IM Prices August 2017

Fluorspar

Chinese fluorspar prices drop as refrigerant season ends

Albert Li

Chinese fluorspar spot prices fell in the first two weeks of August as the high season ended, but metspar remained high due to strong demand in the steel industry. Some traders warned that the supply pressure will remain as the environmental inspections continue.

Chinese acidspar spot prices dropped over the first two weeks of August as the traditional high season for refrigerants sales ended while demand from the steel industry continued to support metspar.

Acidspar (97% CaF2) is the key raw material for refrigerants or coolants and the high season for refrigerant is traditionally in spring. Trading activities have been quiet as the market enters the height of summer, traders told IM.

Industrial Minerals’ acidspar min. 97% CAF2, wet filtercake spot prices dropped over the past two consecutive weeks to $340-360/tonne FOB China, according to IM’s assessment on 10 August.

Acidspar, 97% CaF2, Wet Filtercake, FOB, China (USD/tonne)

Source: Industrial Minerals

Prior to the decline, it spiked to a four-year high in May at $380-400/tonne FOB China as strict environmental measures and restricted dynamite usage in mining cut production.

Amid lower demand, one Indian buyer has received more acidspar offers at the new lower prices, the buyer told IM.

Despite falling acidspar prices, metspar prices on an FOB China basis remained unchanged for several months, supported by the strong steel industry.

Environmental checks to stay

Despite falling prices in acidspar, many expect fluorspar production to remain disrupted in China in the coming months as the strict anti-pollution checks will continue.

"The inspections won’t seem to stop this year because a new director of the Ministry of Environmental Protection was appointed recently and his policy execution measures were even stricter than those of his predecessors," one trading company in China told IM. "The supply of many industries might be affected, from steel, hydrofluoric acid and fluorspar."

"In the future there will be no hiding when it comes to environmental protection in China. Any industry could be affected by environmental issues."

Albert Li

Graphite prices in China increased further in mid-August, as several suppliers told IM that the market may continue to appreciate in the near term on the back of renewed environmental inspections of facilities and restrictions to mining.

"Prices could go as high as Chinese renminbi (Rmb) 1,000/tonne in a month – why sell it now?" he added.

According to an IM assessment on 17 August, FOB China prices for flake graphite 94-97% C +100 mesh surged to $750-890/tonne from $700-840/tonne previously, while +80 mesh material (same carbon content) increased to $850-1,010/tonne, up from $800-960/tonne in the previous week.

The price of flake 94-97% C, -100 mesh increased by $10/tonne on the lower-end of the range to $495-690/tonne, according to IM assessment. 

One producer in north-eastern China told IM: "We are only selling to our oldest customers – and, frankly, we don’t even want to sell to them. We sell 96% C +80 mesh at Rmb 7,000/tonne ($1,048/tonne), ex-works VAT included, simple package, but even our oldest customer might not get it. To new customers or refractory producers who always want to bargain and don’t have a relationship with us, we simply do not sell, or don’t even quote."

"Even we as producers are facing difficulties in sourcing graphite from other sellers for future inventory use. In addition, we must be able to pay for the material in advance, and we must have good contacts or friendships [in the industry] to get it in the first place," the producer added.

Prices expected to stay high

Haibo Mo, deputy general manager of Hensen Graphite, a large spherical graphite producer in China, told IM: "We expect prices will remain at a high level for the rest of the year. One thing is certain: overall prices won’t fall back to the cheap levels seen before."

Flake, 94-97% C,+100 Mesh -80 Mesh, FCL, FOB, Qingdao, China

Source: Industrial Minerals

Graphite

Albert Li

Graphite producers in Jixi city, in China’s south-eastern Heilongjiang province, came together to announce a mutually-agreed increase in graphite prices in August, which they said was needed on the back of fast-rising costs affecting operations.

The document – issued by the Jixi Graphite Industry Association – says that, in 2017, graphite production costs have continued to increase due to additional investment needed to meet environmental regulation, higher taxes and land fees, and shortage of ore supply – all this resulting in a "severe [financial] burden" for producers.

The table below shows all grades of graphite affected by the increase, and their updated price in Chinese Renminbi (Rmb). All listed prices are ex-works, VAT included, with simple package.

Mine closure in Luobei

"Graphite mines in Luobei are shut down due to mine safety standards failing to meet the guidelines required by the local safety inspection bureau. We don’t know when they will be reopened," one local producer told IM.

This could mean that the previous targets set by the government to double graphite production in Luobei may fall short of expectations.

At a time when Chinese domestic production is affected, local sources suggest foreign competitors could have a crack at the market, eroding China’s market share.

"Now it seems like a good opportunity for foreign graphite mining companies, since China is short of large flake graphite," a second producer said to IM. "It is likely that domestic graphite buyers [will have to] import graphite from foreign producers, and foreign buyers who used to buy from China could buy from other countries too."

