Results from refractory producers in March showed the deep
cut that the slumping steel market has made in the industrial
News that Tata Steel was looking to sell off or shut down
its entire UK steel business rocked the British – and
wider – steel industry at the end of March. The
implications are deep and catalytic. The steel industry is one
of the largest consumers of industrial minerals and while there
are larger steel-producing countries than the UK (in 2015, the
UK produced 10.9m tonnes steel compared to China’s
803.9m and Germany’s 42.7m tonnes, according to
the World Steel Association (worldsteel)), it is not a positive
signal for the industry as a whole.
Around 60-70% of the world’s refractories
output is destined for the steel-making sector, while the rest
is mostly used in the production of iron, cement, glass and
non-ferrous metals. Minerals used as raw materials include
magnesia, alumina and bauxite as well as graphite and
At the time of writing, it looked as though private equity
firm Greybull Capital would acquire Tata’s Long
Products division and potentially its speciality steel
division, but the uncertainty certainly has shaken confidence
in the sector.
This has translated into production cutbacks for refractory
producers. RHI Group revealed in its 2015 results that it has
cut production at several plants and admitted that it could
potentially source raw materials on the external market if
lower prices persist.
Slower economic growth in the emerging markets, along with a
weaker industrial production, led to falling price levels for
many important refractory raw materials such as sintered and
fused magnesia, bauxite, andalusite or fused corundum, RHI
That said, the group did hedge that, due to stricter
environmental legislation in China, it expects raw material
prices to increase in the medium term.
Elsewhere, in oil and gas markets, this month brought with
it finally some good news, with prices now trading consistently
above $40/bbl for both Brent Crude and US WTI.
While the uptick in the price – still a far cry
from 2014 highs – spells the beginning of a potential
rebalancing in the oil market, price increases have been
supported by anticipation of production cuts from OPEC (which
have not yet happened) and accelerating production declines
particularly in the US.
Producers of oilfield minerals such as barite (barytes),
bentonite and silica (frac) sand have expressed hope that
prices for their products will also increase in line with the
This, however may be a little slower to materialise, as much
capacity in the industry – particularly in frac sand
– has come offline since 2014, with a number of
producers noting that they are ready and waiting to ramp back
up once the market improves.
Unimin Energy Solutions was the latest casualty of the still
declining oil and gas market this month, as the company was
forced to close its most recently opened frac sand plant in
Tunnel City in Wisconsin, US.
The company said that the loss of expected orders ahead will
make the plant uneconomical to operate. It also described frac
sand prices as being at unsustainable levels.
Other frac sand suppliers have also recently reported losses
as the downturn in oil and gas continues to worsen, resulting
in a sustained decline in frac sand prices.
According to US-based Fairmount Santrol Inc., which supplies
both raw frac sand and coated proppants to the oil and gas
sector, average proppant prices fell 5% sequentially in the
last quarter of 2015. Houston-headquartered Hi-Crush Partners
noted prices in Q4 had fallen to $52/tonne, down from $57/tonne
in Q3 and $67/tonne in Q2.
As soda ash capacity continues to come offline in China,
prices for the mineral have jumped nearly 30% since their
lowest point in 2015.
Sources have indicated to IM that the
current market price for light and dense soda ash is around
Chinese renminbi (Rmb) 1,350/tonne ($209.98/tonne*).
By the end of 2015, there were 44 soda ash companies
operating in China with a total capacity of 29.9m tonnes, a
year-on-year (y-o-y) decrease of 360,000 tonnes, driving a
price increase from Q4 2015.
Capacity was further constrained following the failure
of a wastewater dam at Shandong Haihua Group Co.
Ltd’s 3m tpa soda ash facility in the city of
Weifang, Shandong province, early on 29 January. The company
announced the recovery of one of its production lines on 26
February, and at the end of March said it had recovered all
New supply however is expected to enter the market, as China
Salt Kunshan Co. announced the completion of its soda ash
production facility on 17 March. The company spent three years
on moving its factory from an urban to suburban area and is now
ready to begin production.
