Price increases are expected to be seen "in most refractory
raw materials" next years, buyers attending the UniteCR 2017
conference in Chile told IM.
As the tightness affecting several industrial minerals
markets on the back of reduced output in China continues to
pressure prices upwards, several consumers have reported they
are bracing for higher sourcing costs in 2018.
"Everything will appreciate in 2018," one Europe-based buyer
of refractory minerals told IM. "We know that
for certain."
Another buyer quipped: "Sellers have been mentioning it
regularly over the last month or so: they are preparing us for
it. We know it will happen."
Higher spot market prices, coupled with limited availability
of material, has been seen since Q2 this year and remains a
feature of the market as the industry enters Q4.
 |
IM's Davide Ghilotti
presenting
at UniteCr2017 |
Prices of
Chinese fused magnesia have reached new highs over the last
couple of weeks, while
European fused magnesia prices are at a decade-high.
Brown-fused alumina and
bauxite also surged, following renewed anti-pollution
inspections at operations in China and restrictions to mining
with dynamite in several areas of the country.
The shortage in alumina is also bound to affect the supply
chain of related products, including white-fused and calcined
alumina materials.
Buyers are adamant they will see upticks in prices in their
2018 contracts for all of the above materials, as well as other
inputs, such as andalusite.
Some manufacturers of speciality cements are expected to be
affected as well, particularly as regards bauxite (which they
source as refractory grades). While regular buyers tend to keep
several months of feedstocks at hand in order to ensure smooth
production, if the situation of tightness were to extend
throughout 2018, they would also face increased sourcing
costs.
A third consumer attending the Santiago event told
IM: "When it comes down to it,
it’s not really a question of 'if’,
rather than 'when’ and, especially, 'how
much’."
He said the expected widespread uptick in costs would force
refractory makers to, in turn, seek to adjust their selling
prices upwards to uphold margins, but this would be easier said
than done.
At the same time, in the view of an eastern European
refractory supplier, end users – particularly in the
steel sector, which is the single largest end market for
refractory products – have shoulders broad enough to
absorb what would be a minimal increase in their costs.
"In steel, the cost of refractories is around 2% of the
total – maybe not even that. If it has to go up half a
percentage point, that in itself won’t be an issue
for steelmakers," he said.