Summer holiday for agriminerals, no break for mineral sands

By Laura Syrett
Published: Tuesday, 29 July 2014

Agrimineral demand recovery continues as flame retardant chemical price growth stutters; no gains in sight for mineral sands

Fertiliser minerals led the cheering in July, with the latest market and pricing data pointing to a sustained recovery in potash, phosphate and sulphur prices.

Elsewhere, the summer lull in Chinese buying activity impacted many markets during the month, compounding alre-ady established declines in antimony, iodine and mineral sands.

Pigment minerals continue to disappoint predictions of an upturn in prices, although demand looks set to remain positive as the market enters Q3.

Meanwhile, nervousness over the delay to the barite (barytes) tender in India nudged up or tightened some price ranges, while a flat refractory market kept deadburned magnesia (DBM) prices steady but undercut some grades of zircon.

Agriminerals - prices hold on to H1 Gains

Potash

According to PotashCorp.’s July monthly market data, prices for potash (KCl, spot, standard grade) have been stable at slightly above the $300/tonne mark on an FOB Vancouver basis, with a faintly positive trend pointing to a robust market.

Phosphate

DAP (spot) prices were recorded as being in the $450-480/tonne range at the mid-year point on an FOB Central Florida basis, having climbed from below $400/tonne at the start of this year.

Sulphur

Sulphur prices are reported to be around the $170/tonne mark and climbing towards $200/tonne on an FOB Central Florida basis.

Market commentary

Market sources recently told IM that the market for fertiliser minerals was steady but with improving fundamentals - a view supported by comments from some of the industry’s main producers.

At the beginning of July, PotashCorp.’s new CEO, Jochen Tilk, has said that he will continue with the company’s existing strategy of prices over volumes.

“The principle and the strategy of aligning production with demand has been a very successful one, and so (...) there’s no reason to change that going forward,” Tilk said in an interview with Reuters.

However, some market observers told IM that Uralkali’s claims that its volume over price strategy has been successful enough to warrant a return to focus on prices have been exaggerated at a time when the market was improving anyway.

Flame retardant minerals - price growth stuttering ATH

Alumina trihydrate (ATH) prices have risen significantly in the last 15 years, on the back of demand increases of between 3% and 5% per year, chiefly from insulated wire, cable and construction applications.

However, market forecasts seen by IM suggest that there will be a sharp deceleration in price growth over the next decade and a half, owing to a large increase in global ATH and alumina capacity in the last five to seven years, particularly in China.

IM’s prices for ATH (damp, 57-60% Al2O3, 5-8% moisture, bulk, FOB refinery) currently stand at $320-420/tonne.

Antimony

Prices for antimony ingot and antimony trioxide tumbled in the middle of July as buying activity almost completely fell away, sources told IM.

“Demand is weak in China and overseas,” one China-based exporter said.

Others described business on China’s Fanya metal exchange as “thin” owing to wide availability of antimony ingot and a lack of demand.

Prices had been receiving some support from a crackdown in smuggling at the China-Vietnam border in June and early July, however this appears to only have postponed the effect of trade stagnation.

IM’s prices for antimony trioxide (typically 99.5% min Sb2O3, 5-tonne lots) have been revised to $7,900-8,000/tonne, down from $8,000-8,100/tonne on a CIF Antwerp/Rotterdam basis and to $7,700-7,800/tonne (20-tonne lots) on an FOB China basis.

Ex-works US trioxide material now stands at $8,100-8,200/tonne, down from $8,100-8,500/tonne.

Antimony ingot prices (99.65% min) have been lowered to $9,100-9,500/tonne from $9,500-9,800/tonne FOB China and to $9,200-9,500/tonne CIF Rotterdam.

Standard grade II antimony metal is priced at $9,300-9,600/tonne (in warehouse, Rotterdam), according to Metal Bulletin.