In titanium dioxide (TiO2) meanwhile, Chinese
producers began Q2 with the biggest price rally for the pigment
Following three price increases in Q1 2015 from Chinese
TiO2 producers, the country’s market
leader Sichuan Lomon Titanium Industry Co. Ltd announced its
biggest price increase to date. The company plans to up rutile
prices by Rmb 500/tonne ($77.4/tonne) and by $150/tonne for the
domestic and export market. This follows three price increases
in Q1, each by Rmb 300/tonne ($46.44/tonne).
Lomon additionally said that exports remained stable for its
TiO2 products. Producing 1,000 tonnes per day, the
company reported January exports at 16,157 tonnes and February
exports at 9,325 tonnes, at an average export price of
Elsewhere, The Chemours Co. announced global price increases
for all of its TiO2 grades following price hikes
by Huntsman Corp. the previous week.
Price increases of $150/tonne or the local currency
equivalent will be effective 1 May 2016, or as contracts allow,
for all regions.
Australian Bauxite Ltd (ABx) completed the first sale of
non-metallurgical grade bauxite from its Tasmanian mine for use
in cement applications, as the company said higher prices for
non-met supply were the reason it was targeting that
While it did not disclose the sale price of the 5,000 tonnes
cement-grade bauxite, sourced from the Bald Hill mine, and the
potential subsequent shipment of 30,000 to 40,000 tonnes in the
coming two months, ABx described the deal as "satisfactorily
ABx’s CEO, Ian Levy, stressed the significance
of the deal, in a current scenario of sluggish prices for
He added that the company paid particular attention during
the past two years to developing the necessary specifications
to supply the cement and fertiliser industries, and has now the
ability to tap into these market as well as metallurgical
bauxite "at the best prices and terms available".
After a substantial delay, Indian state-owned minerals
exporter Andhra Pradesh Mineral Development Corp. (APMDC)
released a government-run tender for the mining and export of
barites (barytes) from its Mangampet mine in India in
APMDC intends to sell about 600,000 tonnes drilling grade
4.2 SG barite and 200,000 tonnes drilling grade 4.1 SG barite
on an ex-Magampet barite mine/stockyard basis to Indian buyers
over the next year.
It also plans to sell around 150,000 tonnes drilling grade
4.2 barite and around 100,000 tonnes 4.1 SG barite on an FOB
India basis to buyers registered in foreign countries for one
Interested companies will bid for the right to mine and
trade SG 4.1 and SG 4.2 grade Indian barite on an FOB India
basis for a period of 12 months.
Indian bidders will quote for a minimum quantity of 100,000
tonnes of 4.2 grade at a reserve price of Indian rupee (INR)
5,000/tonne ($75/tonne) and 40,000 tonnes drilling grade 4.1 SG
at a reserve price of INR 4,000/tonne ($60/tonne).
International buyers will need to quote the FOB price for a
minimum of 50,000 tonnes 4.2 SG barite and 25,000 tonnes 4.1 SG
In the fluorspar market, acid grade fluorspar (acidspar)
buyers have reported little change in consumption levels, due
to the ongoing slump in fluorochemical markets, as producers
attempt to compete with low-cost supplies from China and
Prices for Chinese acidspar sank to their lowest point since
Q2 2010 in recent months, as suppliers attempted to sell
greater quantities into export markets as a result of the
slowdown in domestic consumption.
Fluorochemical producers within Asia, mainly in India, are
benefitting from a free trade agreement between the Association
of Southeast Asian Nations (ASEAN), with reduced tariffs
leading to deals being settled at low price levels,
The Chinese New Year was expected to play a significant part
in easing excess supply in a number of sectors, particularly in
graphite and fluorspar, however, both stockpiles and pressure
on materials have continued to build.
Fluorspar prices also weakened as demand for the mineral,
most notably from the fluorocarbon sector, has suppressed
hydrofluoric acid consumption, scuppering any hope of a
near-term market rebound.
Flake graphite trades within Europe have been bearing the
brunt of excessive stockpiles in and outside of China as demand
in major refractories end markets stagnates, resulting in
producers selling heavily discounted material to keep cash
The excess in supply, which was expected to ease with trades
resuming after the Chinese festival, remained unchanged as low
growth rates in major end markets continued to keep recovery at
bay, further building supply side pressure on prices.
