Speciality product prices outstrip mineral values in traditional volume markets

By Laura Syrett
Published: Friday, 27 June 2014

Antimony prices settle for summer months; Magnesia stabilises as spot market sleeps

Speciality grades of minerals are expected to be the main winners in terms of prices during the second half of 2014, as demand for fine chemicals, batteries and niche mineral-based products is outperforming consumption in traditional industrial markets.

While this news is encouraging for some in the lithium, graphite and magnesium hydroxide industries, price appreciation for a small number of specialist materials is not expected to compensate for price stagnation and weakness seen in higher volume applications.

Antimony, iodine, refractory grade magnesia and zircon producers all saw prices either stall or weaken at the end of May and into June, although the troubled fertiliser industry saw some positivity as potash prices began to strengthen.

Antimony

Prices for antimony trioxide and trioxide grade antimony ingot have been stable since mid-May, prompting suggestions that the market has now settled ahead of the summer months in the northern hemisphere, which are usually quiet for trading.

Antimony trioxide (typically 99.5% Sb2O3, 5-tonne lots) prices listed on the IM Prices Database stand at $8,650-8,750/tonne on a CIF Antwerp Rotterdam basis, while the same grade (20 tonne lots) is priced at $8,750-8,850/tonne FOB China.

US antimony trioxide prices (typically 99.5% Sb2O3, ex-works) remain higher at $8,900-9,100/tonne.

Meanwhile, trioxide grade antimony ingot prices are in the range of $9,600-9,800/tonne on both an FOB China and CIF Rotterdam basis.

Prices for standard grade II antimony metal are currently $9,400-9,700/tonne, according to Metal Bulletin.

On 8 June, China’s Ministry of Land and Resources announced that it has cancelled the country’s production quota for antimony this year Ð the first time restrictions have been lifted since they were imposed in 2009.

The purpose of the cap, which last year limited Chinese output to 89,000 tonnes antimony, was to prevent overcapacity in the sector. The removal of the quota is unlikely to boost output, however, given that both prices and demand are currently weak.

Lithium

Prices for lithium compounds reportedly crept above 2013 averages in June, following months of positive predictions by producers.

Sources told IM that the price range for lithium hydroxide (56.5-57.5% LiOH) has widened upwards to $7-8/kg from $7-7.2/kg in Europe. This compares to an average range of $6.7-7/kg last year, according to the IM Prices Database.

US prices for the same material remain in the $7-7.5/kg range, meanwhile. This compares to an average range of $6.2-6.7/kg.

Lithium carbonate prices are also reported to be increasing, although they currently remain within IM’s current ranges of $2.8-3.1/lb ($6-6.8/kg) for large contract orders delivered in the US and $5-6.5/kg for orders (packed in bags) on a CIF Asia basis. This range parallels average prices seen last year.

Economist Daniela Desormeaux, founder of Chile-based signumBox, recently told IM that rising demand from ceramic and battery applications coupled with the pressure of rising costs were helping to push up prices.

Desormeaux has however cautioned that aggressive marketing strategies from major producers such as Chilean miner Sociedad Quimica y Minera (SQM) could pull lithium values down.

A US-based source who preferred not to be named told IM that they did not think SQM would bring prices down. “They don’t need to,” the source said. “Plus, they’ve got their production costs to think about - and it’s getting more and more expensive to mine in Chile right now,” they added.

Iodine

Iodine industry sources have told IM that prices for iodine above $40/kg are now “virtually non-existent”, bar sales for a handful of small volume, highly specialised applications, after the market softened further in recent months.

“Prices of around $38/kg seem to be low enough to interest buyers, but generally suppliers are not sitting on a lot of material now as values are so low,” one Europe-based source told IM.

Some Japanese suppliers are reported to be sticking to prices of $40/kg, despite market pressure to cut their offers, particularly since the Chinese market has recently “gone very quiet”.

Rumours of prices below $38/kg were also mentioned, although these were generally attributed to dumping in Asia and were not considered to be reflective of the wider market.

