Chinese barytes exporters fear they may struggle to maintain
their price advantage over India, if a new tender process
lowers prices from the latter origin.
Markets are still waiting for news on when the state-owned
barytes miner Andhra Pradesh Mineral Development Corp (APMDC)
will announce the next round of tenders. Pricing for the top
grade of barytes will determine the competitiveness of Indian
supplies in international markets.
But many buyers expect Chinese supplies of SG 4.2 barytes to
remain priced below Indian supplies, even if the next tender
slashes Indian exporter costs.
Buyers at two major oilfield services companies told
IM in August that Chinese suppliers could cut
their prices to compete for global market share with India,
given any foreseeable APMDC price cut.
Tight Chinese margins
But sources in the Chinese market seem less certain that
there is room to undercut Indian sellers given high production
costs in the near to mid-term.
According to IM’s assessment
on 20 July, Indian barytes prices for SG 4.2 lump was at
$90-110/tonne FOB Chennai, compared to $80-90/tonne for Chinese
supplies on FOB China basis.
A major Chinese barytes producer and trader reported "very
low profit margins" for the drilling-grade mineral.
The producer told IM that barytes
production costs at a legal facility with environmental
certificates in China would be approximately $80/tonne, while
unregulated producers who did not meet strict environmental
standards could operate at reduced costs.
However, unregulated producers have been increasingly shut
down by the Chinese government during the waves of
environmental inspections that swept through the country since
early this year. Hence, it is unlikely that Chinese barytes
prices could fall below $80/tonne, the producer said.
"Every cycle has to be controlled very carefully or else you
will lose money," the producer said.
The increasingly strict anti-pollution controls on all
mining and processing facilities throughout China is cited by
Chinese suppliers as the key factor driving production costs
"Barytes mining and production will be more and more
regulated in China," the producer said.
Meanwhile, another trader estimated that up to one-third of
barytes capacity in China is idled due to the anti-pollution
A US-based barytes buyer agreed with this assessment, though
he noted that smaller sellers could avoid environmental
scrutiny and offer competitively-priced products.
Unlike other barytes exporters, such as China and Morocco,
where supplies come from numerous small mines, the huge
majority of Indian production comes from one site.
Access to the Mangampet site, the world’s
largest barytes deposit, is controlled by the regional
government-owned Andhra Pradesh Mineral Development Corporation
(AMPDC). These supplies are offered to private-sector employees
through a tender system.
High grade Indian barytes, with specific gravity of over
4.0, has been kept out of the US market for over a year, as it
is not competitive with equivalent supplies from China.
Barytes with relatively low specific gravity are more
competit-ive, and are shipped to the US for blending with
higher grade supplies, and used in onshore drilling.
API-grade Indian barytes dominate the key Middle Eastern
markets, particularly Saudi Arabia, where they are valued for
their reliable quality, as they originate from a single mine.