Pressures in Asian markets squeeze refractory and chemical minerals

By Laura Syrett
Published: Friday, 28 November 2014

Global increases for calcium carbonate and kaolin Refractory minerals under strain in China

November brought little in the way of positive news for the global indus­trial minerals industry, with price ap­preciation confined to list price increases by global producers. Some of these were attributed to cost infla­tion, while others were aimed at countering declines in spot prices.

Even barite (barytes) and lithi­um prices, which have been is­lands of relative positivity this year, saw only flat to weak price movements during the month, while elsewhere, both pricing and demand trends continued down­wards for iodine and rare earths.

Chemical minerals – antimony, iodine fall further

Antimony

Trioxide grade antimony ingot prices fell in November, as soft downstream conditions continued to eat into demand.

Prices for antimony ingot on an FOB China basis have been re­vised to $8,900-9,000/tonne, down from $9,000-9,100/tonne in October.

Metal Bulletin’s price for stand­ard grade II antimony stands at $8,850-9,050/tonne.

Bromine

ICL will ask its customers in the Far East to pay 20% more for its elemental bromine and hydrobro­mic acid products, effective imme­diately from early November, or in accordance with existing agree­ments with customers.

IM’s bromine prices (bulk, puri­fied, 99.95% Br, ex works, CIF Europe) stand at $1.6-1.75/lb ($3.52-3.85/kg).

Iodine

The price of Chilean iodine fell below $30/kg in mid-November, market sources reported to IM.

Industry insiders said that a price of $29/kg recently offered for Chilean material was likely to be a deal for a very large contract or a longer than usual supply agreement.

IM’s prices for iodine (crystal, 99.5% min, drums) stand at $31- 37/kg on a spot and contract basis.

Market commentary

The price of antimony ingot (99.65% min), used to make anti­mony trioxide, which is mainly used in flame retardants, managed to escape falls in the price of standard grade II antimony metal, an alloy ingredient, in October as traders stood firm over offers.

Market reports suggested that traders had begun liquidating their positions in antimony ingot during the last month, in an effort to cut their losses.

One market participant in Lon­don for London Metal Exchange (LME) Week told IM that anti­mony looks likely to remain "pret­ty volatile" for the foreseeable future and that he would "not be surprised if some traders decide not to hang on for the ride".

Elsewhere, ICL’s bromine busi­ness was reported to have "come under margin pressures over the past few years," according to a statement announcing ICL’s bro­mine price increases.

Asian prices for bromine prod­ucts are reported to be among the lowest globally, with overcapacity in the region leading to price weakness that has affected the profits of other large bromine companies, including US-based Albemarle Corp. and Chemtura Corp.

These companies said earlier this year that they had faced resistance to introducing higher priced bro­mine products in Asian markets, but ICL declined to comment on this when contacted by IM.

For iodine, one market source commented on the latest reports of lower prices that producers are doing "whatever they can" to se­cure forward sales.

"We haven’t seen a price at this level, but it’s in the low $30s now and we do expect it to go down further," the source added.

Another source said that the $29/kg price may have been a fire sale to shift some inventory and that they would wait to see wheth­er this price becomes embedded in the market before acknowledging a new lower range.

Energy minerals – softer times for lithium

Lithium

US-headquartered lithium pro­ducer FMC Corp. is to raise glob­al prices for all grades of lithium carbonate and lithium salts by 10%, effective 1 December 2014 or as contracts allow.

The Philadelphia-based compa­ny said that the increases would include prices for lithium hydrox­ide (LiOH), pharmaceutical car­bonate and speciality salts and will apply to "all standard and non-standard pricing".

"The increases are necessary to offset continued rising costs of raw materials and operational cost pressures at our Argentina facili­ty," Chris Senyk, global marketing director for FMC Lithium, said.

The latest hike in LiOH prices is on top of a previous 10% rise the company levied on these products in May this year.

IM’s prices for lithium carbon­ate (large contracts, del. Conti­nental US) stand at $5.8-6.5/kg. LiOH prices (56.5-57.5%, large contracts, packed in drums or bags, del. Europe or US) stand at $7.2-8/kg.

