South Korea saw its refractory mineral demand increase in the
fourth quarter of 2016 compared with the same period in 2015.
Despite flat steel production, a driver for refractory
mineral consumption, South Korea imported more refractory
minerals year-on-year (y-o-y) after prices fell at the end of
last year. With South Korea’s manufacturing
sector experiencing a recovery, demand for refractory raw
materials could be further boosted in 2017.
But different refractory minerals experienced different
finishes to the year, with Chinese regulation on magnesia
exports delaying purchases as buyers waited for prices to
fall further. For other refractory minerals, import
volumes were tightly correlated with prices.
Alumina refractory bricks
South Korea imported 91.2% more high-alumina refractory
bricks in Q4 2016 at 23,632 tonnes compared with Q4 2015.
The volume-weighted price fell by 29.7% to
But the price fall was not consistent with all sellers.
China remained the largest supplier of bricks to South
Korea, and Chinese prices rose on average around 14% to
$642.92/tonne. China supplied 72.5% of South
Korea’s total imports in the fourth quarter.
However, other big exporters slashed prices, with Japan
decreasing its December price by 24% y-o-y, which resulted in a
216.5% increase in volumes. Drastic falls in other
countries such as Germany, India, and Malaysia helped to pull
the overall price lower.
|The port of Busan in South Korea is a major
in the country.
Calflier001 via flickr
Silicon carbide (SiC) saw a similar pattern to high alumina
content bricks, but to a lesser extent. Imports grew by 5.2%
quarter-on-quarter to 13,197 tonnes in 2016. Meanwhile, prices
fell by 17.4% to $944.95/tonne.
Again China was the largest supplier of SiC and in December,
prices fell by 15.4% y-o-y to $787.79/tonne while volumes rose
by 22.2% to 4,578 tonnes.
But in November and October, prices fell on a y-o-y basis
without the comparable rise in volumes. Japan also had
mixed fortunes, with two out of the three months resulting in
lower volumes and price. In November, it saw very small
gains in prices and volume.
Also for the last three months in 2016, Russia sold South
Korea 80 tonnes of SiC a month at $850/tonne, which is likely
a single deal for a long-term contract. In 2015, Russia
prices were just under $1,000/tonne for the same total
Fused and dead burned magnesia
Bucking the trend, fused and dead burned magnesia (FM and
DBM), saw a fall in both volumes and prices in Q4. Total
South Korean imports were down by 6.9% to 38,720 tonnes while
prices also decreased to 8.7% to $368.79/tonne during the
fourth quarter 2016.
China accounted for the largest share of magnesia supply and
provided 91.1% of South Korea’s total import
volumes. This market share was flat on the fourth quarter
Chinese sellers started the quarter badly, unable to boost
volumes even with a reduction in price. However, they saw a
reversal in November with a 62.5% y-o-y increase in volumes to
11,735 tonnes with a 17% decrease in prices to $342.98/tonne.
In December, volumes fell by 25.4% to 11,794 tonnes while
prices rose 1.7% to $317.13/tonne compared with December
Second largest supplier Japan also saw mixed results from its
price reductions. However, Japan’s sales
prices were nearly double China’s prices,
averaging over $600/tonne for the quarter.
Caustic calcined magnesia
Caustic calcined magnesia (CCM) saw a strong correlation
between rising prices and lower sales. Volumes imported
into South Korea during the last quarter of 2016 fell by a huge
83.4% y-o-y to 1,146 tonnes. At the same time, prices
soared by 71% to $528.16/tonne.
It is likely that FM, DBM, and CCM volumes all fell in
December due to changes in Chinese export policy.
Magnesia buyers previously reduced purchasing because they
expected the removal of export quotas and tariffs on the
refractory mineral (see p20).
In November, export quotas for magnesia were removed without
explanation from the government list released for 2017. Then,
just before the end of 2016, the state council of China
approved an export tax adjustment on partial products,
including the cancellation of export taxes on graphite,
magnesia and magnesite.
For FM and DBM, Chinese exports to South Korea fell heavily
in December, by 25.4% to 11,794 tonnes compared with the
December the previous year. For CCM, a similar trend was
seen when Chinese volumes fell by 69.6% to 402 tonnes in
December compared with the same month in 2015.
Going forward, a fall in magnesia prices is likely to result
in South Korea increasing its imports of Chinese magnesia in
South Korea recovering
South Korea’s economy is also recovering slowly,
which is expected to result in increased steel production and
refractory mineral consumption.
"The end of 2016 showed signs that the South Korean
manufacturing sector had come through the worst of its
downturn. Both production and new orders declined at weaker
rates, while international demand increased for the first time
in five months," Amy Bell, economist at Markit, said in a
research note published 2 January.
The Nikkei South Korea Manufacturing Purchasing Managers
Index (PMI) was 49.4 in December, which still showed the
sector contracting, but the rate of contraction was below
November’s PMI of 48.0. A PMI below 50 indicates
the sector is in recession.