In May, SQM said that it expected to see further price erosion for iodine this year, as it seeks to regain market share lost to competitors in 2013.

However, the recently reported problems at privately-owned local rival Cosayach, which saw its director jailed for 61 days in May (see p14) over abuse of water rights in Cala Cala and Negreiros, mean that Chilean iodine output is unlikely to increase as much as had been previously expected.

Sources still expect prices to fall further this year, however, and said that the spot market is currently tracking slightly lower than contract orders as suppliers scramble for scarce business.

IM’s iodine prices (99.5% min, drums) have been revised to $38-45/kg for contract values and $37-40/kg for spot prices.

Magnesia

Prices for Chinese deadburned magnesia (DBM) are reported to be stable, supported by steady demand from large volume contract consumers in lieu of an active spot market, after weakening significantly towards the end of last year.

Export prices for 90% MgO Chinese DBM fell by around a quarter in 2013 to their present level of $255-270/tonne, from $320-350/tonne (FOB China).

Values for 92% min MgO Chinese DBM fell by 10-30% to $320-400/tonne from $410-450/tonne and by a similar magnitude for 94-95% MgO material, to $350-450/tonne, from $450-480/tonne (FOB China).

High purity 97.5% MgO Chinese DBM prices have fallen by around 15%, meanwhile, to $450-485/tonne from $531-583/tonne (FOB China).

The downturn in the market for Chinese DBM, which is mainly used in basic refractory bricks and granular refractories, is a knock-on effect from the decline in the global, and particularly China’s, steel industry since 2009.

Although steel production appears to be recovering in Asia, the US and Europe in line with wider economic improvement, this recovery is yet to translate upstream to raw material markets, pricing and production data from DBM producers indicates.

Phosphate

New Zealand-based fertiliser co-operative Ballance Agri-Nutrients Ltd reduced prices on most of its fertiliser products at the end of May, citing softer international prices for phosphate rock and urea.

The company, which imports phosphate rock from North Africa, said the price of its Superten product, which contains phosphate, sulphur and calcium, has been lowered to $315/tonne from $327/tonne, effective 30 May.

IM’s prices for North Africa-sourced phosphate (70-72% BPL, long-term contract, FAS Casablanca, Morocco) currently stand at $100-110/tonne.

Ballance also said that increased international manufacturing of di-ammonium phosphate (DAP) had contributed to lower prices of $775/tonne, down from $850/tonne, while high global stocks of urea, particularly in China, had caused prices to drop to $605/tonne from $645/tonne.

Although the price of core ingredients like phosphate have fallen, Ballance noted that boron and magnesium sulphate prices have increased. These rises have not been enough to push up finished product prices, however.

Price indications for fertiliser minerals from large importers like New Zealand are significant markers of international market trends. New Zealand currently has no significant domestic phosphate production, buying in most of its supply from Morocco, Christmas Island and Vietnam.

Potash

PotashCorp. of Saskatchewan announced in mid-June that it would rescind layoff notices affecting 50 workers at its Penobsquis, New Brunswick, facility in Canada due to “ongoing tightness” in the granular potash market.

The layoffs at Penobsquis were part of an overall 18% reduction of PotashCorp’s workforce, affecting more than 1,000 jobs, announced in December, as it struggled with slumping demand and weak prices for the fertiliser mineral.

PotashCorp.’s announcement came shortly after the company published data showing that North American potash production hovered around 1.7m tpm between March and May this year, compared to output of roughly 2m tpm during the same period in 2013 - a drop of 13-15%.

Sales for North American producers have been around 300,000 tpm higher than last year from January to April, meanwhile, and North American potash supplies dipped in May to 2.35m tonnes, their lowest level since September 2012, while inventories were 19.7% lower year-on-year.

This has created a tightness in the market that is lending support to prices, which have recovered marginally in the Vancouver export market from a six-year low of $300/tonne, according to PotashCorp.’s data.