Rare earths

The launch of a new dysprosium contract on China’s Fanya Metal Exchange has prompted some positive movement in prices for the heavy rare earth, according to market sources.

Both dysprosium and terbium were listed on the exchange for the first time on 31 October and the increased market visibility afford­ed by the contract has reportedly stirred interest from investors.

Prices for dysprosium oxide (min 99%, bulk, FOB China) currently stand at around $320- 375/kg. Market reports indicate that prices for terbium oxide are around $590-650/kg, mean­while.

Market commentary

FMC’s decision to raise its lithium prices follows indications that worldwide market values for lithi­um have fallen back slightly on gains seen in the first half of 2014, with industry insiders blaming a sobering of premature reactions to the impact Tesla Motors’ lithium-ion battery Gigafactory may have on demand.

The electric vehicle producer is reported to be ahead of schedule on construction of the facility in Nevada, US, but so far has not made public any further informa­tion on its raw material needs.

In the rare earths market, warn­ings that car manufacturers are looking to reduce specific con­sumption of rare earths in mag­netic motor components have cast a shadow on future pricing projections, although a more pos­itive assessment of growing de­mand in the autocatalyst market offered some reassurance to pro­ducers.

Efforts to stockpile heavy rare earths by China’s State Reserve Bureau is reported to be lending some support to the market in China, although prices for light rare earths were mostly flat in the last month.

Overcapacity in the light rare earths market continues to cause concern that prices for cerium and lanthanum have not yet bot­tomed, meanwhile.

US-based rare earths producer Molycorp Inc. said at the start of November that it had sold "imma­terial" amounts of separated ceri­um in the third quarter of this year, and that average selling prices for rare earths products had fallen to $36.93/kg for the period, down from $41.18/kg in Q3 2013.

Filler minerals see worldwide increases

Calcium carbonate

Imerys Carbonates North Ameri­ca announced at the end of Octo­ber that it will increase its calcium carbonate prices by up to 10% from 1 December, or as contracts allow.

The standard 10% price increas­es will apply to all of the company’s calcium carbonate products manu­factured in the US and Mexico, and are being implemented to "[support] investment in manufac­turing, quality systems, mainte­nance, environmental compliance, and new product development," Imerys Carbonates said.

Georgia, US-based Huber Engi­neered Materials has also an­nounced a 5%-10% increase in calcium carbonate prices, citing cost increases in materials, pack­aging, freight, regulatory compli­ance, labour and capital investments.

FOB US prices for calcium car­bonate range from $25/s.ton to $420/s.ton, depending on specifi­cation.

Kaolin

US-based kaolin producer KaMin LLC will raise prices for its paper and industrial grade kaolin prod­ucts by between 5-7% from 1 De­cember, or as contracts allow, while its Brazilian affiliate compa­ny, CADAM SA, will simultane­ously introduce increases of 6-8% for paper grades.

These announcements followed a statement by Germany-head­quartered BASF that it would in­crease its kaolin prices by up to 7% globally, with immediate ef­fect from early November.

Macon, Georgia-headquartered KaMin said that the rate of in­crease will vary according to prod­uct category.

KaMin also announced that its 2015 energy surcharge, which will be effective from 1 January 2015, will remain unchanged with a threshold of $5/MMBTU (British Thermal Unit) and incremental surcharges by product type.

KaMin’s surcharge applies to all of its slurry, spray-dried hy­drous and calcined kaolin prod­ucts. It does not affect CADAM’s products.

IM’s prices for paper-coating kaolin (Ex-Georgia plant) stand at $118-185/s.ton, depending on grade, while Brazilian paper-coat­ing material is priced higher, at $205-295/tonne

Market commentary

As well as increasing its calcium carbonate prices, Imerys also warned its customers to expect further price volatility associated with North American freight rates.

"Customers purchasing prod­ucts on a delivered basis will also see the effects of highly volatile and increasing truck and rail freight rates," the company said in a statement.

"Imerys continues to work with its freight partners to minimise this impact as much as possible," it added.

