The refractories industry remains under
pressure, with no immediate signs of an upturn in the market as
the slowdown in steel manufacturing persists.
Crude steel production, the end market for
around 60% of refractory products, was 128m tonnes in January
2016, a 7.1% decrease from January 2015, according to the World
Steel Association (worldsteel).
Against this backdrop, suppliers of
bauxite and alumina to the refractories industry are continuing
to feel the crunch, IM heard at the
22nd Metal Bulletin Bauxite and Alumina
Conference in Miami this week.
"We are not at the bottom of the trough
yet," Martin Ma, vice president of Zhejiang Zili Corp. Ltd, a
major Chinese producer of refractory materials and tabular
alumina, told IM, referring to the downturn in
"We think winter is on its way,
it’s coming close, which means we
haven’t started to experience the worst part of it
yet," Ma added.
As a result, the company is looking to
slash its raw material overheads, which make up 75-80% of its
overall costs. It sources smelter grade alumina (SGA) feedstock
for its tabular product from Brazil, Australia and a number of
local Chinese producers.
In addition, Ma said the most important part of
Zili’s response to the industry weakness is to
increase its service offering.
A weakened steel industry means
refractories continue to struggle. Alumina usage
intensity is increasing, however.
"There is a different mindset in China and
the West (…) Between two products, equal quality does
not mean equal performance," he said, explaining that
comprehensive service has become critical to any offering,
especially in current market conditions.
"The recipe for making a certain type of
product can be copied. What is hard to copy is a combination of
technical superiority and onsite experience," he added.
"Pretty soon I think service (…)
will outweigh product to be the most important factor which is
going to determine whther your company is going to survive this
market or not."
Of the 5% of bauxite not used in alumina
refineries, refractories make up 16%, according to Jessica
Roberts, senior analyst at Roskill Information Service.
Refractories also account for around 46% of the 2.5% of
alumina consumed in speciality calcined form.
Bright spot for
French alumina producer,
Alteo expressed relief that its exposure to refractories
does not account for more than 25% of the end market for its
products, which include white and brown fused alumina and
"In the short term this market is not in
the best shape," Pierre Le Cacheux, the
company’s chief commercial officer, told
However, he added that a shift in favour
of using higher quality refractory products in the metals
industry could offer a growth path in an otherwise depressed
market for non-metallurgical alumina.
Such a trend would not bring about an
increase in refractory production volumes in real terms, but it
could boost alumina consumption via a switch to high-alumina
Roskill’s Roberts agreed with
this outlook, suggesting that usage intensity of alumina is
forecast to rise globally over the next five years, as product
In both the US and Europe, for example,
she suggested alumina usage intensity would increase from 1.2kg
aluminium oxide (AlO3)/tonne steel to 1.4kg
AlO3/tonne steel between 2015 and 2021.
Alumina consumed in refractory production
in Central Europe and Russia, meanwhile, is forecast to rise
from 0.7kg/AlO3 tonne steel to 0.8kg
AlO3/tonne steel, with India and China both
increasing their respective consumption rates to over 0.4kg
AlO3/tonne steel over the period.
Refractories therefore are likely to
increase their alumina consumption over the coming years,
despite the weakened state of the refractory industry. Bauxite
consumption by this industry is likely to suffer, however, in
tandem with its weakening end market.
As to when refractories will see an uptick
in consumption, this remains heavily reliant on the steel
industry and delegates at the conference were unwilling to
speculate on a timeframe.
"If anyone tells you they have a crystal
ball and can predict the month or year that the refractories
market will pick up, they’re lying," said one
anonymous senior player.