Mineral markets start 2016 on a low ebb

By Laura Syrett
Published: Monday, 21 December 2015

Antimony market crashes in 2015; refractories pull alumina, graphite and magnesia down.

Industrial mineral markets will embark on a nervous new year in January, after many industry observers gave up calling market bottoms following price declines that undercut even the most pessimistic forecasts in 2015.

In the refractory mineral markets, prices for alumina, graphite and magnesia all fell this year as soft demand, overcapacity and cheap Chinese exports eroded global selling values.

Prices for antimony, both ingot and trioxide, posted some of the biggest losses in 2015, with the market effectively going into free fall in Q4, leaving prices below the $5,000/tonne mark at the end of the year.

Frac sand prices are reported to have halved from 18 months ago and proppant prices suffered similarly, however values for the oilfield clay, bentonite, remained relatively stable over the course of the year, with sources pointing to diversification in end markets as the reason for the mineral’s resilience to negative pressures.

Mineral sands and titanium dioxide (TiO2) also had a tough year. Chinese prices for the pigment chemical rose in H1, but experienced a sharp reversal in Q3 after the effects of capacity ramp ups and the slowdown in the domestic construction market began to eat savagely into the sector.

Lithium compound prices meanwhile continued on their upward trend, with both hydroxide and carbonate prices posting gains in Q4. Prices for Chilean material, which sources had speculated was being deliberately kept low to entice buyers at a time when more market share was up for grabs, recorded increases towards the end of the year. How sustainable the growth in lithium values is remains to be seen, however, and much will depend on whether new supply comes online in 2016.

Alumina

In China, fused alumina prices were reported to be under strain at the end of 2015, as a result of the ongoing contraction in domestic and international demand for refractories.

Medium purity grades of brown fused alumina (BFA) from Henan province were being offered at prices of $550/tonne FOB. IM’s prices for 95.5% Al2O3 min BFA (refractory sized) stand at 650-700/tonne.

Antimony

Antimony trioxide (Sb2O3) producers in China’s Hunan province said that production halts implemented during the first quarter of 2015 and retained throughout the year failed to prevent prices from sliding, as sales of the flame retardant chemical declined to unsustainable levels.

Between January and the end of August, output of Chinese antimony products (ingot and trioxide) fell 7% year-on-year (y-o-y), while stibnite (antimony ore, Sb) production declined 4.9% over the same period.

Third quarter prices for antimony ingot (99.6% min) averaged Chinese renminbi (Rmb) 42,281/tonne ($6,610/tonne*), down 24.3% y-o-y, pulling down the price of antimony trioxide, for which the metal is a feedstock.

Industry sources have blamed the weak prices on slow demand from antimony’s main end markets – alloys, chemicals and flame retardants. Slow growth in the plastics, chemical fibre, and coatings segments also failed to keep pace with production. Lead battery and electric cable production has contracted, meanwhile.

IM’s prices for antimony trioxide (typically 99.5% Sb2O3) stood at $4,850-4,950/tonne on a CIF Antwerp/Rotterdam basis and at $4,800-4,900/tonne on an FOB China basis in mid-December.

Ingot (min 99.65%) prices stood at $4,800-5,100/tonne FOB China and at $4,900-5,000/tonne CIF Rotterdam.

Prices for Chinese stibnite (min 50% Sb) in mid-November stood at around Rmb 28,000/tonne ($4,377/tonne) on a domestic basis and at $3,100-3,400/tonne FOB China in December.

Prices for standard grade antimony stood at $4,900-5,200/tonne in mid-December, according to Metal Bulletin (MB).

MB reported that almost all antimony producers lost money in 2015 and are now reluctant to sell any further stock at a loss.

Bentonite

US prices for both drilling, cat litter and foundry grades of bentonite remained stable during the fourth quarter of 2015, sources indicated to IM.

Selling values for the clay generally held up over the course of the year, staving off market weakness led by the oil price decline, which affected other oilfield minerals.

IM’s prices for iron ore pelletising (IOP) bentonite (bulk, ex-works Wyoming) stand at $50-65/s.ton ($55-71.5/tonne).

