Sep 17

Low-grade magnesia prices fall while stocks rise

Chinese low-grade magnesia prices moved downward because of increasing stock levels amid thin buying activity among downstream refractory producers, while high-grade magnesia prices were unchanged on a lack of magnesite ore.

All prices for low grades of China-origin caustic calcined magnesia (CCM), dead burned magnesia (DBM) and fused magnesia (FM), assessed by Industrial Minerals, moved down this week because of continuously rising stock levels in a flat market.

The fob China prices for CCM 90-92% MgO were down to $180-220 per tonne on Tuesday March 27, from $205-230 per tonne last week.

The price for DBM 90% MgO lump was $220-280 per tonne, down from $240-280 per tonne a week earlier.
And the price of FM 97% MgO (Ca:Si 1:1) fell by $50 per tonne to $1,100-1,200 per tonne.

Demand from overseas buyers remained slow and they were in no hurry to replenish stockpiles while waiting for lower prices. Some traders in Dalian also confirmed there were no fewer ships delivering magnesia from Bayuquan port recently.

“Chinese domestic prices of low-grade magnesia fell on sporadic buying and higher stocks. We lowered export prices following the downtrend in the domestic market, but have concluded no new deals this week,” a Haicheng magnesia producer said.

Meanwhile, high-grade magnesia prices remained at their current levels this week with high-quality magnesite still in tight supply.

“The local government hasn’t released any news about relaxing control of explosives in mining, and most magnesia producers still face limitations on how to achieve high-quality magnesite ore to produce high-grade magnesia,” another Haicheng producer said.

The fob China prices for high-grade CCM materials held stable this week $240-260 per tonne for 94% MgO, and $335-355 per tonne for 96% MgO.

The price of DBM, 97.5% MgO, lump, was unchanged at $1,100-1,400 per tonne fob China on March 27, and the price of DBM, 94-95% MgO, lump, held firm at $680-700 per tonne fob China.

The price of 97% MgO (Ca:Si 2:1) was also stable at $1,250-1,400 per tonne.

Several producers told Industrial Minerals that “if the government permits the use of explosives, high-quality magnesia prices will also face downward pressure with more spot materials rushing into the market.”

Sep 10

Lead times grow for alumina, silicon carbide amid tightness in supply

Users of silicon carbide, brown-fused alumina and calcined alumina are having to wait longer to get their consignments amid limited availability and firm prices.

Market participants active in the distribution and consumption of refractory raw materials are reporting longer lead times for deliveries of minerals including silicon carbide, and fused and calcined alumina, which is thought to be related to the persistent tightness in the market.

While prices for refractory minerals have remained firm over the past two weeks, it is taking longer to deliver material after orders are placed, Industrial Minerals has heard.

Market participants listed silicon carbide as one commodity being affected. “It’s taking almost twice the time it normally takes to have material shipped,” one distributor to Western Europe said. “We have seen lead times for refractory grade SiC going from three to five weeks.”

Sellers active in the SiC market confirmed this situation, citing disruption to production in China as a principal factor.

“It has been harder to source from China, and more expensive in some cases [than to buy from Europe]. So demand has shifted to European suppliers, which are now swamped with orders,” one supplier said.

“It is true that prices are stable, but it is harder to find material,” a distributor added.
Industrial Minerals assessed the price of refractory-grade silicon carbide, min 95%, at €1,015-1,100 ($1,244-1,348) per tonne ddp Europe on Wednesday April 4, and the price of refractory-grade silicon carbide, min 98%, at €1,050-1,250 per tonne ddp Europe.
In brown-fused alumina (BFA), it is again the uncertain production situation in China that is contributing to longer lead times.

Henan province, the largest producing area for BFA, recently announced new rounds of environmental inspections that will take place at local facilities in the coming months.
This is making it harder for facilities to operate, and is helping to lengthen the supply times.

“It’s taking five to six weeks to have BFA ready for shipment [in China]. This is, of course, affecting schedules for deliveries to customers,” a trader said.