A lack of refractories demand, particularly in China, has
led to oversupply and the undercutting of prices, a situation
which has spilled over into the European market, forcing prices
down particularly in refractory grades.
Market sources have indicated that low demand for graphite and
pricing volatility are likely to continue at least for the
first half of the year.
Prices for refractory grade flake graphite 94-97% C, +100
-80mesh, (FCL, CIF Rotterdam) into Europe have been revised
down to a range of $780-$850/tonne from the levels of
Flake graphite 94-97% C, +80 mesh, (FCL, CIF Rotterdam)
prices into Europe have dec-
reased to $780-$850/tonne from $1,050-$1,150/tonne. Flake
grap-hite 90% C, -100mesh (FCL, CIF, Europe) has been moved
down to $500-$550/tonne from $600-$650/tonne previously.
Flake graphite 85-87% C, +100 mesh -80 mesh (FCL, CIF
Rotterdam) fell to $450-500/tonne from $550-$600
Sources also told IM that prices remain
under pressure as weak Chinese demand continues to outweigh
production cuts by producers elsewhere.
The price trend for refractory grades has been relatively
more volatile, with small flake and fines traded less due to
higher production capacity and oversupply.
In amorphous graphite, price levels in China after the Lunar
New Year holiday were recorded at levels a little lower than
the previous year in order to encourage sales. With production
expected to contract in H1 2016 owing to environmental
restrictions and squeezing demand, supply-side pressure on
prices is likely to ease, keeping them stable in the short
Prices of Chinese rare earths have started to rise on the
back of stockpiling actions taken by the six largest rare earth
groups in China following governmental indications, as 2016
exports show visible growth.
The start of a recently-introduced governmental plan to
build a domestic inventory of rare earths products led to a
reduction of supply on the part of Chinese producers, which are
moving part of their output into storage.
The intervention of the manufacturers, which was initiated
at the end of March, has started to affect the market, pushing
The price of Chinese praseodymium-neodymium oxide is now up
to Chinese renminbi (Rmb) 260,000/tonne ($40,189), dysprosium
oxide is up to Rmb 1.2m/tonne ($310,000), and terbium oxide up
to Rmb 2.3m/tonne ($360,000).
According to the IM Prices Database
praseodymium oxide is priced between $53-58/kg, dysprosium is
at between $215-240/kg.
Exports in 2016 to date have meanwhile picked up speed. In
March, rare earth shipments were at 4,343 tonnes, 114% higher
y-o-y and 34% higher month-on-month (m-o-m). Q1 exports, at
11,596 tonnes, were up 109% y-o-y. The value of Q1 exports was
up 38.3% y-o-y.
Evidence of Chinese oversupply and resultant price wars
continued to be reinforced throughout April. Market leader RHI
reported it had been operating at below capacity at a number of
its plants. The company said it was likely to further adjust
its fused magnesia (FM) output if low prices in the sector
persisted and opt to instead purchase the refractory raw
material on the external market.
The company additionally incurred a loss of €84.8m in
the raw materials sector, which included impairments amounting
to €23.2m related to the FM production in Porsgrunn,
Norway – necessary due to "the persisting decline of
Chinese fused magnesia prices".
Slow economic growth in emerging markets and a drop in
weaker industrial production are likely to continue to keep
refractory raw material prices low, including for FM, although
RHI predicted that stricter environmental legislation in China
could help to buoy magnesia prices in the medium term.
Overcapacity in the sector – with sources last
month describing Chinese FM inventories as "full to bursting"
– has led to intense price wars and undercutting,
which has expanded beyond China.
The struggling refractories sector, magnesia’s
single largest end market, consumed only 80% of production in
2015 and has left magnesia producers facing lower orders and
weaker prices for their products. However, at
IM’s MagMin 2016 conference in
Dusseldorf, Germany held in April, delegates were told that
consumption of magnesia-based chemicals was starting to
increase at the same time as the refractories sector contracts,
with chief drivers including flame retardants, agricultural
uses, food and pharmaceuticals.
According to IHS Chemical, chemicals such as magnesium
chloride, magnesium hydroxide and magnesium sulphate would
experience demand growth of more than 2% per annum for the next
few years and in the long term could help ease some of the
pricing pressure the mineral is currently experiencing.
*Conversions made April 2016