China has dictated the global minerals markets for almost
three decades, thanks to its production dominance in many raw
materials sectors. But its focus has now switched from mining
to the value-added section of the supply chain for many of the
minerals it exports in large quantities.
The country has also made moves toward cleaning up its
mining and industrial sectors, seeking to improve air quality
and reduce water pollution from factories that were once
allowed free rein to produce as much as possible, regardless of
the environmental consequences.
Beijing will complete its 13th Five-Year Plan at the end of
2020, rounding off a half-decade characterized by environmental
controls that have severely curtailed the
country’s fluorspar production.
As China’s emphasis shifts upstream, the
country’s fluorspar market has decoupled from its
traditional buyers in the rest of the world. Today, the
country’s Asian neighbors take much of the Chinese
material that previously went to Europe and the United
Two trends working in parallel have contributed to this
First, China is consuming higher volumes of high-quality
fluorspar domestically. Second, ex-China consumers are looking
to reduce their reliance on Chinese material, which is not
guaranteed to arrive if government environmental controls sweep
through the mining sector again, disrupting mining, processing
Research from industry consultant Roskill, published in
September 2018, showed that 600,000 tonnes of China-origin
fluorspar production was taken out of the market following
Beijing’s environmental inspections in
This reduced China’s nameplate capacity output
by 9.5% to 5.7 million tonnes per year.
Diminished exports to the
"Compared to the past, the role of Chinese fluorspar for the
US and Europe is completely different," Oliver Rhode, managing
director of Germany-based specialist sourcing company Xenops
"[Europe and the US] used to be flooded with good quality,
low cost, Chinese material. This has changed, because the
Chinese have developed their own fluorine value chain and
because fluorspar production is now more difficult in China due
to the environmental policies. Now, I would say [the US and
Europe] have no reliance on Chinese material," Rhode added.
Trade data from the US Geological Survey showed that the US
imported just 394 tonnes of Chinese acidspar in 2018. This
compared with 45,000 tonnes the year before - a 99.1% drop.
Market participants have also remarked on the dramatic shift
in the global fluorspar supply chain.
"Chinese fluorspar practically disappeared in the US. That
was [where we noticed] the first signs of contraction, [because
it was] the first place the Chinese stopped selling," one
"In Europe, I believe there were also fewer and fewer
Chinese exports," he added.
"I believe we will continue to see less and less Chinese
fluorspar in the international market, because China is
investing in more chemical and fluoropolymer plants," he
Data from the China Customs Bureau show that the major
European export destinations, the Netherlands and Germany, have
taken lower volumes of Chinese fluorspar since environmental
controls caused prices to surge in January 2018 (see
The Netherlands, where material is received in Rotterdam
before being distributed throughout Europe, imported no Chinese
fluorspar for three of the eight months up to June 2019 - a
noticeable change from what previously were fairly regular and
large monthly receipts.
The reasons behind the decline in Chinese fluorspar exports
to US and Europe are twofold - price and quality.
Since environmental controls designed to curb pollution from
mining came into force in China, ex-China consumers have
struggled to find acid-grade fluorspar with the right impurity
profile - namely, less than 1% silica and low levels of calcium
carbonate - to satisfy their requirements.
When the market became tighter following the imposition of
environmental controls, which shut some mines and reduced
production at others, China-origin acidspar became the most
expensive material of its kind on the international market.
This made it an unattractive proposition for consumers in
Europe and the US, which also have to pay $35-55 per tonne to
cover logistics costs.
Meanwhile, for Chinese producers, increasing amounts of red
tape from the central government have made the export market
unfavorable, and trade tensions between China and its markets
in the US and Europe have created uncertainty about the
sustainability of relying on buyers in these destinations.
|Rising demand for air conditioning and fridges in
supporting acidspar consumption.
David Brossard, via Flickr
Asian demand remains strong
Indian imports of fluorspar from China in the 18 months from
January 2018 to June 2019 remained solid, totaling 86,000
tonnes for the period.
The three strongest months were January to March 2019,
during which 21,600 tonnes were imported in total.
India began ramping up its imports of Chinese fluorspar when
prices were climbing and has maintained high levels since. This
has been driven in part by strong demand for acidspar from
India’s air-conditioning and refrigeration
industries, which have been growing rapidly with Indian
consumers becoming wealthier.