In fact, China has already begun importing material from African countries. Between January and June this year, China imported 525 tonnes flake graphite from Madagascar. Last year, China imported 181 tonnes from Madagascar and 207 tonnes from Tanzania. This trend is expected to increase.

Albert Li

The China Ministry of Industry and Information Technology (MIIT) announced a draft of a double-point system that will be applied to all automakers of both internal combustion engine (ICE) vehicles and new energy vehicles (NEV).

The Chinese Government was collecting views from the public until last June and, on 25 July, the MIIT announced that the new system would be confirmed sometime before the end of 2017.

This means that producers or importers must produce or import a certain amount of NEVs, replacing the carrot of the subsidy system with a stick. 

Points can be transferred from company to company or traded. Points for fuel consumption can be carried forward into the following year while point for NEVs cannot.

The punishment for getting negative points or for failing to achieve enough NEV points is anticipated to be the partial shutdown of factories or the payment of fines.

Under this new policy, the Chinese government aims to reach the production target of 2m NEVs by 2020 targets.

"The Chinese government is looking to consolidate the automotive industry as currently there are over 200 electric automotive OEMs [equipment makers] in the country and the new policies aim at putting this market in the hand of a handful companies to make this industry more sustainable," a trader told IM. 

Bullish market sentiment

"We anticipate prices of lithium carbonate to move up throughout H2 2017 due to the current tightness of material in the market," a lithium producer told IM. 

Global lithium prices

In China lithium carbonate (min 99-99.5% Li2CO3) spot prices remained unchanged between $17.4-22.80/kg CIF China, according to IM’s 10 August market assessment, while lithium hydroxide (min 56.5-57.5% LiOH) remained between $19.9-24.3/kg CIF China.

Lithium carbonate (min. 99-99.5% Li2CO3, del. US and Europe) prices were also stable between $11-16/kg for large biannual contracts.

Lithium hydroxide large contracts (56.5-57.5% LiOH, del. US and Europe) held at $14-20/kg.

Bentonite

Yoke Wong

Since mid-July, the environmental inspectors have again moved into Henan province – the main fused alumina producing region in China – and many facilities were compelled to close during inspections.

China is one of the biggest fused alumina producers globally and the output cut will impact exports to the refractories and abrasive sectors globally.

At least two fused alumina producers in Henan were shut for days while operations at another facility were greatly reduced, the three producers told IM.

It is unclear when the environmental inspections will end, but the authorities will remain watchful on the region ahead of the national sports events due to be held in Henan in September.

The extreme supply shortage has pushed refractory-grade brown fused alumina higher, while many suppliers are wary of committing to bigger volume contracts exceeding 100 tonnes, in case they were unable to meet orders due to sudden shutdown. 

Refractory-grade BFA (95% Al2O3 min, 0-6mm) spot prices increased to $620-700/tonne FOB China, up from $580-620/tonne from a fortnight ago, according to IM’s assessments on 10 August.

Abrasive-grade material (95% Al2O3 min, Fepa F8-220 Grit) were unchanged from previously at $730-780/tonne FOB China.

Acidspar, 97% CaF2, Wet Filtercake, FOB, China (USD/tonne)

Source: Industrial Minerals

Yoke Wong

The department of environment protection of Shanxi has vowed to hit at industries breaching emission regulations and shut down all polluting operations by the end of September, a move which would further reduce refractory minerals output.

The new, tougher policy is set to further disrupt refractory minerals production in Shanxi – a key bauxite producing region in China. Calcined bauxite production capacity in China has been slashed following months of strict environmental checks on all facilities, and this latest round of intensifying anti-pollution efforts is set to further compound supply issues.    

China is one of the largest calcined bauxite producers globally and supply disruptions will likely impact deliveries to global refractories makers. Refractory-grade bauxite prices increased in August.  

The Taiyuan municipal government announced it would roll out the "iron fist pollution control atmospheric environment remediation and implementation in hundred days" plan, to ensure the province complete the task of combating pollution by October, it said on 11 August.

Under the plan, the average concentration of particulate matter (PM) between October 2017 and March 2018 must fall by 25% year-on-year, and the number of severe pollution days must also decline by 20%.

Taiyuan will crack down on illegal waste disposal in the steel, thermal power, cement, coal, paper, printing, dying and coking industries, speeding the prosecution of these "scattered polluting" industries, the authority said.

According to the government, those facilities without permit for their emission and waste disposal will be shut down and prosecuted by the end of September. All motor vehicles used in city must be registered with the authority by 1 August. With effect from 1 October, the city will also supply only state-approved grades of diesel fuel for motor vehicles.      

By 10 October, Taiyuan city aims to have electricity supply in the city to be entirely powered by gas, instead of the traditional coal-fired power plants. By end of September, the city will be completely coal-free and it will also ban the sales, distribution and burning of coal.

Err on the side of caution

This fresh wave of inspections is also expected to affect facilities that have already met environmental standards, as many producers prefer to err on the side of caution and shut down during checks.