The price of refractory-grade brown fused alumina, min 95%, 0-6mm, rose to $800-820 per tonne fob China on March 22, against $780-800 per tonne in previous weeks.
Meanwhile, the price of abrasive-grade brown-fused alumina, min 95%, FEPA F8-220 grit, remained stable at $870-920 per tonne fob China, after an increase earlier in the year.

A similar situation with longer lead times is being seen in the calcined alumina market.
“So far, shipments have been for limited volumes, and have come late,” a trader said. “Customers are concerned that they won’t get as much [material] as they have ordered for the year.”

Another distributor to Europe has been receiving inquiries from calcined alumina buyers who could not get their original consignments, but said that he was unable to meet their requests for material due to limited supply.
As reported on March 1 during the 24th Bauxite & Alumina Conference in Montego Bay, Jamaica, calcined alumina producers told Industrial Minerals that they are oversold, due to a rebound in demand following previous years of weak markets. And they warned that there is not enough supply available to meet global demand.


In other refractory minerals, however, European traders and buyers reported fewer problems with sourcing, although opinions vary.

In magnesia, market participants said that they could find material and have it shipped within relatively normal time frames.

“My suppliers can still deliver a few thousand tonnes [of magnesia product], and can deliver right now. I don’t perceive that to be an issue at the moment,” a Europe-based trader said.

Industrial Minerals is also aware of a number of trades for high-grade dead burned magnesia (DBM) during the first quarter of this year with volumes between 2,000 and 6,000 tonnes.

A second western consumer told Industrial Minerals that he saw “continuing limited availability and firm prices” but was nevertheless able to place orders “for the volumes we require.”

Prices for China-origin caustic calcined magnesia (CCM), DBM and fused magnesia (FM) remained unchanged this week, following a previous downward adjustment for low-grade material.

Sep 03

Refractory raw material supply “the single most important challenge”

India’s Tirupati Graphite Group has been a leader in flake graphite production for over two decades supplying refractory, foundry and speciality markets; pictured is the mine at Gaura in Palamau district, Jharkhand state, which has a production capacity of 50,000 tpa flake graphite. Tirupati is evaluating other deposits in the district, as well as developing a new mine in Madagascar.

Yes, the weather was warm and pleasant, as was the hospitality, and the quality of attendees appeared to excel over the 2016 event by most accounts.

But what a difference two years makes in the refractories world: this time the conference was
markedly upbeat in nature, fed by positive market performance.

However, there was no doubt that the positive vibe was somewhat tempered – particularly if you
were a refractory producer – by the overriding challenge (verging on desperation among some
attendees) of securing high quality volumes of refractory raw materials in light of the current supply
squeeze from China.

This issue was forcefully driven home, with respect to India’s refractory requirements, in the
Inaugural Session by Hakimuddin Ali, IRMA Chairman, and complemented at the CEO’s Roundtable,
and in subsequent presentations by Jürgen von Raesfeld, Managing Director, Possehl Erzkontor HK
Ltd, and Mike O’Driscoll, Director, IMFORMED (see below).

Despite the concern over raw material supply, nothing could detract from the most enjoyable
colourful and vibrant Bollywood experience afforded by the Gala Dinner evening sponsored by
Dalmia OCL.

Solutions & collaboration

The 12th India International Refractories Conference – IREFCON18 took place 7-9 March 2018 at the Hotel Vivanta by Taj Dwarka, in New Delhi with the theme “Refractories solutions through user collaboration”.

The conference also celebrated the 60th Anniversary of IREFCON organiser, the Indian Refractory Makers Association (IRMA), which was marked by the unveiling of IRMA’s new logo, website, and slogan, “Partnering Heating Solutions.”

With some 450+ delegates and 32 exhibitors, IREFCON is now firmly on the refractory event circuit as one of the leading shows bringing together all those active in the supply chain of refractories, with a strong focus on India and Asian markets.

Keynote Speaker, Tom Vert, VP Manufacturing, ArcelorMittal Dofasco GP, USA, underlined the theme of the conference by sharing the African proverb: “If you want to go fast, go alone. If you want to go far, go together”.

