Aachen 2018: What we learned

By Davide Ghilotti
Published: Monday, 22 October 2018

Key takeaways from the 61st International Colloquium on Refractories, held September 25-26 in Aachen, Germany

Security of supply is still a concern for the entire supply chain

It was evident at the Colloquium that availability of refractory raw materials remains a primary concern for refractories producers. At the same time, they are not the only ones keeping a close eye on supply of product: Final users across the main end applications for refractories - steel, aluminium, copper, glass, ceramics and industrial - share very similar worries. 

Prices of refractory minerals are expected to remain firm

Most market participants canvassed by Fastmarkets IM seem to think that prices for raw materials, including bauxite, alumina, magnesia and graphite, will continue at high levels for the foreseeable future, with small fluctuations. A combination of supply uncertainty from China - where more hiccups in availability are being seen - and strong end-market demand are seen supporting the current pricing scenario.

China is not out of the woods; uncertainty becomes the new norm

Due to the ongoing uncertainty related to China’s environmental policy and its effects on domestic heavy industry, volatility in supply flows from the country is forecast to continue. China is the largest producer of several refractory raw materials such as bauxite, brown and white fused alumina, magnesia, graphite and silicon carbide. Over the past two years, and especially since the second half of 2017, production of some of these raw materials has been severely disrupted compared with the abundant flow of supply to which the international market was accustomed. More of this is thought to be in the offing. "What you have seen for the past year will be what normality will look like next year, and maybe the year after," one delegate said.

Andalusite and calcined alumina under the spotlight

Some raw materials such as andalusite and calcined alumina have been beset by ongoing tightness.

The andalusite market entered 2018 in a position of shortage following a number of issues that hit production areas simultaneously in early 2017. Last year’s production fell short of global demand and led to some outstanding volumes having to be covered with this year’s production, thus reducing 2018 new availability. According to delegates, andalusite is expected to remain stretched going into next year, also due to high demand.

Calcined alumina has experienced an analogue situation of unbalance between strong demand and insufficient supply this year. This has led to prices rising by double digits in contracts. Expectations are for further upticks for next year, owing to the ongoing shortage. At the same time, some consumers have suggested the tightness may have been "overplayed to push margins" on the part of sellers.

Refractories demand easing in Q4 but still strong

Practically all refractories producers in touch with Fastmarkets IM during the Aachen event and earlier this year said that business has been high from end markets across the board. Steel output saw a rebound in 2018, but the global economic indicators - with GDP growth seen in Europe, North America, Southeast Asia and other regions - supported demand from other sectors, including industrial. The first and second quarters were "record months" in terms of orders and inquiries, several producers said. "Demand has eased somewhat in the fourth quarter but remains overall stronger than for a number of years up to now," one producer said.