One Shanxi-based bauxite producer told IM that the plant is going to close for a week for a half-day environmental inspection, as it is a "fail-safe decision".

Environmental inspectors have been enforcing strict measures on all facilities as they too prefer to err on the side of caution in order to keep emissions down, the producer said.

"From their point of view, it’s very safe to make that [shutdown] decision. It’s very unsafe to stay in operation," he added.

Magnesia

Albert Li

The Chinese magnesia market continues to appreciate, as export prices of a number of magnesia products have increased further in August while producers’ concerns over the environmental controls in Liaoning province persist.

The spot price of DBM 97.5% MgO rose to $500-600/tonne FOB China, compared with $460-530/tonne previously, according to a 14 August IM assessment, FM 96% MgO also increased further to $580-650/tonne FOB China, up from $580-620 last week. Other magnesia grades bound for exports remained stable.

In the first week of August, the China Ministry of Environmental Protection held a meeting focused on pollution and environmental issues in Liaoning Province.

The environmental inspection team from the ministry was already stationed in Liaoning for a month, between 25 April and 25 May, reporting a number of problems to the provincial government.

As regards magnesia-related pollution, the inspection team reported that, out of the 1,394 kilns in 291 magnesium companies in Dashiqiao, 40% had no de-dusting equipment causing serious dust pollution. 

Additionally, out of the 116 magnesium companies in Haicheng, most had ineffective or sub-standard environmental procedures: the area around several facilities was clouded by yellow smoke, prompting frequent protests by the local population.

The Ministry required that the Liaoning provincial government start working immediately to rectify the irregularities, and must submit a plan of action to the State Council by the end of August.

Barytes

Martim Facada

Global iodine (crystal, 99.5%min, drums) spot and contract prices rose 17 August with more activity reported in the market.

Multiple iodine sellers told IM that they are confident the spot and contract iodine (crystal, 99.5%min, drums) prices will reach $24/kg before the end of 2017. 

While that would require a relatively steep increase, from the lows of $18.50/kg seen in November 2016, it remains well below the "equilibrium point" that some consumers and producers expect which is closer to $30/kg.

According to IM’s 17 August market assessment iodine (crystal, 99.5%min, drums) spot and contractmarkets have moved up by $0.50/kg to $20.50-21.50/kg and $20.50-21.00/kg respectively.

"We have been witnessing producers here in South America reducing their output over the course of 2017 at the same time withholding new stock in order to sell the existing old material," an iodine producer told IM. 

Reducing stocks combined with other favourable market conditions mean producers are better positioned to push for an increase, the producer added.

But still, prices levels in August remain around $21/kg.

"We keep being supplied between $20.50-21/kg by our traditional suppliers," a consumer told IM. 

"However, we have started seeing prices being offered above $21/kg indicating suppliers might soon propose a rise in prices the next time we go to the market," the consumer added.

Iodine crystal, 99.5% min, drums, spot $/kg

Source: Industrial Minerals

Antimony trioxide

Martim Facada

China remains the most active antimony trioxide market but prices remain steady, failing to track antimony metal markets upward by mid-August. 

"We have kept on selling and offering prices at $7,400/tonne FOB China per container," the trader added.

IM sister publication Metal Bulletin reported a recent price increase on antimony metal MMTA standard Grade II on MB 11 August Global Antimony Wrap, with Chinese DDP prices up 500 renminbi, at 55,500-56,500 renminbi/tonne. 

But antimony trioxide prices have yet to catch up, with offers and confirmed sales for antimony trioxide 99.5% Sb2O3 material ranging between $7,300-7,400/tonne in an unchanged market. 

Europe and US

Confirmed spot sales have remained at low levels, with the few active consumers and suppliers holding back since a good portion of the market is on holidays. 

The European antimony trioxide 99.5% Sb2O3 market remains between $7,300-7,450/tonne CIF Antwerp/Rotterdam seeing the same price trend of stability within the domestic market having this sat unchanged at €6.50-7.10/kg in-warehouse Antwerp/Rotterdam according to 15 August IM market assessment.

"Wait and see is our current market attitude. We have kept our price offer between €6.70-6.90/kg in warehouse Antwerp/Rotterdam," a European trader told IM.

"We have been mainly more active on the metal antimony side of the business," a second trader told IM. 

"Our offering prices for antimony trioxide would be somewhere €7.00-7.10/kg in warehouse Antwerp/Rotterdam, but we have no material in stock and we have not received material inquiries in the past weeks," the trader added.

In the US, consumers and producers told IM that the market remains stable due to depressed demand, with prices between $7,400-7,500/tonne CIF East Coast and between $3.50-3.60/lb in-warehouse Baltimore. 

"We have received offers of Chinese material at higher prices, somewhere above $7,600/tonne CIF East Coast, but due to the cheaper material within the US we will not source Chinese material since everything remains very slow in North America," the trader added.