Price stability rules as mineral markets enter Q2

By Laura Syrett
Published: Monday, 27 April 2015

Producer increases may lift bromine prices; oilfield mineral prices flat as oil tumult persists; fused alumina prices edge up as Chinese competition dips.

Laura Syrett

Prices in most industrial mineral markets were flat as the industry entered the second quarter of 2015. 

The majority of suppliers have given up predicting market recoveries but some positive sentiment was garnered by the fact that most prices held steady in April. This was a perhaps a particular surprise in the oilfield mineral sector, where low oil prices and falling rig counts continue to pose questions about future price trends for barite (barytes) and bentonite.

Flame retardant chemical industry minerals, antimony and bromine, remained under pressure from weak demand over the last month, while in the refractories raw materials market, fused alumina prices are reported to be benefitting from reduced Chinese competitiveness.

Chemical minerals – bromine bumped up

Antimony

Prices at the lower end of the antimony trioxide price range slid again in early April by around $50/tonne, as the market shows no sign of improving.

The latest slip puts the CIF Antwerp/Rotterdam floor price of antimony trioxide (typically 99.5% Sb2O3, 5-tonne lots) on a par with FOB China prices for the same material (20-tonne lots) at $6,900/tonne.

The top end of the ranges are assessed as $7,050/tonne for CIF Antwerp/Rotterdam, and $7,000/tonne for FOB China material.

Prices for ex-works US antimony trioxide remain at $7,000-7,100/tonne, meanwhile. Prices for trioxide grade antimony ingot (99.65% min Sb2O3) stand at $7,750-7,850/tonne on both an FOB China and CIF Rotterdam basis.

Metal Bulletin maintained its trioxide grade ingot prices at a higher level, assessing values as being in the $8,600-8,900/tonne range in mid-April. Industry sources told IM that the market remains weak, however.

Bromine

US chemicals producer Chemtura Corp. said in April that it is increasing prices for new orders of selected bromine-based flame retardants and brominated performance products by up to $0.90/kg.

The increases will affect products sold in all regions and take effect immediately, or as contracts allow.

Included in the increase are its tetrabromobisphenol A (BA-59P), tribromophenol (PH-73FF), alkyl bromides, HBr 48% and certain other products, Philadelphia-based Chemtura said.

The company’s latest rise in prices comes on top of a 20% hike in its bromine prices for the Asia-Pacific region in February this year.

IM’s prices for elemental bromine (purified, bulk, 99.95% Br, domestic destination, tonne lot, ex-works US) stand at $1.6-1.75/lb ($3.52-3.85/kg).

Market commentary

At the beginning of April, it was reported that the government of Lengshuijiang city, Hunan province, China’s largest antimony-producing centre, had closed 11 antimony producers, including a 600-700 tpa antimony mine, two ore-dressing plants and eight smelters with about 50,000 tpa combined capacity.

According to local sources, the production lines may remain closed until September.

Yang Xueling, senior analyst at state-backed research firm Antaike, said the closures of the other businesses would reduce supply of antimony metal by at least 1,000 tpm, a figure which accounted for nearly 5% of China’s production in December 2014.

In the bromine market, Chemtura took the unusual step of giving a price/kg figure for its most recent increase, rather than stating the rise in percentage terms. However, the company did give the usual reasons for raising its prices, namely the need to support increased investment and product stewardship within its business.

Gulf Resources Inc., one of Asia’s largest producers of bromine chemicals, has said that the increase in list prices put forward in recent months by other producers like Albemarle Corp. and Israel Chemicals Ltd (ICL) for Asian customers is likely to boost bromine prices in China.

Albemarle Corp. said in March that it will increase its prices for elemental bromine and bromine derivatives by 30%. ICL raised its bromine prices for Far East-based customers by 20% in November last year.

"The significant price increases by the two largest companies in the bromine industry will have a positive effect on the Chinese domestic bromine market," Xiaobin Lu, CEO of New York-listed Gulf, commented.

"It is difficult to predict when these price increases will be fully reflected in China. However, we believe when customers work through their current inventories, we will see significant increases in prices."

