This year’s 23rd Industrial
Minerals Congress was once again well attended despite the
current market downturn.
Delegates travelled to Prague in the Czech
Republic to drum up new business and listen to presentations
from an array of speakers including producers, consultants and
Much of the conversation circling IM23
centred on the need for innovation no matter the industry, as
well as the necessity to reflect and re-evaluate current
production processes in the downcycle. Speakers focused
predominantly on cost and energy savings, as well as technology
that is able to "do more with less" particularly as mineral
grades decline and mineral prices remain weak.
And, while the economic climate makes it
difficult to give an accurate forecast of what 2016 might hold,
editorial market reporters took to the stage to discuss current
and potential future pricing trends in lithium, titanium
dioxide (TiO2), graphite and fluorspar.
Graphite: Albert Li, Analyst
|The IM team takes to the stage
to discuss pricing.
While China has been the
dominant power in the natural graphite industry for a
generation, as consolidation escalates, industrial regulations
tighten and major investment flows into value-added markets,
doubts have emerged as to whether the domestic industry is
likely to continue its dominant position in the
Benefitting from huge reserves, China has
been leading the market as a price strategist
– a trend which is likely to fade away –
following a drop in the country’s raw material
exports, slowing growth in demand from traditional markets and
emerging new capacities.
Stagnant growth in traditional graphite
end markets, largely refractories, remains sluggish with demand
side pressure mounting over prices since H2 2012. Prices for
some commonly traded higher mesh grades have fallen by 70%
since the second half of 2012, while similar drops have been
registered in fines.
The only market making some waves is
spherical graphite, on the back of it's use in batteries for
electric vehicle (EV) industry.
The dullness in demand from traditional
markets has pushed existing producers and explorers towards
performing research and development to produce battery-grade
material driven by the EV boom.
This has seen most graphite explorers in
countries like Madagascar and Canada, developing their projects
to be a sustainable source of battery-grade graphite material
required as anode in lithium-ion (Li-ion)
Besides the spherical grade, other
specialised graphite grades including expendables, micronised
and purified graphite have seen steady growth in demand showing
greater resistance to the market volatility, while retaining
higher price levels.
Fluorspar: Albert Li,
The acid grade fluorspar (acidspar)
market, accounting for 60% of total fluorspar production,
continues to bear the brunt of the fluorochemical slowdown with
lower consumption rates putting pressure on the prices.
Acidspar prices dropped
by 25% on average in the last two years owing to the persistent
lull in market demand, with downstream markets suffering the
effects of a weak global economy, regulatory changes pertaining
to GWP emissions, and the large oversupply which caused a
backlog throughout the supply chain.
This was further compounded by new
low-cost supplies coming from Vietnam, Thailand, Afghanistan
and Germany triggering price undercutting in the market clogged
with excessive material.
The trend has pushed acidspar prices to
five-year lows and squeezed producers' profit margins as prices
near production cost levels.
Consequently, the producers with
low-production costs are most likely to weather the mix of high
In the metallurgical grade fluorspar
(metspar) market, more stability has been observed in terms of
prices although enquiries have slumped on the back of slowing
steel growth, the major consumer market for metspar.
Metspar is used as a flux for melting and
refining of steel in integrated steel plants and foundries, and
as such demand for this commodity is closely tied to the growth
of these industries.
The recent trends foreseen in the global
steel market have played a major role in influencing the demand
for metspar, which has not just led to squeezing consumption
rates, but also a shift in regional trade patterns.
With China sourcing the majority of its
metspar from producers in neighbouring countries additional
low-priced supplies from Afghanistan, Iran and Pakistan has
intensified competition in an oversupplied market.
This left trades settling at lower end of
Acidspar price trends
Lithium: Myles McCormick,
The market for lithium has undergone a
significant shift over the course of the past nine months.
Traditionally used primarily by producers of ceramics and
greases, contracts tended to be annual agreements between
buyers and sellers.
But the rise in lithium-ion (Li-ion)
batteries, fuelled in particular by increased demand for
electric vehicles (EVs) has changed the market significantly.
Additionally generous government subsidies for EV production in
China especially have caused a spike in lithium demand,
creating a spot market in that country that has driven lithium
prices to unprecedented levels.
Chinese spot prices for both lithium
carbonate and hydroxide have increased by factors of
three-to-four over the past nine months, while large contract
prices in the rest of the world have begun to track it upwards,
though not to the same heights.