Vert demonstrated that to get the best refractory match for the specified process, a partnership of trust between end user and supplier working together is the best approach for a win-win scenario.

For the first time at IREFCON the Inaugural Session included a CEO’s Roundtable, which was eloquently hosted by Sameer Nagpal, CEO, Dalmia OCL, discussing the theme “Collaborating in times of uncertainty: challenges & opportunities” across a range of important issues.

A wide range of papers covered topics within ironmaking, steelmaking, non-ferrous, new technology, case studies, product design, and testing/refractory installation.

Refractory raw material presentations included: natural and synthetic aluminas and aluminosilicates (Danilo Frulli et al, Imerys Aluminates), additives for silica-fume castables (Goutam Bhattacharya et al, Imerys Aluminates), MgO-zirconia powders (Johan Loricourt et al, Imerys Fused Minerals), andalusite (Florian Ahouanto et al, Imerys Aluminates), sillimanite minerals (Dilip Jain et al, Kyanite Mining Corp.), and magnesia (Mike O’Driscoll, IMFORMED).

Refractory mineral supply: alarm bells ringing

Described in his paper “Refractory raw materials – a strategic analysis in Indian context” as the “single most important challenge”, Hakimuddin Ali, IRMA Chairman and Chairman Imerys India, drove home with some passion the high concern over the shortage of high quality refractory mineral resources in India.

“There is an immediate need for commercially viable [domestic] fusion of magnesites of different grades to reduce dependence on imports” said Hakimuddin Ali, IRMA Chairman at the Inaugural Session.

This has most recently been brought into sharp focus owing to the tightness of mineral supply from China, on which India’s refractories industry relies heavily for imports of dead burned and fused magnesia, tabular alumina, refractory bauxite, and graphite (see Newsfile 13 February 2018: Dog Days ahead for Chinese mineral consumers?). “China’s high profile disruptions to industrial operations have wreaked havoc in the raw material supply chain taking prices to new highs.” said Ali.

The Indian refractory industry saw average refractory raw material prices increasing by 18% in January 2018 compared to January 2017. The overall impact since July 2016 has seen prices rise by around 65%.

Ali stressed the need to enhance domestic raw material production and the use of alternative sources as “key to remain competitive in the current scenario”. His presentation assessed the present scenario of key raw materials: fireclays, alumina, magnesite, bauxite, diaspore, sillimanite minerals, zircon, and chromite. Although fireclay resources are abundant in India, Ali revealed that fireclay found above coal beds was being dumped, causing an acute shortage of good quality fireclay.

Of concern was the availability of low-iron refractory bauxite. With some 2.5m tpa consumption of refractory grade in India, current reserves are expected to last only 6-7 years unless fresh reserves are identified and released for mining.

Similar issues exist with magnesia, India possesses no fused magnesia producer, and there is very limited dead burned magnesia production.

North Indian Himalayan deposits are high in iron content and not suitable for refractory bricks, while the Salem deposits of south India are high in silica and low in lime and iron, making them only suitable for certain brick applications. Ali called for an “Immediate need of research for commercially viable fusion of magnesites of different grades to reduce dependence on imports.” Most chromite is imported, and Ali recommended more domestic reserves to be identified and fused magchrome grains to be manufactured by beneficiating both magnesite as well as chromite if required.

There is sufficient domestic capacity for fused alumina and fused mullite demand, and for certain speciality aluminas, although all tabular alumina is imported. The abundant availability of quartz and quartzite in India should create opportunities to make viable ventures for domestic production. Initiatives by IRMA to address these raw material issues include teaming up with Dept. of Ceramic Eng. IIT BHU Varanasi to create a world class Centre of Excellence for Refractories and spreading the word through the relevant industry media.

China’s influence “Over the past decades, the world strongly relied on the supply of refractory raw materials from China. There should be no doubt about the significant influence China has on the worldwide industrial mineral scenario and that surely includes our refractory raw-materials.”: so commented Jürgen von Raesfeld, Managing Director, Possehl Erzkontor HK Ltd in his presentation “Global refractory raw material scenario with main emphasis on the situation in China”.

