FLUORSPAR 2018: current market trends to continue pressuring prices

By Michael Greenfield
Published: Monday, 22 October 2018

Tighter supply in the fluorspar market has put pressure on raw materials and fluorine-derived product prices, while new products and increasingly fragmented end-user markets are creating widespread uncertainty.

Establishing a detailed view of 2018’s market fundamentals and assessing what trends are now developing is critical to understanding how the supply and demand balance will develop. And the impact this will have on pricing was a major talking point at a Fastmarkets IM panel discussion the Fluorspar 2018 conference in Johannesburg, South Africa on 26-27 September.

Gaining an accurate overview of the global supply and demand balance has been challenging over the calendar year due to a lack of clarity on the effect of environmental inspections on China’s annual fluorspar output.

Kerry Satterthwaite, division director of carbon and chemicals for industry consultancy Roskill, referred to research that shows that 600,000 tonnes came out of the supply side in China in 2017.

This 10% year-on-year decrease in global supplies has created shortness in the market and led to price increases across all production markets.

The latest Fastmarkets IM price assessment for acidspar, 97% CaF2, wet filtercake, fob China $410-500 per tonne on Thursday October 4. It was $340-360 per tonne a year ago. 

In 2017, global fluorspar supplies were at their lowest level in a decade at 5.7 million tonnes produced, comprising 3 million tonnes of acidspar and 2.7 million tonnes of metspar.

Acidspar fell 25% from 4 million tonnes produced in 2016, while metspar production was up from 2.3 million tonnes in 2016.

Both metspar and acidspar are becoming more scarce, which is limiting spot market activity and placing upward price pressure on raw materials and fluorine products.

The drop in acidspar production has coincided with strong end-market demand. 

"Hydrogen fluoride (HF) demand follows the same trends as acidspar. You need HF as a precursor for refrigerants, aluminium fluoride (AlF3) and fluoropolymers," Mexichem’s upstream business director Guillermo Gallegos said at the panel discussion.

"If acidspar supply is short, there will be an impact on HF volumes and thus prices," he added. "We are seeing this situation in 2018 and most probably [will also see it] in 2019." 

Fastmarkets IM does not price HF.

Mexichem, the largest single producer of HF by volume, has both upstream and downstream operations.

"Despite the fact that new fluorspar producers are entering the market, we believe that overall demand, including from China, will absorb any incremental increase in supply," Gallegos said. "The market balance could continue to be short, resulting in price increases."

Regarding metspar-consuming sectors - predominantly steel - Satterthwaite estimates that while global crude steel production will be broadly flat this year, there will be a recovery in 2019.

Metspar demand will be slightly limited in steel applications, and Satterthwaite believes that China has reached its peak in terms of steel output.

Gallegos, however, noted that steel demand has recovered in the United States, having dipped in 2015-2016, which means metspar supplies are likely to be tighter because no new significant metspar sources have been identified in recent years. He added that this will be influenced by trade conflicts between the US and China.

Even with current end markets performing strongly, Chris Potgieter, director business development at the South Africa-based consultancy BFluor, told the discussion group that he expects downstream markets to become more fragmented as new products are developed. 

There have also been shifts in the market in recent years. For example, French conglomerate Solvay has gradually moved out of the fluorspar mining sector and is focused on developing its fluoropolymer business.

And focusing on downstream products is a shift that mirrors what has happened in the Chinese market, where production has come offline and there has been a focus on developing fluorspar-derived products.

FLUORSPAR 2018: What we learned this year

Global supply has decreased. More than 500,000 tonnes of fluorspar came out of global supply in 2017. This followed on from 500,000 tonnes leaving the supply side between 2012 and 2016 due to weak pricing in the market.

Market participants expect prices to move. These expectations are already being reflected in Fastmarkets IM’s 4 October price assessment where the acidspar cif Rotterdam price spiked by $70 as a result of short supply and consumer concern about securing material for 2019.

Trade flows out of China have diminished. Research presented by Oliver Rhode, chief executive officer of consultancy Xenops, shows that Chinese acidspar exports to major import markets have declined steadily over the past decade.

Manufacturing value-added products has become more prevalent in China. As a percentage of local production, domestic consumption is now more than 90%. A decade ago, it was under 80%, and in 2000, it was marginally above 30%. 

End uses for fluorspar are becoming increasingly fragmented. A few years ago there was only one fluorine-based polymer product on the market and now there are eight. 

Fluorocarbon refrigerants still have room for growth in emerging markets. Strong growth is anticipated in South America, Africa and across Asia, according to research from IHS. There will be declines in Europe, Australia and Canada.

Two new projects will hit nameplate in early 2019. Canada Fluorspar and Sepfluor have both asserted they will be at nameplate capacity in the early part of next year, producing a combined 400,000 tonnes per year.