Liu’s comments hint at the resistance to higher prices by Asian customers, as lately remarked by both Albemarle and Chemtura. As well as price rises for elemental bromine, companies have sought to introduce higher priced flame retardant chemicals into Asian markets as they manufacture new regulation-compliant brominated products for consumer and industrial goods.

While there remains a plentiful supply of bromine, buyers in lower-cost regions like Asia are reluctant to pay more for the products.

Liu said that efforts by the Chinese government to boost the country’s economy could increase demand for bromine, which is linked to construction and consumer markets through its use in insulation foams, textiles and plastics.

Energy minerals – rare earths prices hold on

Rare earths

Prices for rare earths seemed to have stopped falling in April, with industry sources indicating relative stability and even some price rises for the first quarter of 2015.

Prices for neodymium oxide (min 99%, FOB China, bulk), used in neodymium-iron-boron (NdFeB) magnets have remained steady since the end of 2014 at $58-68/kg.

The price of dysprosium oxide (min 99%, FOB China, bulk) has increased, meanwhile from around $320-370/kg at the beginning of this year to $360-400/kg at the end of March.

Prices for all other rare earth oxides have stayed within IM’s published ranges, according to market sources.

Market commentary

The news of price stability for rare earths comes as some consolation for dismal full year price trends in 2014, both for producers in China and the few non-Chinese companies operating in the sector. 

Recent data from Chinese customs showed that even though rare earths export volumes grew 27.3% to 28,000 tonnes last year, the average export price of rare earth products, which include oxides, metals, mixed oxide compounds and magnets, fell to Chinese renminbi (Rmb) 83,000/tonne ($13,000/tonne*) – down around 48% on 2013’s average.  

The largest Chinese producer of rare earths, China North Rare Earth High-Tech Group Co. Ltd, formerly known as Baotou Steel Rare Earth Hi-Tech Co. Ltd, which produces mainly light rare earths from Inner Mongolia, recorded a 57% year-on-year fall in annual profits last year to Rmb 643m ($105m).

Latest figures for exports of magnet materials from China showed an easing of the traditional decline in February shipments, which occurs every year as a result of the Chinese Spring Festival holiday in the middle of the month.

In February 2014, exports of rare earth magnets fell by 821,412 kg; in the same month in 2015, this drop narrowed to 305,688 kg.

Industry observers have expressed confidence in a resurgence of demand for rare earths used in magnets.

One industry participant said that government attempts to consolidate the Chinese rare earths sector are taking effect, with many small producers being absorbed by larger companies or forced out of the market, giving the remaining companies more pricing power.

Sources said that the fight to tackle illegal mining and smuggling in the country is only having a limited impact, however, and  that this activity would continue to keep a lid on prices even as producers try to push values for legal contracts higher.

Oilfield minerals – barite and bentonite flat

Barite

Prices for Indian barite have been confirmed as stable within IM’s current ranges, despite ructions in Andhra Pradesh over government-published prices for the oilfield mineral, which many claim make exports from the state too expensive and are putting off buyers.

According to the Andhra Pradesh Mineral Development Corp.’s (APMDC) tender document, bidders are required to quote for a minimum quantity of 100,000 tonnes 4.20 SG drilling grade barite at a minimum price of Indian rupee (INR) 6,750/tonne ($107/tonne) and 40,000 tonnes 4.10 SG drilling grade barite at a minimum price of INR 5,360/tonne ($85/tonne).

IM’s prices for Indian barite (drilling grade, underground lump, OCMA/API, bulk) stand at $138-145/tonne for SG 4.20 material and $110-125/tonne for SG 4.10 material, on an FOB Chennai basis.

Prices for ground barite (API, big bags 1.5 tonnes) are $158-175/tonne FOB Chennai.

Bentonite

Drilling grade bentonite prices have likewise remained stable within IM’s published ranges, despite the ongoing weakness in the oil market, according to industry sources.

IM’s prices for bentonite (API grade, bagged, rail car, ex-works Wyoming) stand at $95-135/s.ton.