A dip in the China spot price has
been registered in the past number of weeks, however, as the
government pursues an investigation into cheating on its
subsidy programme, causing battery producers to become more
cautious. Observers have said this dip will only be
Despite the general high spot prices,
however, most material is still shipped at prices agreed in
late 2015, under one year contracts at set prices with big
battery producers. The market will watch with anticipation to
see how negotiations for 2017, which are set to
begin this September, pan out.
Lithium price trends
Titanium Dioxide: Kasia Patel,
North American Editor
The industry supply chain has suffered
from a gap between TiO2 prices and its feedstocks,
rutile and ilmenite, and although this issue was identified by
suppliers and traders around two years ago, this disparity
Due to oversupply in the feedstock sector,
any price changes in TiO2 do not immediately trickle
down to benefit raw material suppliers and until –the
overcapacity issue is addressed or end user demand
significantly rises, pigment producers will continue to enjoy
low input costs without passing down any of the benefits.
|Delegates were keen to discuss price
trends and forecasts.
While pigment producers are attempting to
implement price increases across the board, both in China and
the rest of the world, analysts are arguing that a best case
scenario for TiO2 this year will be a stabilisation
Chinese producers have announced six
prices increases in 2016 alone and the country’s
TiO2 Industry Association expects further price
rises owing to low inventory levels among pigment
Despite the announced price hikes, market
participants have told IM that
TiO2 producers have yet to recoup the decline
in global prices over the last two years.
Market participants are doubtful that the
increases are being reflected in market prices against a
backdrop of TiO2 oversupply.
In feedstocks, consolidation and a move
towards chloride route pigment production was expected to drive
demand for higher quality raw materials, but so far this has
not come to fruition due to competition from imports,
technology blockers, foreign expertise and a lack of incentives
or tax cuts for those who upgrade their technology.
Consolidation and M&A activity is
expected to continue though, with government encouragement for
the creation of a small number of sulphate route
TiO2 producers with around 300,000 tpa capacity and
chloride route producers with 100,000 tpa capacity.
China’s plans anticipate, or hope, that chloride
route technology will account for at least 20% of the
country’s output over the next several years, but
the speed of change remains to be seen.
Additionally, recovery rates will also
need to be improved and waste generation and energy consumption
will need to be cut so that China’s products can
compete on a global market and command higher prices.
Pigment and feedstock producers have faced
a grim few years, however the general consensus is that 2016,
finally, marks a turnaround for the industry.
US TiO2 pricing
Consolidation will help cut overcapacity
in Asia and push up prices, while in North America spending on
durable consumer goods has risen in tandem with new housing
starts, supporting the supply-demand balance. The building
sector has not yet fully recovered from the downturn but the
construction sector in the US is on an upswing.
There is some evidence that pigment
inventories have normalised in North America and that price
increases implemented by TiO2 producers are starting
to gain traction in the continent, market participants have
told IM. This has fuelled reports that prices
for TiO2 and zircon had stabilised at the end of
April and beginning of May, albeit at lower than ideal
Major producers in North America pushed up
TiO2 prices in the first two quarters of this year
and at the end of last year marking an increase of around
$300/tonne in order to remain in the market. While this may not
be the price rebound industry players had hoped for, an uptick
in demand for end products such as paints and coatings was
reported in company results such as PPG Inc. and AkzoNobel, and
the stabilisation indicates that prices may have at least
finally bottomed out.
Despite this, year-on-year (y-o-y) prices
still remain at significantly lower levels, resulting in
declining sales and net profit for many major producers.
The oversupply of ilmenite and rutile that
has led to the widening gap between the announced
TiO2 price and the feedstock prices, continues to
Major feedstock producer Sierra Rutile is bringing
online 888,000 tonnes rutile and ASX-listed MZI Resources Ltd
began mining at its Keysbrook leucoxene project in Western
Australia in November.
On the flip-side, Iluka suspended its
ilmenite and zircon mine in Virginia due to weaker prices at
the end of 2014, and Chemours has brought its
new Mexican TiO2 line online, although most of this
additional capacity is a balancing out of other shut-downs and
a move to more efficient production.
Iluka has, however,
forecast that $1.6bn will be spent on new mineral sands
projects, and while it expects a supply shortfall this
remains to be seen.
New players into the market will need to
be highly cost competitive and produce high quality product in
order to gain traction. New entrants are also banking on the
trend towards chloride-route technology in China to create
demand for high quality titanium mineral
TiO2 price trends,
If you have any comments or concerns, or
wish to discuss any of the prices listed please contact:
Myles McCormick for lithium at email@example.com
Shruti Salwan for graphite and fluorspar
Albert Li for China prices at firstname.lastname@example.org
Kasia Patel for titanium dioxide at email@example.com
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