IM’s prices for granular potash muriate (KCl, bulk, ex-works, North America) stand at $310-370/s.ton. Standard potash muriate (KCl, bulk, FOB Vancouver) also stand at $310-370/tonne.

Soda ash

The decision by soda ash producer Solvay Chemicals Inc. to increase its prices by $14/s.ton for North American products has prompted market participants to call for the opening of 2015 contract negotiations.

Solvay said that the increase, which is effective from 1 July 2014, or as contracts permit, on an FOB basis, is “in order to support the continuing demands on our soda ash business [and] investments aimed at maintaining and improving our supply, while continuing stable mining”.

The company added that list prices would not exceed $289/s.ton for bulk orders; $354/s.ton for 50lb (22.7kg) bags; and $344/s.ton for 100lb (45.5kg) bags and bulk bags.

The increases, which were announced at the beginning of June, have given rise to speculation that rising demand for soda ash will translate into higher prices later this year, although contract negotiations could limit increases.

For 2014, soda ash producers won an increase of around $7/s.ton for contracts in the US, less than half the $15-20/s.ton originally sought when negotiations began in 2013.

Industry sources told IM that although soda ash consumption is increasing in North America, it was not clear whether this market or foreign markets would support significantly stronger prices.

In May, rival US producer FMC Corp., which runs a soda ash operation through its subsidiary, FMC Wyoming, said that it believed prices were firming up both domestically and internationally.

In response to analyst questions during its first quarter earnings call, FMC’s CEO, Pierre Brondeau, hinted that a 10% increase in the price of soda ash this year was not unrealistic.

“The 10%, on average price would be something in between $10 and $15/tonne,” he elaborated.

IM’s prices for US soda ash are $275-290/tonne (natural, dense, list price, FOB Wyoming); $330-335/tonne (natural, large contracts, FOB Wyoming); and $245/s.ton (natural, light, list price, bulk, FOB Wyoming).

Rare earths

A reduction in the level of rare earths smuggling from China together with improvements in the global manufacturing sector are expected to support rare earths prices this year.

Recent manufacturing surveys have indicated stronger industrial output in China and that makers of glass, catalysts and phosphor products are increasing production volumes and raw material consumption, in step with the recovering global economy.

Market sources have indicated that prices for the lowest value light rare earths - cerium and lanthanum, which are mainly used in polishing powders and phosphors Ð are still weakening, but are expected to bottom soon, close to their current price ranges of $5-6/kg.

Prices for rare earths used in magnet production, including praseodymium, neodymium and samarium, have been volatile in recent months as speculation over increased demand for electric vehicles, which use magnets in their motors, caused prices to surge and fall back again on a week-by-week basis.

IM’s prices for praseodymium oxide currently stand at $110-120/kg, while prices for neodymium oxide are in the $60-70/kg range and samarium is priced at $5-7/kg. Market sources expect these to rise by around 10%, on average, in the second half of 2014.

Zircon

Prices for zircon softened slightly as the market entered June, but industry participants expect that prices will remain at current levels until at least July.

Offer prices for Australian zircon sand (min 66% ZrO2, bulk, CIF) are reported to be between $1,200-1,300/tonne, with suppliers settling for prices at the lower end of the $1,200-1,250/tonne (CIF) range for large volume orders.

Prices for Indonesian zircon sand (min 66% ZrO2, bulk, CIF) are around $1,150-1,200/tonne, meanwhile, slightly above China where prices have slipped below $1,100/tonne, although dwindling producer inventories and reluctance to sell is reportedly stopping prices from falling further.

Chinese producers are also said to be standing firm over prices as margins are under pressure from high operating costs and the recent softness in selling values.

*Conversions made June 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. For in-depth fluorspar and graphite prices, visit the IM Data pages online.


ONE TO WATCH
Iodine
Prices for iodine are already around $38/kg, down from around $60/kg a year ago. Producers fear the market has not bottomed yet.

ONE TO WATCH
Soda ash
Buyers’ responses to promised price increases by major US soda ash producers are likely to limit rises in this market, even though North American soda ash consumption is reported to be growing.