Bromine

Bromine prices have been relatively flat for the last 6-8 months at $1.60-1.75/lb ($3.50-3.85/kg) in the US or $3,000-3,180/tonne in Europe, sources indicated to IM in July.

Current prices in China have dropped slightly to around Chinese renminbi (Rmb) 17,500/tonne ($2,820/tonne*), sources said, adding that this price level is “fairly typical” for the time of year.

MDH

Prices for magnesium hydroxide (MDH) are reported to be increasing steadily in line with a growing preference for non-halogenated flame retardants.

Price estimates for MDH vary dramatically by application, so it is difficult to set an average price that reflects the market, but analysis by Roskill Information Service has suggested that prices for MDH used in flame retardants have quadrupled since 2005, with values being around double that for ATH ($8-10/kg) for any given application.

Market commentary

Price appreciation for minerals used in flame retardants is slowing, according to recent market reports, as the speed of demand growth from electronics manufacturing and construction, particularly in Asia, begins to ebb.

Recent capacity expansion for many mineral-based chemicals in order to meet growing demand in recent years has created a gap between output and consumption.

Mineral sands - no improvement in sight

Ilmenite

Prices for ilmenite weakened by around 10% during Q2 2014, sources told IM.

Market participants said that prices (bulk, min 54% TiO2), had dropped from around $160-165/tonne a month ago to $150/tonne by mid-July on a CIF China basis.

Spot and contract values on an FOB Australia basis remain slightly higher, meanwhile, at $155-175/tonne, although some speculated that these prices were “nominal” only.

TiO2

Paints and coatings producer PPG Industries said during a conference call for its second quarter 2014 earnings report in July that it does not anticipate any near-term price rises in titanium dioxide (TiO2).

“For TiO2, we didn’t see much movement between the first and second quarter and we are really not anticipating any movements up,” CEO Chuck Bunch told analysts.

Zircon

Zircon prices have softened further as the market enters the third quarter of 2014, IM has learned.

Sources said that industry benchmark prices for zircon on a CIF China basis had been set for Q3 at levels slightly below those seen in the previous quarter, at around $1,160/tonne, although actual deals are being agreed below this mark.

They added that prices for premium grade zircon (min 66.5% ZrO2, bulk, CIF China) were around $1,050/tonne. “We are hearing about prices of $1,150/tonne, but we are not seeing business at this level,” a China-based source said.

Elsewhere, miners Kenmare Resources and Sierra Rutile both released second quarter results in early July, which pointed to lower prices for zircon.

IM’s prices for premium grade zircon (min 66.5% ZrO2, bulk, CIF China) have been revised to $1,050-1,150/tonne, while prices for standard grade are now set at $1,000-1,150/tonne

Market commentary

Mineral sands prices remain under pressure worldwide as ready supply availability has been met with flat demand from the pigment and ceramics industries and smaller refractory markets.

Sources said recent production increases from ilmenite miners have added weight to the supply side, while zircon prices have come down across the board.

Currently, demand in TiO2 remains stable but is expected to rise as painting activity increases in the northern hemisphere’s summer months.

An industry participant active in the Asian markets said that it is unlikely that prices for ceramics in Asia will go up in the foreseeable future as the Chinese property sector has entered recession and the country is in the early stages of a credit crunch.

According to recent calculations by Roskill, China stockpiled around 250,000 tonnes zircon in 2013, which is likely to be scuppering demand for new supply.

Sources said they expected benchmark zircon prices to remain level this quarter but that they will be reviewed at the beginning of Q4.

Oilfield minerals - Indian barite prices rise

Barite

Prices for some Indian drilling grade barite rose in July, as the delay to the anticipated 2014 mining and marketing tenders continued to cause anxiety.

Values for Indian barite (API, ground, big bags, 1.5 tonnes, FOB Chennai) have increased to $165-180/tonne from a previous range of $140-160/tonne.

Lump barite (API, CIF Gulf Coast, Indian), has edged up slightly at the lower end to $158-171/tonne, from $157-171/tonne.

