RHI Magnesita will raise all its product prices by 5%
because it expects raw material prices to settle higher despite
recent signs of decline in magnesia prices.
Citing the effect of China’s environmental
regulations on the production of refractory minerals including
magnesia, graphite, bauxite and alumina, the refractory
products supplier said that "global scarcity of raw materials
is still evident."
Despite a recent decline in some raw material prices such as
magnesia, though, the long-term price trajectory remains
bullish, it added.
"What we saw in 2017 was a structural change in raw
materials pricing and dynamics, driving prices up. [The latest
price declines] is not a structural change but is related to
overstocking in some markets," chief sales officer Gustavo
Franco told Fastmarkets IM.
"We believe that, once the high stocks are sold, the market
would go back to where it started, and should settle a bit
higher than where we are today," he added.
The trend in refractory mineral prices in 2019 to date has
been inconsistent, with some commodities remaining high while
others starting to lose value.
In the case of magnesite-based minerals, prices of magnesia
grades out of China - especially dead burned (DBM) and fused
(FM) - are in a bearish phase at present due to weak demand and growing
Fastmarkets IM’s assessment of the
price of FM 97% MgO (Ca:Si 1:1) was at $850-950 per tonne
fob China on Tuesday April 23, down from $1,000-1,100 per tonne
The price assessment for
DBM, 97.5% MgO lump fell to $850-1,050 per tonne fob
China on Tuesday April 24 from $1,100-1,300 per tonne
The prices of bauxite and fused alumina, in contrast, have
been effectively flat so far in 2019.
The Fastmarkets IM price assessment for BFA
refractory grade has held at $780-800 per tonne fob China
since the start of the year, while calcined bauxite, 85% refractory grade, at
$400-420 per tonne fob China is down by just $10 from January.
Both rose by double-digit levels against 2017.
"We are applying a long-term strategy and focus on the value
we add to our customers. This makes us more resistant to what
happens in the raw material market," Franco added.
RHI Magnesita will apply its price increases to customers
globally, across both the steel and industrial divisions of the
company. It is also motivated by pressure on operating,
manufacturing and environmental costs the company has been
All products including basic (magnesia and dolomite based)
and non-basic products will be subject to the price increase,
which averages 5% but ranges from 3% to as much as 20%.
Demand patterns 'flat’
Franco described refractory consumption as "flat" for
this year, dismissing what other participants have described as
evident weakness for 2019 following a strong 2018.
"The rise in demand last year was driven by the perception
that there could be a shortage. This led to [panic buying] in
raw materials and also in refractories," he said. "We all
oversold last year. But high sales do not necessarily mean high
consumption, as those sales may turn into stocks. The market is
This contrasts what other market participants have been
telling Fastmarkets IM over the past few months - they pointed
to weakening demand in markets including Europe.
Franco clarified that RHI Magnesita saw falling demand in
Europe and the Middle East but that this was compensated by
growth in North America and Latin America.
Importers across Europe pointed to weak demand underpinning
refractories a whole, citing alumina, bauxite, magnesia,
graphite and silicon carbide.