And never a truer word was spoken; von Raesfeld went on to illustrate how President Xi Jinping is pushing for “supply side reforms” which so greatly impacted the refractory mineral supply sector in 2017 and will continue to do so. “All in all we are looking at a huge clean up” said von Raesfeld.

“Xi-conomics” is targeted to phase out smaller, outdated plants and replace them with larger, modern and environmentally clean conglomerates. Von Raesfeld commented on the impact on the magnesia, bauxite, graphite, and BFA supply sectors before underlining the importance of seeking alternative supply options: “Knowing about the ambitious plans in China, we should keep our eyes open and continue our search and evaluation of suitable alternatives from any part of the world while we may not always be able to rely on abundant sources from Chinese alone.” said von Raesfeld

Session Chairman Christoph Wohrmeyer, Imerys Aluminates, presents Mike O’Driscoll, IMFORMED with his IREFCON18 Speaker’s gift.

Another solution highlighted was to utilise so- called “inferior” raw ores, exemplified by the “3-Step magnesia fusion plant” in Liaoning, China, which von Raesfeld reported was now in full operation and consumes low cost “rejected raw ores” in a flotation system to produce fused magnesia with improved and extra large crystal sizes.

The topic of magnesia supply was continued by Mike O’Driscoll, Director, IMFORMED in his presentation “Refractory magnesia supply update” where he reiterated the issues in China which continue to create high prices and short supply, and outlined a range of plant expansions and ongoing magnesia projects emerging outside China which could attract frustrated consumers.

Among these was the recent development, revealed at IREFCON18, by Ashapura Group, India, in planning to develop a high-quality magnesite “captive mine” outside India in order to import raw ore to an Indian processing plant for calcination/fusion.

Manan Shah, Director, Ashapura Group also presented on the company’s work in developing domestic low-iron bauxite sources for the refractories industry through recovery from existing resources, including former mines and previously considered “unviable” bauxite resources.

Ashapura’s bauxite and magnesia projects very much chime with Hakimuddin Ali’s clarion call at IREFCON18 to the Indian industry to respond with such initiatives to the prevalent tight raw material supply situation.

Ago 27

Refractories industry remains cool under pressure

The world’s refractories manufacturers are proving resilient, despite mounting pressures on the sector. How is this most traditional of industries adapting to unpredictable circumstances?

The merger of Austria-headquartered RHI with Brazilian rival Magnesita helped it to secure about 70% of its dolomite and magnesite supply, even though RHI was forced to divest its long-held European dolomite business in order for the deal to be approved, writes Rose Pengelly.

The global refractories industry has undergone significant change in the past five years. Increased competition from Asian refractories producers, falling specific consumption in steel and cement making, tightened environmental regulations and complications in sourcing raw materials have all had an effect on the sector.

One of the most obvious responses to these trends has been a rise in consolidation, with manufacturers seeking to pool costs, expertise and supply chains to stave off operating pressures.

The largest merger seen in the refractories industry in recent years was the tie up between Austria’s RHI AG with Brazilian competitor Magnesita Refratarios, announced in October 2016. The deal was estimated to be worth $500 million and to create a business with annual revenues exceeding €2.5 billion ($3.1 billion).

Given that various market analysts estimate the value of the global refractories industry at around $23 billion, the merger amalgamated a significant chunk of the market.

Rather than being a consequence of tougher market conditions, those behind the mega-deal argue that the creation of RHI Magnesita, the name by which the merged entity is now known, was a natural next step for the two businesses.

“Historically, refractories was a very regional industry. Consolidation was one of the growth drivers and is a quintessential part of our DNA,” Reinhold Steiner, chief sales officer at RHI Magnesita, told Industrial Minerals. “If you look back into our history, RHI Magnesita has roots in more than 20 separate companies… This strategic combination is built on many complementary aspects and expands our competitive advantages across the whole value chain.”

Meshing together two giant refractories businesses with vast global supply chains and customer networks is no mean feat. After 10 months of intensive integration, Steiner says that RHI Magnesita finally started to deliver on its merger goals at the end of October 2017.

