply of soda ash (natural
and synthetic) is forecast to rise by 3.4% per year from 54m
tonnes in 2012 to 65m tonnes in 2018, according to Roskill
Information Service analyst, Vincent Pedailles.
“Additional synthetic soda ash
production based on salt raw materials is projected at around
6.8m tonnes in 2018, requiring approximately 11m tonnes
salt,” Pedailles told IM.
Since September 2013, China’s
soda ash producers have moved to increase production in
response to the rise in demand, according to China
Customs’ Export to China information service,
with the overall industrial operating rate for soda ash output
rising from 70% to 80% of capacity before the end of last
year.
Given China’s domestic
overcapacity for soda ash production, the utilisation of
additional capacity could cause prices to retreat again this
year, China Customs warned.
Elsewhere, in an echo of positive
market predictions given in January last month by India’s
Tata Chemicals, US headquartered FMC Corp. said that it was
anticipating single-digit dollar per tonne increases in
domestic and export soda ash prices, although its official
forecast for the next 12 months only reflects contracts agreed
to date.
“We remain optimistic that the
soda ash pricing environment is improving, but our 2014 outlook
only includes price increases that are currently specified in
existing short- and long-term contracts. We continue to be
supportive of ANSAC’s efforts to realise additional price
gains in export markets,” said Pierre Brondeau, FMC’s
CEO.
Sulphur
Prices for sulphur dipped slightly
in January, market reports indicate, although industry
observers still expect the value of the fertiliser feedstock to
temporarily hold onto gains seen towards the end of last
year.
Sources indicated that prices for
sulphur (FOB Middle East) are currently around $165-180/tonne,
down around $5/tonne from the start of the year, but still
around 15% stronger, on average, than the $145-155/tonne levels
seen in 2013.
Prices began to look up towards the
end of 2013 after months of weakness, reportedly due to an
uptick in demand from Chinese phosphate producers.
Because of its use in the
phosphates industry, demand for sulphur is closely linked to
phosphate rock consumption.
Diammonium phosphate (DAP)
fertilisers saw reduced demand in 2013 because of unfavourable
crop market conditions and competition from cheaper nutrient
products, particularly in India.
Forecasts for global sulphur supply
suggest a bumpy road ahead, with periods of rising demand
followed by the arrival of production from major supply-side
projects, leading to possible deficits followed by surpluses in
the next year.
As a result, industry observers
expect prices to remain volatile.
Full information on all
IM’s prices can be found on the
IM Prices Database.
*Conversion made February
2014
If you wish to discuss any of the
prices or grades listed in IM, please contact Laura Syrett,
Prices Editor, at lsyrett@indmin.com.
ONE TO WATCH
Foundry grade chromite
Prices for foundry grade chromite
(45-47% Cr2O3) are expected to fall in
the coming months as demand from the casting industry softens.
Weakness is also likely to affect refractory and chemical grade
chromite, sources have told IM, affecting
prices in South Africa and North America.
ONE TO WATCH
Ilmenite
Ilmenite demand looks set to
recover this year, but industry observers have warned that
producers must exercise strict supply discipline to avoid
flooding the market and pulling down prices.