Fluorspar prices find new levels

By Michael Greenfield
Published: Tuesday, 10 March 2020

Fluorspar’s sluggish global value chain could be boosted by the impact of coronavirus in China, reports Michael Greenfield.

Supplies of minerals are likely to tighten due to Coronavirus

The supply chain in the fluorine market has been disrupted since the outbreak of the novel coronavirus (2019-nCoV) in China. Factories and mines in the country have been slow to restart their operations after the extended Lunar New Year break because employees were told not to return to their workplaces in order to help contain the outbreak.

Limitations on logistics movements were also put in place. Trucks and their drivers could not cross provincial borders, making supply chain logistics particularly difficult. The global market is well supplied, with many non-Chinese consumers reporting to Fastmarkets that they have stocks left over from 2019 because sales did not reach expected levels. This caused one non-Chinese consumer to continue to run his factory at 60-70% of capacity.

Similarly, some factories are not operating at nameplate capacity because of poor pricing and demand in key acidspar end markets, such as fluoropolymers and refrigerants. The limited activity in the fluorspar market, both upstream and downstream, could help rebalance the market. 

The border between China and Mongolia is closed, a source told Fastmarkets. "The traffic restrictions in China have been largely lifted and when the traffic gradually returns to normal in the whole country in April, the whole fluoride industrial chain will rise by 5-10% or more," one Chinese fluorspar producer said.

The supply of downstream companies to their customers will not be affected too much in March since fluorspar consumers have enough stock, but end market prices have begun to rise, a seller source said. The slowing of the logistics supply chain could tighten supply. 

Mongolia produces large volumes of fluorspar and the majority of the material makes its way into China to either be consumed or exported. Mongolia exports all of its fluorspar, which in 2018 totaled around 550,000 tonnes. More than 350,000 tonnes of this went to China, with the remainder going to Russia, according to data from Mongolia’s Ministry of Mining.

Global fluorspar supply is just shy of 6 million tonnes, according to industry consultant Roskill. The global fluorspar market has also been impacted by weaker demand for fluorine-derived products.

In the latest round of contract talks, consumers were able to negotiate prices down against last year’s contract prices. 

Fastmarkets’ price assessment for fluorspar, acidspar, 97% CaF2, wet filtercake, fob Durban, was $350-410 per tonne on Thursday January 30, down from $400-450 per tonne in the previous assessment on December 26 and off from $440-490 per tonne in late November. The November price had been largely unchanged for nearly a year, only widening downward by $10 per tonne in March. Year on year, the price has declined by $90 per tonne, or 19.1%, based on the current midpoint of $380 versus the midpoint of $470 on Jan 31, 2019. 

The price reduction was due to weak end-market demand and pricing. "The acidspar producers kept prices as high as they could, but the aluminium fluoride [AlF3] prices went very low, so there was a need for an adjustment in the raw material price," an aluminium fluoride producer said. "We have seen a decrease of 20-25% [in the price of fluorspar]. $100 per tonne looks a little too big of a jump, but considering prices were close to $500 per tonne last year, it might be about right," this source added.

Historically, Chinese acidspar had always commanded the highest price because its quality was usually guaranteed and Chinese suppliers had the volume to supply the international market. While it is still the case that Chinese material is the most expensive, the premium which it commands over acidspar from other locations has diminished.

Mexican material was typically cheaper by comparison due to high arsenic content, which made it unsuitable for many consumers due to the increased downtime it causes for the consuming plant.

Fastmarkets' price assessment for fluorspar, acidspar, 97% CaF2, wet filtercake, fob China was at $400-450 per tonne on February 20. Fastmarkets' assessment for fluorspar, acidspar, 97% CaF2, wet filtercake, fob Tampico was at $380-450 per tonne. The two prices are almost identical.

Prices two years earlier were $480-520 per tonne for Chinese acidspar and $360-380 per tonne for Mexican material, marking a $100-per-tonne differential between the top end of Mexican and the bottom end of Chinese fluorspar. These price movements have brought a convergence of global prices.

Prices for Mexican material have increased because the market was undersupplied last year and the sole producer in Mexico managed to maintain its price level, citing good long-term demand for fluorspar despite the short-term weakness. Chinese acidspar prices have softened after reaching record highs following the environmental inspections, which created tightness in the market.
Should the current situation in China continue, it could further tighten supply. This would place upward pressure on the fob China price. But this might boost the downstream industries that have performed badly in the past 12 months due to oversupply and illegal refrigerant trade, which has hurt many of the refrigerant producers’ sales.

China remains a net exporter of acidspar

Acidspar exports from China fell against the previous year and imports rose, but the nation is still yet to become a net importer of 97% CaF2 fluorspar, according to the latest trade data from China's Customs Bureau.

Continued environmental inspections in China since early 2018 have taken acidspar out of production, hastening market expectations that China would move to become a net importer of fluorspar. Local inspections took up to 600,000 tonnes of production out of the market, according to Roskill. Subsequently, there has been a push from Beijing to develop downstream, value-added, industries.

But China remains a net exporter of the acid-grade material. Chinese exports totaled 190,600 tonnes in 2019, down from 201,000 tonnes in the previous year. Meanwhile, the country imported 130,140 tonnes of the material in 2019, rising from 91,000 tonnes of acidspar in 2018. This means the acidspar export surplus is 60,000 tonnes for 2019, down by 50,000 tonnes or 45.5% year over year.

Fastmarkets assessed the price of fluorspar, acidspar, 97% CaF2, wet filtercake, fob China at $400-450 per tonne on February 6, stable since October 2019. The price is back at a similar level to before the environmental inspections in China hit the fluorspar mining sector and created a supply shortage. It rose to a peak of $550-580 per tonne in December 2018 from a price of $400-420 per tonne in January 2017.

In the metspar market, imports totaled 567,500 tonnes, up by 35% from 420,000 tonnes imported over 2018. China exported 183,500 tonnes of metspar, down from 202,000 tonnes in 2018.

This leaves the overall balance of fluorspar at a net import of 323,540 tonnes.

High import prices
Chinese imports could have been higher in 2019 had overseas prices not been so high. The contract-driven markets settled prices around November 2018 which then held for the next 12 months. 

Fastmarkets' price for fluorspar, acidspar, 97% CaF2, wet filtercake, fob Durban was $450-490 per tonne between November 2018 and November 2019. This was the highest price since Fastmarkets started assessing acidspar from South Africa in 1989. Chinese consumers and traders reported being unable to purchase material at this price as they would also need to add VAT and import duties on top, 16% on top of the unit price of fluorspar.

That price has since softened to $350-410 per tonne, as of January 30.

Last year, China started making regular imports from Mexico. Additionally, the two newest producers to the market, Sepfluor and Canada Fluorspar, have both been in contact with companies in China over making shipments.

China’s performance
China had a mixed year for acidspar consumption. Its downstream sector is the largest in the world, and accounts for roughly half of global fluorspar consumption, but its refrigerant market performed poorly for almost the entirety of the year. 

Hydrofluoric acid prices suffered this year while non-Chinese fluoropolymer producers reported that prices were down by around 25% because of oversupply from China. 

Market sources told Fastmarkets that Chinese aluminium fluoride producers are organizing a production cut to rebalance the market and prices, which currently sit at $1,100 per tonne. This is down from prices of around $1,600 per tonne a year ago.