Among these were the ability to better manage cyclicality in the refractories industry and to attain greater control of raw material sources.

To gain approval for the merger from the European Commission, however, RHI was ordered to divest some of its raw materials operations, including the entirety of its long-held dolomite business in the European Economic Area (EEA). Meanwhile, Magnesita was instructed to relinquish the production and sale of magnesia-carbon bricks in the EEA.
The contribution to revenue from these two businesses amounted to roughly €100 million in the 2016 financial year and represented around 3-4% of the combined group’s pro forma revenue.

“It is always a tough decision if a company has to divest important assets, market share and revenue. However, we… are convinced that the complementary nature of the combined group and strong dolomite product portfolio of former Magnesita, including [its] dolomite mines – such as the York mine in the United States – enable us to offer our customers an even broader range of products and services,” Steiner said.

“The first immediate area for synergies is purchasing, where we have made substantial progress due to the combination. Our teams are also working to establish the best possible production and supply chain network and thus transferring products to the most suitable sites in the wider network,” he added.

“This will lead to further productivity and capacity improvements, lower logistics costs and better customer service due to greater customer proximity,” he said.

Better value from bolt-ons?

Large merger and acquisition (M&A) processes, such as the RHI Magnesita deal, can rapidly reshape the refractories landscape and help to extend a company’s reach into territories fiercely guarded by competitors.
But some are skeptical about the ultimate value of such major transactions, which typically incur large consultancy and legal costs that take time to pay off.

Customers are also generally wary of M&A deals, because they fear reduced competition and weaker bargaining power, ultimately leading to higher prices for products.

Refractories industry observers, who preferred not to be named, told Industrial Minerals that intra-regional bolt-on acquisitions tend to be more efficient from a transactional point of view, but are regarded with similar suspicion by buyers.

“When a large company picks up a smaller one to bolster its presence in a particular product area, this often involves a price rise for the customers of the smaller business, and can lead to a reduction in the range of products on offer, because the bigger parent company will often cut a few marginal [product] lines,” one sector consultant said.

A recent example of a mid-size regional M&A deal in the refractories industry was France-headquartered industrial minerals giant Imerys SA’s takeover of French speciality cement maker Kerneos for an estimated €880 million in 2017, to form a new division, Imerys Aluminates.

At the small end of the scale, France’s Saint-Gobain High Performance Refractories announced in December 2017 that it had acquired, for an undisclosed sum, US-based Spin-Works International, a niche manufacturer of 3D-printed and extruded silicon carbide ceramic components that improve energy efficiency in high-temperature industrial processes.

Even RHI Magnesita did not get everything it felt it needed through its merger and, in November 2017, the company acquired Sweden’s Agellis Group to expand its expertise in sensor and measurement technology.

While some customers bemoan the apparent contraction of choice in the refractories sector, proponents of the trend say that M&A gives buyers access to a greater range of products from a single supplier, and the benefit of enhanced research and development (R&D).

They add that such tie-ups are vital if manufacturers are to weather the industry’s challenges. They also say that we should expect to see more of these deals.

“We believe that the refractory industry is facing further global consolidation, which will be especially strong in less-developed regions and markets such as Asia and particularly China,” RHI Magnesita’s Steiner said.

This view was echoed at this year’s India International Refractory Congress (IREFCON) meeting in Delhi earlier in March, where chairman Parmod Sagar outlined the knowledge-sharing benefits of M&A.

“There is a lot of consolidation going on in the international refractory market and we are looking forward to [learning] the best technical practices from our global counterparts to cater to the needs of our key customer industries,” Sagar said.

He also pointed to the rising cost of refractory raw materials, which IREFCON calculates have increased by an average of 18% over the past two years.

Sagar said that while consolidation can reduce exposure to mineral price volatility, refractories companies in import-dependent nations such as India would benefit from more investment in domestic mining of refractory minerals such as magnesite, non-metallurgical bauxite and alumina and graphite, to help boost supply security.

