Gildas Fontaine: Yes, we share this view.
We see the calcined alumina market under pressure. What we
expect today is very strong demand coming from all markets.
The main driver is the refractory industry overall [Alteo
sells to bricks and monolithic producers] but also in the
feedstock business for tabular alumina, white fused or
calcium aluminate cement. We are sold out for all products
and all markets.
IM: Do you expect the bullish market forces to
extend for some time?
GF: Since the main driver is refractories
demand from the steel industry, we don’t know
when it may stop. So far, it keeps growing at a fast
We don’t hear of competitors who cannot
supply so it means that it’s really down to
demand drivers. We know refractories [end markets] can be a
bit erratic so we need to be prepared to decrease even if we
don’t see any sign of it today.
The technical ceramics market is also one that offers
interesting opportunities, particularly after [changes in
supply composition]. We are looking in that space.
IM: How is the balance between global supply and
global demand in calcined alumina at the
GF: We are short on production and there
is an unbalanced situation between supply and demand. We
don’t see any of our competitors in a situation
of overcapacity, but we don’t see that many
investments to follow the growth curve.There are two
consequences to this unbalance: one is to increase prices and
the other is to invest in new capacities.
IM: How is Alteo investing at the moment and with
GF: We started investing in grinding
capacity in Asia in 2017 and we are working on further
expansions. We are not expanding Bayer capacity in Gardanne
[the plant in France], but we are working on high value
products. The strategy is to improve Alteo’s
offering of finished downstream products.
The additional capacity in grinding and packing will allow
to sell the material to higher value applications. This plan
is pushing us towards Asia: we are becoming more and more
This is not only for one market or other, but for all
products that are used in refractories and ceramics.
IM: Is the volatility in smelter grade alumina
(SGA) prices we saw in 2017 affecting the calcined alumina
GF: Of course it has had an impact in our
price discussions. The SGA price has increased dramatically
and, to be honest, we did not expect it. The correlation
between the SGA price and the speciality alumina cost is
important, as most of the speciality alumina producers use
IM: What do you expect the price increase will be for
calcined aluminas this year?
GF: [I expect] a ballpark range of
15-20%, depending on specific customer. It’s
even higher than 20% in some cases.
IM: Do you expect the market to evolve towards
shorter contracts, in response to the price
GF: Not really. From what we have seen,
customers’ main fear is not getting enough
material to run their business. We believe their first
priority is to get the volumes.
IM: What are the main challenges the industry could
face this year?
GF: I would say the main challenges are
insufficient supply which is creating a situation of higher
prices. High demand, in some cases, is exceeding available
supply and a lack of enough investment [is making the
industry less able] to keep up with this increasing
IM: I know of at least three suppliers increasing
their hydrate prices. Do you also see the ATH market
GF: Yes, it comes down to lack of
material available for customers. We see increases worldwide.
We are working on our mix of sales, and we want to reduce our
sales of standard wet hydrate and focus on calcined alumina
for the refractories and ceramics.