The company declined to com­ment on whether underlying sup­ply-demand fundamentals had influenced the price increases when contacted by IM.

Imerys further noted that it intends to review surcharges associated with "unique packag-ing configurations" as part of an ongoing effort to reduce manufacturing complexity and cost and to improve ready availability of bagged products.

Few details were given on the reasons for the kaolin price in­creases, but industry insiders said that the rises were in keeping with annual incremental price adjust­ments to keep abreast of costs and inflation, as well as to maintain margins.

Earlier this year, IM reported that prices for paper-grade kaolin had slipped slightly as paper mar­ket demand remained flat last year, while increased competition in the sector was forcing produc­ers to offer lower prices to custom­ers.

Kaolin is used in many of the same industries as calcium car­bonate, including paper, paint, ceramics, concrete and pharma­ceuticals.

Oilfield minerals – barren of barite

Barite

US barite importers have told IM that it is "impossible" to get drill­ing grade material from India at present, as the status of the coun­try’s barite mining tenders re­mains in confusion.

Barite prices from other regions, including China and Morocco, are believed to be broadly stable, meanwhile, suggesting that the shortage in India is not squeezing the market to any significant de­gree.

IM’s prices for barite (drilling grade, API underground lump) stand at $109-113/tonne for SG 4.10 material and $115-130/ tonne for SG 4.20 material on an FOB China basis.

Market commentary

Prices for Indian material cannot be assessed at present, as no trades are being executed, but industry insiders believe that prices will rise when the contracts are even­tually awarded and mining re­commences.

Indications that North Ameri­can oilfield activity may decline in the wake of falling oil prices could limit the impact of India’s barite scarcity on global prices.

Refractory minerals under pressure in China

Alumina

Alumina prices are reported to be broadly stable, with weakening demand for refractory grade mate­rial in Asia and Europe offset by steady demand in the Middle East and robust consumption in North America.

IM’s prices for fused alumina (brown, 94% Al2O3, FEPA 8-220 mesh, refractory) stand at $750- 845/tonne FOB China.

Bauxite

Rising labour and energy costs are putting pressure on refractory grade bauxite producers in Shanxi Province, northeast China – the word’s principal source of the ma­terial.

Sources familiar with the indus­try in Shanxi told IM that average wages in the region have increased by around 45% in the last year alone. The most recent rise came into effect in June 2014, accord­ing to Chinese sources.

Prices for round kilned Shanxi bauxite (FOB Xingang) stand at between $310-385/tonne, de­pending on grade. Pure rotary kilned bauxite (FOB Xingang) prices stand at between $320- 395/tonne.

Prices for Shanxi calcined baux­ite (FOB Xingang) stand at be­tween $330-390/tonne, depending on grade.

Market commentary

Asia-based buyers buying refrac­tory grade alumina for Western economies said that customers were benefitting from low freight rates, but that the FOB China price for material had seen little fluctuation during the third quar­ter of 2014.

For bauxite, one source told IM that Shanxi producers are trying to offset the additional costs by avoiding taxes, with deals being conducted on a cash only basis to sidestep VAT.

This cuts the cost of material by around 20%, and customers pur­chasing bauxite on a CIF basis are often unaware of whether the tax has been paid or not, the source added.

Natural gas prices in Shanxi are also reported to be considerably higher than global benchmarks and sources warned that these en­ergy costs would effectively put Shanxi "competitively out of the loop", if the region did not have an effective monopoly on refrac­tory grade bauxite output.

Electricity prices are also report­ed to be high in Shanxi, while supply is unreliable, causing pow­er outages at a number of bauxite producing facilities.

Adding to the regional indus­try’s woes are tightening environ­mental controls, which are placing strict limits on pollution and lead­ing to factory suspensions, clo­sures and even arrests of managers.

 

Full information on all IM’s prices can be found on the IM Prices Da­tabase online at www.indmin. com/pricesdatabase. For fluorspar and graphite prices, please visit the IM Data mineral tracker pages at www.indmin.com/fluorspar and www.indmin.com/graphite.