Mineral sands markets braced for slowdown after China virus outbreak

By IM Staff
Published: Friday, 07 February 2020

Business activity in the mineral sands markets was seen to be idling in the week to Friday February 7, with worries about the fallout from the coronavirus outbreak in China leading to a cautious outlook, as Declan Conway reports.

Trading in the mineral sands markets was expected to slow down over the near term while information about the Wuhan coronavirus outbreak and its effects on trade were being digested by dealers.

The markets have already been slow this year after rebates offered in December prompted a rash of trading activity that month, and they should be slower than usual in the weeks ahead until the wider effects of the viral infection on international trade flows become obvious, they said.

For now, minerals sands prices were relatively stable, with suppliers holding their offer prices steady while buyers assessed their feedstock levels and operational plans for the rest of the current quarter.

"The year started off with optimistic zircon demand," one source said.

"Unfortunately, the coronavirus has resulted in the Chinese new year holidays being extended by one or two weeks, so everything has been quiet. There is no demand if those guys are not operating," he added.

"We do not expect it to affect prices, but everybody’s sales will be down on volume while this situation lasts. At the same time, port congestion and shipment cancellations are also starting to be an issue. Apart from that, all is normal," he said.

Fastmarkets assessed the price of zircon, premium grade, 66.5% ZrO2 min, bulk, cif China, at $1,500-1,600 per tonne this week, a level it has held since mid-September.

"Recent increases in zircon-buying inquiries are only [inquiries] for now [but they] may develop into more business in the next week or two, when prices may change," another source said. "For now, prices look steady and reasonable. The Wuhan virus situation is making market sentiment cautious but prices are holding [firm]."

At Tianjin port in China, there were certain shipping restrictions, but ships were discharging material as normal, sources said. Jingtang port in northern China was also experiencing some shipping restrictions – although, as in Tianjin, ships were discharging material, they added.

Fastmarkets’ weekly price assessment for rutile concentrate, 95% TiO2 min, large volumes for pigment, fob Australia, was holding at $1,100-1,200 per tonne on February 6.

Fastmarkets’ price assessment for ilmenite concentrate, 47-49% TiO2, cif China, was $200-220 per tonne on the same day, up by $10 per tonne since mid-January in line with demand.

Last month, Rio Tinto reported an increase in titanium dioxide feedstock production in 2019, despite outbreaks of violence in South Africa leading to the temporary shutdown of its Richards Bay Minerals (RBM) subsidiary.

Demand for titanium slag has been supported by a shortage of other high-grade feedstocks, including natural rutile. As a result of the violence, Rio Tinto stalled a planned $463 million investment in the Zulti South project, which was intended to expand capacity at RBM.

Rio Tinto currently expects the RBM site to reach full production in early 2020.

"We saw a slight increase in our rutile pricing, about $10-20 [per tonne], mainly due to the sudden crisis created by the supply interruption from RBM," a third source said.

"The market was starting to be a bit more flat, even if the supply was still tight, but the RBM news was supporting more buying interest from producers," the source said. He added that zircon availability was fairly tight, with strong fundamentals, although that was being offset somewhat by the slowdown in international trading activity.

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