British refractories and Brexit

Others have rejected the lure of major inorganic expansion. In 2014, UK-listed Morgan Advanced Materials rejected a £2 billion ($2.8 billion) bid from rival British refractories maker Vesuvius. Morgan claimed that Vesuvius’ all-share offer undervalued the business and would expose its shareholders to Vesuvius’ low-margin iron and steel refractories arm.

Both companies performed well as separate units in 2017, thanks largely to a revival in global steelmaking. But according to one industry expert, both Morgan and Vesuvius may come to regret the decision not to merge if the UK fails to reach a satisfactory trade deal with the EU following its exit (Brexit) from the political and economic bloc.
“Some of the products [that Morgan and Vesuvius] make rely on raw materials and components that cross the [English] Channel several times before the finished item is sold,” the expert told Industrial Minerals.

“Both companies have large overseas operations and vertically integrated supply chains, but their European business could get more complicated. They might have found it easier as a single large company,” he added.

The British Ceramic Confederation (BCC), which represents a cross-section of UK industries, including refractories companies, has said that Brexit offers UK manufacturers important opportunities, such as a chance to develop a “more carrot and less stick” alternative to the EU’s Emissions Trading Scheme, which it feels unfairly penalizes industrial companies.

It has, however, warned that UK ceramics producers face a significant export gap if the country’s current customs union trading relationship with the EU is not replaced.

“With 50% of the [UK ceramics] sector’s exports sold to the EU, we need to ensure an adequate and comprehensive tariff- and barrier-free UK-EU trade settlement,” BCC said last year in a policy paper aimed at the UK government.
A spokesman for BCC told Industrial Minerals that, before the referendum on the UK’s membership of the EU in June 2016, around 75% of its members were in favor of remaining in the EU.

“We have now shifted our focus to making Brexit work for our members on our key issues of energy and trade. Poor UK trade remedies, import tariffs into the EU and regulatory divergence would all be unwelcome,” he added.



Pressure on policymakers

Refractories producers both in the UK and the EU have called for strong, coherent industrial strategies in their respective jurisdictions, which they say are vital to ensuring that their operations remain competitive with other global suppliers.

In February, Cerame Unie, the industry association representing European ceramics producers, including refractory materials, presented the European Commission (EC) with a paper co-authored by representative bodies of other European industries, outlining the need for “an ambitious EU industrial strategy.”

According to Cerame Unie, measures needed to support European refractory ceramics makers include provision of a business-friendly environment, improved access to skills and training, more research and innovation, better access to finance, and reform to international trade.

In the US, another major producer of refractory materials, tough talk by Republican President Donald Trump about protecting US industry has not so far translated into any specific strategy and direct legislation for refractories.

But US refractories producers are expected to benefit from the country’s December 2017 reduction in corporate tax rates to 21% from 35%, and could potentially receive a boost from the recently announced import tariffs on steel and aluminium, if this leads to the intended increase in domestic metal output.

The unpredictability of the Trump administration’s trade policies is, meanwhile, causing consternation in other parts of the world, particularly among UK and European refractories exporters.

“The UK refractories sector is very export-driven, so the uncertainties that exist around our future trading environment, both in terms of Brexit and the Trump administration’s approach to international trade, are very important,” the BCC told Industrial Minerals.

Access to raw materials

Reliable supply of good-quality raw materials has been a concern for refractories makers for a number of years.
The removal of Chinese export quotas and taxes on certain refractory raw materials, such as magnesia, resulted initially in a surge of supply on the international market (export volumes in 2017 rose by 94.1% year-on-year to 653,528 tonnes) and a corresponding decline in prices.

But a pollution crackdown affecting sintering plants, and restrictions on magnesite mining in 2017, coupled with an uptick in demand, caused availability to tighten and prices to rise – a situation that posed particular problems for major importers such as India.

RHI Magnesita’s pooling of resources has alleviated some, although not all, of its raw material concerns.
“The availability of our own raw materials is crucial and enables us to guarantee our customers consistently high product quality. [We now supply more than 70% of our own] basic key raw materials, namely, dolomite and magnesite,” Steiner told Industrial Minerals.

The group now produces around 50% of all its raw material needs, he added, but still depends on Chinese supply to make up the rest.