Market commentary

The APMDC, which controls the barite deposits in the state, put the rights to mine the oilfield mineral up for tender on 13 March, but so far no qualified company has submitted an offer for the licences, local sources told IM.

One would-be exporter of Indian barite said that the APMDC tender contained a number of "impractical conditions", including: a reduction in the base specific gravity (SG) quality for drilling grade barite from 4.23 to 4.20; an unrealistically high floor price; and a clause providing for monthly variation in prices, which the source said ran contrary to international practice for barite contracts.

However, APMDC denied that these clauses were the probable reasons for the lack of bids. APMDC executive director, H D Nagaraja, told IM that the pricing methodology used to fix the barite floor price was not unrealistic and that the monthly variation clause was designed to offset the impact of currency fluctuations.

Industry observers believe that the main concern for Indian exporters is that they are unable
to compete with Chinese suppliers at APMDC’s stated prices, meaning that they will lose market share to their lower cost competitors.

Prices for Chinese barite (drilling grade, API, underground lump) stand at $109-113/tonne for SG 4.10 material and $110-123 for SG 4.20 material.

Locally-based sources in Andhra Pradesh said that the ongoing hiccups in the tender process means that there is no barite available from India at present. However, market participants in North America and Asia confirmed that list prices for Indian barite have been kept consistent with IM’s published ranges and are likely to remain so until the supply situation changes.

In the bentonite market, oilfield service companies, which supply bentonite to drilling companies for use in muds, are reportedly being asked to reduce their offers in response to lower oil and gas prices. However, supply-side businesses are standing firm.

"Some end users are beginning to ask for price concessions, believing that the price of bentonite should go down with the price of energy," one North America-based source told IM.

They added that the widely held assumption by operators further down supply chains, that those further up "must be making more than us", is unfounded for bentonite.

Margins are reported to be under pressure for bentonite producers, as operating costs for the clay increase.

One buyer told IM that it did not expect to pay less for its bentonite this year on a per tonne basis, but added that they may be buying lower volumes as a result of the softness in the oil market.

A slump in demand could lead to producers cutting their prices later this year.

Refractory minerals – fused alumina creeps up

Alumina

Prices for fused alumina are gradually edging up, despite global overcapacity for the material, as China’s dominance as a low cost supplier begins to ebb.

IM’s current prices for fused alumina stand as follows: brown, 94% Al2O3, FEPA 8-220 mesh refractory (mm), FOB China, $755-850/tonne; white, 25kg bags, CIF Europe, €840-900/tonne ($906-971/tonne); 94% Al2O3, FEPA grits, acid washed, Chinese, $700-760/tonne; brown, 95.5% min, Al2O3, refractory sized, FOB China, $695-740/tonne; and brown, 95% min, Al2O3, FEPA F8-220 grit, FOB China, $685-700/tonne.

Market commentary

Sources told IM that prices for white and brown fused alumina were "increasing very slowly".

"This is not because [industry] competitors are putting up prices, but because China is becoming less competitive," one Europe-based source said.

Industry participants said that some customers were prepared to pay a premium for quality and consistency of product, particularly in the refractories and ceramics markets, as well as security of supply across all consuming sectors, which includes abrasives.

However, Chinese prices are still used as a benchmark, which other suppliers have to negotiate up from.

"China is the major player in the white and brown fused alumina market," one source said.

Market insiders said that while the fused alumina industry is in an oversupply situation on the whole, there is supply tightness for some products, although this varies by market and none were prepared to divulge where shortages lie.

On the raw materials side, European fused alumina suppliers told IM that they are paying higher prices for dollar-denominated shipments of non-metallurgical bauxite, owing to the weakness of the euro against the US dollar. Underlying prices for non-metallurgical bauxite, which is mainly sourced from China, are reported to be stable, however.

The decline in the value of the euro has generated increased demand for European-manufactured fused alumina, meanwhile, as buyers transacting in dollars seek to take advantage of the currency-led price differential.

See p67 for magnesia prices.

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.

*Conversions made April 2015