Japanese imports of Chinese fluorspar have likewise remained
firm, averaging 4,500 tonnes per month in the 11 months up to
|Construction of SepFluor’s Nokeng
fluorspar mine in
Panic over scarcity
The tight fluorspar supply situation in China caused by
environmental inspections was exacerbated by the
later-than-scheduled arrival of new, ex-China supply.
After suffering severe supply chain disruption last year,
many of these ex-China fluorspar consumers ensured that they
did not suffer the same fate in 2019 by avoiding a reliance on
Chinese material that was not guaranteed to be delivered.
"Consumers have definitely covered themselves better than
[they did] in 2018. The feeling is that there is scarcity, but
not panic," the first producer said. "I believe that spot
selling [from China] will always be there, because there will
be someone that has issues or a delay in delivery."
The international market has been eagerly waiting for new,
non-Chinese producers to provide additional reliable sources of
Canadian newcomer Canada Fluorspar, which operates the St
Lawrence fluorspar mine in Newfoundland, Canada, had announced
that it would start shipping material around September 2017,
creating expectations of additional supply.
In the event, it was not until a year later that the company
finally sent out its maiden parcel.
While the arrival of this new supply was welcomed by the
market, the delay in it becoming available left many scrambling
to cover their needs when Chinese material became scarce.
Meanwhile, SepFluor, a South African company that owns the
Nokeng fluorspar project near Pretoria, finished building its
mine in March and officially opened the site in early
Fastmarkets understands that the company has not yet
produced any acid-grade material, although SepFluor said that
it has contracted at least 40% of its capacity for 180,000 tpy
for this calendar year.
|China has launched a series of environmental
over the past five years intended to reduce pollution
its industrial sectors.
Clay Gilliland, via Flickr
No going back
Although both Canada Fluorspar and SepFluor admit to having
had discussions with Chinese buyers, so far they have said that
all their contracted deliveries are destined for US and
Fastmarkets is aware that five of the four shipments which
have so far left Canada Fluorspar have gone to the US.
In the meantime, China’s imports of fluorspar
have been increasing while domestic production has fallen - a
trend that was expected to continue in the next year.
A source in Mongolia reported that the Mineral Resource
& Petroleum Authority of Mongolia had recorded a 44.4%
year-on-year increase of fluorspar exports to China in the
first five months of 2019.
The increase meant that exports to China, which have now
risen for three consecutive years, reached 221,500 tonnes of
fluorspar from January to May this year. China accounted for
65% of exports, with Russia taking the remaining 35%.
Fastmarkets was unable to verify this with the authority
itself but, given other market factors, this was a plausible
There has historically been a lack of transparency about how
much material that is sold on an fob China basis was actually
produced in landlocked Mongolia, and how much passes through
the country from other sources before being declared of
Mongolian origin at the Chinese border.
China’s fluorspar exports have been declared
flat in the year to date compared with 2018. If this is true,
it would mean that China’s downstream industries
are buying and consuming more fluorspar, both domestically and
from international suppliers.
"China is still exploring [for fluorspar reserves], despite
the fact that it is becoming a net importer," the producer
Others believe that China will need to rely more and more on
international supply until it gets more of its own mines up and
"What we have heard is that the Chinese will become more of
a net importer, because it cannot cover the whole of the
domestic demand," Olivier Ruffiner, business manager for
fluorine at Swiss chemicals company Buss ChemTech, said.
He also pointed out that Chinese government controls on
domestic fluorspar producers were likely to persist for some
time, which will further limit China’s ability to
meet its own fluorspar needs.
"For the past few months, a few smaller [Chinese] companies
have been closed overnight, [subsequent] to government
inspections," Ruffiner said. "The installed capacity [for
aluminium fluoride and hydrofluoric acid] in China is higher
than the production rate, [so] capacity utilization is probably
The market was unanimous in its view that China will
continue to grow as a net importer of fluorspar, having
dominated the export market in former years, thus creating
opportunities for more ex-China mines.
All the signs point toward further separation of Chinese
fluorspar supply from markets in Europe and the US.
Inspections cause price spikes
In January 2018, when the effects of the environmental
controls were at their sharpest, fluorspar prices spiked
At that time, the price for acidspar, 97% CaF2, wet
filtercake, fob China, went to $480-520 per tonne, up from
$300-340 per tonne in November 2017.
By comparison, the price for acidspar, 97% CaF2, wet
filtercake, fob Durban, South Africa, was $350-400 per tonne,
up from $200-230 per tonne in December 2017.