Other price ranges have also narrowed, meanwhile, with prices for drilling grade (underground lump, OCMA/API, bulk, SG 4.20) closing in to $138-145/tonne from $136-148/tonne.

Market commentary

USGS figures show that global barite production fell last year to 8.5m tonnes from 9.2m tonnes in 2013, possibly as a result of stockpiling by oilfield users in 2012, which held back demand.

While rig counts remained fairly constant in 2013, the latest analysis from Baker Hughes (see p13) showed a year-on-year increase of almost 5% to 3,437 rigs, suggesting that oilfield mineral consumption is also increasing.

In early July, IM reported that the three-yearly contracts to mine and market Indian barite from the Mangampet mine in Andhra Pradesh had missed the slated 1 July completion deadlines (see p12).

The hold up in the tender process has caused some consternation in the wider market, with industry participants nervous about the impact the tender could have on prices. Some said they expected prices to go up slightly in the near term as a result of this anxiety.

Refractory minerals - business as usual for DBM

DBM

Prices for Chinese dead burned magnesia (DBM) are reported to be stable at current levels as the industry enters the second half of 2014.

Some US-based sources said that prices may drop towards the end of Q3, as the flat market could tip into decline if buying activity fails to pick up. Rumours of forthcoming magnesia “fire sales” in China during September and October could also weigh on prices.

IM’s prices for Chinese DBM (lump, FOB China) stand at $255-270/tonne for 90% MgO material; $320-400/tonne for 92% MgO; $350-400/tonne for 94-95% MgO; and $450-485/tonne for 97.5% MgO.

Market commentary

Sources told IM the export market for Chinese material was now “flat”, having ebbed earlier in the year as a result of reduced demand from refractories manufacturers in Europe and North America.

Market reports in June suggested that exports of Chinese DBM were around 34,025 tonnes in April, declining by 34% year-on-year (y-o-y) and 41% month-on-month (m-o-m).

The value of exports also fell to $8.79m, down by 47% y-o-y and 41% m-o-m. Total DBM exports from China in the first four months of 2014 totalled 204,800 tonnes.

One Europe-based source told IM that large European buyers have been pushing Chinese exporters for lower prices, but said that suppliers were “holding firm on offers”.

Filler minerals - costs bite vermiculite

Vermiculite

Rising costs of producing vermiculite are reported to be edging up the price of exfoliated grades, IM has learned.

Sources said that the prices of exfoliated South African vermiculite (bagged, grading 1mm, 3mm, 8mm per 110 litre/4 cu.ft bag, ex-Johannesburg) had risen by around 25%.

Market participants in Brazil also acknowledged that costs were increasing, although they said that they had no plans to increase the price of bulk concentrates at present.

IM’s prices for South African exfoliated vermiculite have been increased to $4-6/110 litre bag, up from $3.20-4.65/110 litre bag. Concentrate (bulk, FOB Antwerp) prices stand at $315-715/tonne, meanwhile.

Brazilian bulk material values stand at $230-577/tonne on an FOB Antwerp basis and $230-550/tonne on an East Coast US basis.

Market commentary

Exfoliation of vermiculite involves heating mineral concentrates to temperatures above 870¡C and prices of the processed material tend to increase in line with input costs.

Speciality minerals - iodine weakens further

Iodine

Iodine prices have moved down again as producers have cut offers in an effort to attract buyers, sources have said.

Europe and South America-based suppliers told IM that their lower range offer prices were edging towards the $36/kg range, although some prices were still holding on to “the low $40s”.

IM’s iodine prices (crystal, 99.5% min, drums) have been revised to $36-40/kg on a spot basis and $37-43/kg on a contract basis.

Market commentary

Chinese purchasing activity remains muted and competition is fierce to secure orders, sources told IM.

Market participants believe that prices have not yet reached a floor, but added that they expect values to bottom later this year at close to current prices.

*Conversion made July 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.