Cat litter material (ex-works Wyoming) is priced at $47-58/s.ton ($52-64/tonne) and prices for drilling (API) grade bentonite (bagged, rail car, ex-works Wyoming) stand at $86-125/s.ton ($95-137.5/tonne).

Graphite

The seasonal winter downturn in Chinese graphite production had failed to push up graphite prices by mid-December, as slowing market activity approaching the end of the year gave suppliers little leverage to increase offers. 

Prices for refractory grades of graphite are unlikely to improve until the second half of 2016, or more likely until 2017, IM learned at the 5th Graphite and Graphene Conference in London in December.

Producers, traders and buyers described the pricing situation as "pretty miserable" across all grades of flake graphite, although a handful said that they were able to make money out of some lower grade products as buyers opted for poorer quality in an effort to cut costs.

While few expected further price decreases before Janaury, some sources said that the market might revive ahead of the Chinese New Year in February.   

As of December, the price of flake graphite (94-97% C, -100 mesh, FCL, CIF, Europe) stood between $750/tonne and $850/tonne, while equivalent prices for +80 mesh grades stand at $1,100/tonne, on average. 

Excess supply of spherical graphite throughout 2015 saw prices flat line. Any rebound in this area of the market is unlikely to happen before H2 2016. The price of spherical graphite (99.95% C, 15 microns, FOB China) in December stood at an average of $2,750/tonne. 

The price of amorphous graphite (80% C, -100 Mesh, FOB, China) was between $380 and $410/tonne, meanwhile, level with Q2 2015. 

Delegates at the London conference in December also heard that graphite, both natural and synthetic, is too expensive to be widely used as a recarburiser in the steel manufacturing and iron foundry industries.

David Wilson, project manager at Sheffield-based James Durrans, said that despite its various performance advantages, such as high solubility, graphite is not cost competitive against substitute products which include anthracite coal, calcined petroleum coke and metallurgical coke.

According to Wilson, calcined petroleum coke is the most widely used recarburiser for iron and steel owing to its wide availability and low cost, although other cheap carbon sources such as crushed
coconut shells are also viable materials.

Wilson declined to give a price threshold at which carbon materials are considered competitive for use as recarburisers and some industry participants disputed the claim, saying that large volume graphite mines could afford to sell fines
into the industry at breakeven or a profit.

In the graphene sector, some rare guidance on price levels was issued by UK-based Thomas Swann & Co., which manufactures nanocarbon materials out of natural graphite.

Dr Andy Goodwin, commercial manager for the advanced materials division at Thomas Swan, said he expected graphene would be priced at the same level as multi-wall nanotubes in the medium term.

Iodine

US-iodine producer Iofina Plc said in late November that it agreed with an assessment made by rival iodine producer, Chile’s Sociedad de Quimica y Minera SA (SQM), that average market prices for iodine were now below $28/kg.

The company’s CEO, Tom Becker, added that the rate of price decrease experienced in the second half of the year was not as steep as that of the first half, but was unwilling to predict how iodine prices might move in 2016.

IM’s prices for iodine (crystal, 99.5% min, drums) currently stand at $27.5-32/kg on spot and contract bases.

Lithium

Prices for lithium compounds sourced from South American brine reserves increased towards the end of Q4 2015. Delivered values for lithium carbonate with minimum grades of 99-99.5% LiC2O3 rose by as much as 7% from prices traded in mid-2015, sources indicated.

Producers said that carbonate prices had followed rises in lithium hydroxide seen earlier this year, citing demand from battery manufacturers as the main reason for the increases.

Market observers have speculated that South American lithium producers have been making efforts to minimise price inflation in order to remain competitive. 

IM’s prices for lithium carbonate (min 99-99.5% LiC2O3, large contracts, delivered continental US) now stand at $6.2-7/kg. Prices for the same material (packed in bags) on a CIF Asia basis also stand at $6-7.2/kg.

Prices for spodumene concentrate sold into Asia are reported to be around the $450/tonne mark.

Magnesia

FOB China prices for caustic calcined magnesia (CCM) weakened between mid-2015 and the end of the year.

The latest drop in prices for CCM (min 90-92% MgO) was blamed on lacklustre market activity, with industry participants describing the sector as "sluggish".

Selling values from China reportedly fell to a range of $195-210/tonne, from $200-220/tonne, where they had been since June.

