China’s acidspar import deficit grows

China became a net importer of fluorspar in 2018, having previously been a net exporter. Imports of acidspar rose by an average of 40,000 tonnes per year between 2018 and 2020, from 90,992 tonnes in 2018 to 170,688 tonnes in 2020, China Customs data states.

Acidspar imports to China in January-April 2021 reached 68,497 tonnes, compared with 33,859 tonnes in the same period of 2020.

Export volumes, however, fell from 201,950 tonnes in 2018 to 190,650 tonnes in 2019, and then slumped to 70,702 tonnes in 2020. 

In the first four months of 2021, total acidspar exports were 16,271 tonnes, down 10.26% from 18,132 tonnes in January-April 2020. 

Though China remains the world’s major fluorspar producing country, downstream buyers – especially in the hydrofluoric acid (HF) sector – have shown increasing interest in importing materials and in seeking to bring international supply into China.

Mexico was the main supplier of fluorspar acidspar to China in 2020, accounting for 152,883 tonnes, or 89.60%, of total imports of acid-grade fluorspar. The remaining imports were primarily from South Africa and Vietnam. In 2021, both Vietnam and South Africa are increasing their shipping volume to China, with competitive prices.

In January-April 2021, the three leading countries shipping fluorspar acidspar to China were Mexico (24,102 tonnes), Vietnam (21,775 tonnes) and South Africa (18,465 tonnes), which accounted for 93.93% of total imports. Imports from Mexico fell 27.31% compared to the same period in 2020.

There were no imports from Vietnam and South Africa in January-April 2020. South Africa sent no acidspar to China in 2019 and only 1,151 tonnes in 2020. 

China remains the largest producer of fluorspar globally. The country produced 4.30 million tonnes of acidspar and metspar in 2020, much more than Mexico (1.20 million tonnes), South Africa (320,000 tonnes) and Vietnam (240,000 tonnes), according to United States Geological Survey (USGS) data.

Growing demand from China’s downstream markets, combined with a low appetite for acidspar in the rest of the world due to Covid-19 and cheaper prices outside China, are behind the growing imports for acidspar, sources said. While Chinese end markets for acidspar have been extremely active, demand has been weaker in other acidspar-consuming hubs, primarily Europe.

Fastmarkets’ assessment of fluorspar, acidspar, 97% CaF2, wet filtercake, fob China was at $390-420 per tonne on May 27, unchanged from the previous week, but a fall from $390-430 per tonne on May 13.

Fastmarkets’ price for fluorspar, acidspar, 97% CaF2, wet filtercake, fob Tampico, Mexico was at $280-320 per tonne on May 27, down from $300-350 per tonne in April.

"China continues to be a net importer of acidspar and, based on China’s high demand, the situation will continue. I didn’t see any significant improvement in demand from the downstream sector in Europe or the United States," a distributor said.

"We purchase fluorspar acidspar from Chinese suppliers and we also purchase from Mexico and South Africa to guarantee our production. Imports from Mexico and South Africa are cheaper, with prices below $300 per tonne, compared with prices of around $400 per tonne in China," a buyer said.

South Africa has produced 100,000 tonnes more material in 2020 compared with 2019, according to USGS data. South Africa has a new fluorspar producer, Sepfluor, which owns a 200,000-tonne-per-year capacity mine and began shipping in January 2020. 

Regulatory developments have contributed to the boost in China’s downstream fluorspar consumption, sources said.

The Kigali Amendment to the Montreal Protocol was drawn up in 2016 has been so far signed by around 120 countries. Its inception has signaled a phasing down of hydrofluorocarbons (HFCs). HFCs are primarily used as refrigerants and if released into the atmosphere the products can deplete the ozone layer.

If China signs the amendment, it will be committed to reducing its production and consumption of HFCs by 80% by 2045. "China is running flat out on HFC production and that level will set the baseline for the reductions starting in 2030. China wants to produce as much as possible to get the highest quota," a fluorochemical producer said. The incentive is to have as large a quota as possible and then have the option to reduce production from that level, the producer added.

This is affecting the global downstream market, where Chinese fluorochemical producers look to sell their products, Fastmarkets heard. "[China’s HFC production] is affecting us in a few ways, primarily because the Chinese have reduced their fluoro-product prices. Chlorofluorocarbon prices are much lower this year and we have to compete on the international market," an Indian consumer said.

"Margins are affected but once you’re in the market and have capacity, you have to operate even if margins are reduced," the same consumer source added. The volume of material entering India from South Africa in 2021 was at a similar level to 2020, the Indian market source told Fastmarkets.

Covid-19 has weakened global demand for acidspar and several producers outside of China are still not sold out for 2021, sources said.

"Most orders are from Asian buyers because demand from Europe and the US remains curbed due to the impact of Covid-19 and high freight fees," a Chinese fluorspar producer said. 

"Asian buyers, especially from Japan and South Korea, usually require more expensive specific fluorspar acidspar with higher quality due to most high-quality downstream products produced there," the producer added. 

"We don’t expect significant improvement in the export sector for fluorspar acidspar and overseas demand will not recover much in 2021," a trader said.

This helps to explain why fluorspar suppliers outside of China are now shipping into the country, sources said.  Mexico has been visible in the Chinese market for a few years, but Vietnam and South Africa have not been regular supplies to China, Fastmarkets learned from China’s custom data.

"My impression is that in the fourth quarter of 2020, when the fluorspar contracts for 2021 closed in Europe and North America, outlook for demand was very doubtful and stock levels both at the mines and at end users was high," a fluorochemical producer said. "It is quite probable that some miners were left with high volumes to sell so the hypothesis that they’re trying to sell these in China sounds reasonable."

Falling demand from India has also hit Chinese exports, sources told Fastmarkets.

In past years, India had been a key destination for exports, but Indian demand has fallen after the country increased its purchases from other global suppliers to guarantee a sustainable supply, market participants said. 

Since the China-India border clash in July 2020, and demand weakened amid the Covid-19 pandemic, exports to India from China fell to 8,946 tonnes in 2020 from 48,167 tonnes in 2019 and 57,379 tonnes in 2018, China’s official customs data showed. 

The China-India border clash began on June 15, 2020 in Ladakh, in northeastern Kashmir. Its impact has spilled over into fluorspar trading between China and India, causing reduced demand for the material.

"Some [Indian] customers purchased more material from producers outside of China and will only buy material from China on emergent need considering the shorter distance to India compared to other global sellers," a producer said.

"Though consumers in India are trying to reduce their dependence on China’s fluorspar, they sometimes purchase material, and in recent weeks they have been sending inquiries but haven’t placed final orders yet," a second producer said.