Food for thought: Global salt supply

By Cameron Perks
Published: Thursday, 30 June 2016

More than just a seasoning, salt production has increased globally y-o-y, while prices for the mineral vary wildly depending on end market, location and data sources.

 CAMERON snow removal vehicle salt_farmington hills
US salt demand has been largely driven by the need for de-icing salt (Farmington Hills)

Salt, or common salt, is a mineral composed primarily of sodium chloride (NaCl) and is produced by either mining or by evaporation, using solar evaporation or a heating device.

Salt is routinely used by the general population, with most people coming into contact with it at least once a day as a basic food ingredient. The food market is just the tip of the iceberg however, with some industry sources quoting up to 14,000 known end uses.

The biggest global end market for salt is the chemical industry. Salt is the raw material used for the production of chlorine, an effective disinfectant, and caustic soda, an essential ingredient in many industrial operations like paper and detergent manufacturing.

Globally, salt production totalled 273m in 2015, up from 266m the previous year, as the 2014-15 winter was colder than average for the second year in a row, and the number of winter weather events in the US requiring salt for highway de-icing grew.

China is currently the world’s largest salt producer, since 2005 when it overtook the US. In 2015, the US produced around 48m tonnes salt according to the US Geological Survey (USGS), up 6% on the previous year, whereas China produced 70m tonnes, an increase on 68m in 2014.

US salt production has remained relatively flat since 2005, when the country supplied just over 45m tonnes and was matched by output from China.

Estimates for 2005 indicate that 39% of demand in the US came from the chemical industry. This number declined in subsequent years to 36%, replaced by the highway de-icing industry as the lead consumer, which now makes up about 46% of demand.

Declining consumption by the chemical industry in the US is in contrast with the situation in China, where demand grew and drove an almost 100% increase in salt production from 2004 to 2013.

CAMERON Salt consumption by end use US_usgs 
Salt consumption demand in the US, 2015 (Source: USGS)

The demand for salt grew so strongly that in 2005 China was unable to meet domestic demand, resulting in a shortfall which meant China had to rapidly expand production and import more material to alleviate some of the pressure.

Left to pick up some of the slack, Australia produced about 11m tonnes salt in 2015 according to USGS figures, down from about 12m tonnes in 2005.

The Western Australian (WA) Department of Mines and Petroleum (DMP) reported sales of some 11.7m tonnes in the 2014-15 financial year for WA alone. The fact that this number is higher than those numbers reported by the USGS may be attributed to differences in timing as well as a discrepancy between production and sales.

Dampier Salt Ltd, located in WA and owned by Rio Tinto, accounts for the majority of Australia’s salt production with a combined approximate output capacity of 10.3m tonnes, but produces about 8.5m tpa in total. Rio Tinto's 68% stake means that it produces 5.5m tpa, making it world’s largest exporter of high-quality bulk, solar salt.

 CAMERON Salt output_WA DMP

WA salt production in terms of percentage relative to Australia and the world. (Source: WA DMP)

In 2015, Rio’s production numbers for Dampier were 18% lower than that of 2014, reflecting a decline in market demand. According to various industry sources, the majority of Dampier’s production is exported to Asia's chemical sector.

This is representative of most of Australia’s production, with Andrew Speed, CEO of Cheetham Salt, telling IM that 90% of Australia’s total salt production is exported (as bulk salt).

Steady price declines

The prices for salt by region, source and quality vary significantly. According to the WA DMP, 2014-15 salt prices averaged Australian dollar (A$) $33/tonne ($24.6*), up on the previous year.

Limited by reporting standards in different countries, data indicates that Australian export salt prices are declining in the face of slowing demand.

Trade values – which do not necessarily represent prices at which transactions actually took place, or bid and asked prices – of Australian salt reported by China indicate a decline to an average of $41/tonne in 2015 from $46/tonne in 2014, and highs of around $50/tonne in 2013.

Australia’s export volumes to China are second only to those heading to Japan. In 2015, tonnes of bulk salt exported to Japan outstripped volumes to China by around 1.3m tonnes. This has not always been the case, with China and Japan swinging between first and second place over the last decade.

Data collected by IM, although restricted, indicates that exports to Japan from Australia are now fetching an approximate average of $48/tonne. Exports to China commanded highs of about $50/tonne in 2012, though these prices fell short compared to $77/tonne paid by Japan in 2010.

Data reported by the US (a global importer of about 23.2m tonnes salt for consumption) in 2015 indicates that the trade value of salt imported from Australia averaged around $32/tonne.

Shaky data

While differences in prices might be explained by the way companies report their data, they could equally be explained by the availability of local supply and varying end market needs for individual countries for that country.

An example of the differences seen in export end-markets is in Mitsui & Co. (Australia) Ltd, the second largest participant in the Australian market, which operates via its subsidiary, Shark Bay Salt Pty Ltd.

Shark Bay exports about 1.3m tonnes salt each year, mostly to "high end food markets" in Japan and Indonesia, claiming that "food manufacturers value its distinctive texture and purity".

Food grade salt demands a very different price to that paid for chemical grade and comes in a diverse array of 'flavours’. Murray River Salt, or SunSalt, produces a solar-evaporated gourmet salmon-pink salt from concentrated brine of the Mourquong Salt Mitigation Basin, located 13km north-west of Mildura in New South Wales and markets it on its distinctive colour, taste, flake texture and trace-mineral content.

The company finds small competition in operations such as the famous Pink Himalayan Salt and that of Mount Zero Pink Lake Salt, however the products are worlds apart when it comes to trace-mineral content, shape, source and taste.

While the intricate differences, range of flavours and textures may be hard to fully appreciate even for the gourmands among us, Murray River Salt told IM that readers should take notice of their continual growth as "sales increase every year, with demand currently outstripping supply".

Murray River Salt exports its products to Asia, Europe and the US, telling IM that gourmet salt may fetch upwards of $13,000/tonne due to increasing demand from food lovers as well as the small quantities sold per transaction.

In the US, salt prices for their number one market segment, de-icing, are growing. All prices (average value of bulk, pellets and packaged salt, FOB mine and plant) were higher in 2016 coming in at $182/tonne for vacuum and open pan salt, $89/tonne for solar salt, $50/tonne for rock salt and $9.15/tonne for salt in brine.

Wallace Bolen of the USGS said that prices were higher due to an increased need for de-icing salt during severe winter weather.

Bolen added that "salt purchasers without contracts are subject to substantial spikes in pricing if they require an unplanned salt allocation".

Salt prices are predicted to surpass $60/tonne for de-icing in some areas with Macomb County Agencies in Michigan reporting $58.90/tonne last year and a predicted $60.90/tonne for the 2016/17 snow season.

Farmington Hills 2015 salt bid for a total target of 86,650 short tons (s.tons). Farmington Hills is a main participant in the cooperative purchasing of salt through the Michigan Intra-governmental trade network, which contains 153 member agencies.

*Conversion made June 2016

Editor's note: This article was edited July 5, 2016 in order to clarify Rio Tinto's salt output from Dampier Salt Ltd. in Western Australia.

(Website image source: Roger Ahlbrand via Flickr)

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