Zircon buyers thrifty and
resentful of “unfair” prices
Zircon prices and demand are being
undermined by solidifying downstream preference for cheaper
substitute materials, industry participants have told
IM.
European zircon-based chemical
producers said that the sharp price jumps for zircon seen in
2010 and 2011 forced buyers into thrifting (using as little
zircon as possible in compounds) and, where possible, replacing
zircon altogether.
Even though prices have come down
from the $1,800/tonne highs seen three years ago, zircon buyers
are continuing with their frugal habits.
“There are several products
now being used where the zircon has been diluted with the
addition of other items, such as aluminas,” one source
said.
“Whilst this has brought some
changes to the manufacturing process at the customers’
plants Ð requiring changes in viscosity of glaze, for
example Ð in general these new formulations are working and
are saving at least 10% on zircon costs. Sometimes more than
this,” they added.
Major zircon suppliers are
reportedly working with customers to try to persuade them that
these new low- or no-zircon formulations are not as attractive
as they seem.
But, as one source pointed out,
“a saving is a saving”.
Participants on both the buy and
sell side of the industry have expressed concerns that if
zircon prices suddenly jump up again, customers will try to
abandon it altogether.
There have been calls throughout
the supply chain for sustainable pricing that will benefit the
entire industry, but part of the problem lies in the fact that
many zircon producers are also battling with low margins in
titanium dioxide (TiO2) feedstocks and see zircon as
an opportunity to recoup losses.
“Customers are fully aware of
the actual costs of mining zircon and have deeply resented big
mark-ups,” one source said.
“When zircon products are
being sold at $2,500/tonne - up to three times cost of
production - and with volumes [for some, of] over 500,000
tpa, the profits [made] are seen by many to be unfair,”
the source added.
Major zircon producers contacted by
IM and asked to respond of accusations of
unfair pricing in September declined to comment.
Buyers said that prices are now just about sustainable with
the current volumes of business available, but warned that any
further increase will be seen as detrimental to the downstream
businesses.
No floor in sight for
ilmenite
Traders told IM in
September that large mineral sands producers may be partly to
blame for the sliding ilmenite price, as established companies
attempt to protect their market shares.
“From a cynical point of view,
it would appear to be in the interest of larger miners, who
dominate the mineral sands market, to keep ilmenite prices low
in order to see off smaller competitors and maintain market
share,” one trader said.
Sources familiar with the market in
China said that, although the country is not exporting huge
amounts of ilmenite at present, it has the impetus to be very
competitive in the future and can significantly undercut
Western producers.
As the Chinese economy slows, the country is likely to
export more, a trader commented, adding that the “quality
gap” between Chinese minerals sands, including zircon, and
that produced by other countries such as Australia and South
Africa, is getting narrower.
IM’s full
price listing will now only be published online at www.indmin.com/PricingDatabase.
If you have any comments or concerns, or wish to discuss any of
the grades or prices listed, please contact Laura Syrett,
Prices Editor, at lsyrett@indmin.com.
For in-depth fluorspar and graphite
price analysis, please visit the IM Data mineral
tracker pages online.
Bold indicates a price
change from the previous month (it may have changed more than
once during the month). All prices are listed in US$ and quoted
per tonne unless indicated.