Sources said they did not anticipate trading to pick up significantly before the end of the year.

Prices for deadburned magnesia (DBM) were also reported to have fallen in December, as a result of thin trading and excess stocks
being offered for clearance in China.

In the US, prices in the magnesia-carbon (MgO-C) brick industry are likely to be sheltered slightly after the US International Trade Commission (USITC) announced in December that tariffs against resin-bonded MgO-C bricks from China should remain in place and not be revoked,

Potash

While broadly firm-to-flat for early-mid 2015, potash prices softened further in the second half of the year look to be on a downwards trend into 2016.

In its latest commodity price data sheet, the World Bank assessed potash prices to be $300/tonne, down $7/tonne since April-June 2015, but up on July-September 2014, when prices stood at $287/tonne.

Falling prices have been blamed partially on oversupply, but also on the good growing conditions in major crop producing regions, which have seen record crop yields over the past three years.

Soda ash

Price increases for 2016 contracts for US soda ash began to look clearer by the end of 2015, but industry participants told market reporters that the extent of the negotiated rises would not be fully disclosed until January.

As usual, larger contracts are believed to have secured smaller increases while lower volume buyers are expecting to face slightly steeper hikes, although suppliers are generally agreed to have settled for less than they had hoped.

Most of the US’ natural soda ash producers announced list price increases of $11-12/s.ton ($12.1-13.2/tonne) in the summer. Despite a positive global outlook for soda ash, with demand growth pegged at around 2.5% per annum, according to chemicals consultancy IHS, localised overcapacity and a rising amount of Chinese material on global markets is expected to put pressure on prices in 2016.

TiO2

Prices for TiO2 in China fell by around $400/tonne since peaking in May-to-June 2015, delegates at the TZMI 2015 Congress in Shanghai, China, heard at the end of November

Prices for rutile TiO2 in China reportedly fell by $30-40/tonne in early December, as slower buying activity and growing inventories prompted producers to give in to lower bids.

Locally-based sources said that overcapacity is continuing to rise in the country and that none of the manufacturers of the pigment chemical are willing to shut off production as they vie to secure market share.

According to a Hong Kong-based trader, one positive aspect to this situation is that it is preventing prices for rutile and ilmenite feedstocks, which are imported into China from locations including Africa and Australia, from sliding as sharply as they might do otherwise.

Prices for anatase TiO2 in China had dropped to Rmb 8,800-9,500 ($1,376-1,486/tonne) from Rmb 9,800-11,000 ($1,534-1,722/tonne) at the end of November, with even lower prices being offered by traders.

Chinese sources said they thought TiO2 prices would probably fall further before the end of the year. The Chinese TiO2 industry is suffering from overcapacity and falling export demand. Slow progress in upgrading manufacturing facilities to more efficient chloride-route production technology is also adding pressure to margins.

IM’s prices for TiO2 pigment (high quality, bulk) stand at $1,650-1,850/tonne on a CFR Asia basis.

Zircon

Prices for standard grade (65% min ZrO2) zircon in China sank to around $1,000/tonne at the bottom end of ranges in December. 

Reports confirmed by IM indicated that prices for ex-works material, excluding VAT, had slipped by around Rmb 100/tonne ($16/tonne) in the last two weeks, driven by aggressive negotiations and weak buyer interest.

Prices in export markets had not declined outside IM’s published ranges as of mid-December, however domestic Chinese prices for standard grade zircon were reported stand in the range of Rmb 6,400-6,900/tonne ($1,010-1,088/tonne). 

Sources in Australia and Africa declined to comment on the market, however in mid-December, Australia-based mineral sands miner Iluka Resources Ltd released its guidance for 2016, where it offered a subdued outlook on the market.

The company reiterated its approach of not pursuing volumes at the expense of prices where practicable, adding that the approach has "limited erosion in its received
prices".

The November year-to-date averaged and realised price for premium and standard zircon at the company stood at $1,005/tonne, down from $1,033/tonne in 2014, Iluka said.

Rutile price averages had not changed since the August guidance release, standing at $777/tonne.

*Conversions made December 2015

Full information on all IM’s prices can be found on the IM Prices Database at www.indmin.com/pricesdatabse.