“The dramatic increase in the market prices of several key Chinese commodities, especially smelting and sintering magnesia, has naturally weighed heavily on our cost structure in recent months. In order to further increase the backward integration of these raw materials in the future, we restarted our raw materials plant at Porsgrunn in Norway, which recovers the highest-value fused magnesia from seawater,” Steiner said.

The European Refractories Producers Federation (PRE) has said that the European refractories industry “is heavily dependent on imports of refractory industrial minerals” and that “the supply situation… is particularly critical for high-grade magnesia, bauxite and graphite, which are mainly sourced from China.”

PRE, through its various national associations, is continuing to lobby the EC for decisive action under its Raw Materials Initiative, which critics say has so far done little beyond outlining a list of raw materials that are critical for EU industries.

Although China’s latest policy decisions have proven to be a headache for importers of Chinese raw materials, Steiner points out that there are some potential long-term benefits to the international refractories industry, which has long complained about the market being flooded with cheap Chinese refractory products.

“Recent actions by the central Chinese government have led not only to significantly lower availability of magnesite raw materials but also to higher requirements on environmental, health and safety topics, and thus to higher costs for Chinese producers,” he told Industrial Minerals.

This, according to Steiner, means that the cost structure of Chinese refractory manufacturers is now developing closer toward the international average, thereby levelling the playing field for foreign competitors.

Tackling challenges with technology

To cope with, and even benefit from, some of the challenges facing the refractories industry, manufacturers are investing significant sums in new technologies and adapting the way they do business to stay abreast of changing trends.

RHI Magnesita, which has a 270-strong research and development (R&D) team, and BCC members have highlighted the importance of “full service offerings” as a way of insulating their businesses from uncertain trade policies and the effect of falling specific consumption of refractories, while processes such as steel- and cement-making become more efficient.

“Our full-service offers to clients are already facing high demand in developed countries and are becoming popular globally,” Steiner said.

Efficiency is also a major driver of technological advances in refractories, with pressure mounting on the sector to decarbonize and to become greener all round.

“A particular area of innovation [among BCC members] is around energy-saving refractories that help to mitigate the environmental effects of high-temperature processes,” BCC told Industrial Minerals.

RHI Magnesita, which operates 35 main production sites across 16 countries, faces the challenge of complying with a complex patchwork of local and international environmental regulations, all of which are becoming tighter.
“[As a leader in the international refractories industry,] we are required not only to comply with all given standards and to work with local authorities, but also to define new ones globally,” Steiner said.

“When looking into the environmental legislation of the different countries, one can see that there is still a significant gap in individual national environmental standards. Whereas the EU already has ambitious levels, we can now see a drastic change in legislation in Asia,” he explained.

Recent policy developments and tougher environmental regulations in China have led to very strict limits for nitrogen oxide and sulfur dioxide pollutants, among others, that are emitted from factories. Many refractories plants are also being forced to switch from running on coal to using natural gas instead, and to install scrubbers to clean flue gasses.

As with other industries, the refractories industry’s efficiency drive is being boosted by digitization. “We believe that products themselves, but especially processes, machinery and the supply chain, will get smarter in the long run,” Steiner said.

“With the use of big data,” he added, “we can help our customers to better predict maintenance and re-linings, reduce downtimes and also improve their production processes. Furthermore, the steel industry especially is experiencing a strong trend toward fully automated mills.”

Ago 21

Persisting market tightness leads to higher andalusite prices in 2018

Contract prices for andalusite have edged up by about 10% from last year’s levels, with widespread consumer demand further compounding limited availability of material.

The andalusite market is set to experience further tightness in 2018 with high consumer demand said to be exceeding available supply, driving contract prices for the year upwards.

Limited availability is expected to persist throughout 2018, following a shortage that became apparent last year, when production issues led to lower output in major andalusite-producing regions.

As a consequence of that, and of ongoing high activity in the refractory raw materials space, almost all market participants active in andalusite canvassed by Industrial Minerals claim current demand will not be covered with available supplies this year.

“I am fully booked, and I imagine others will be as well,” one supplier said.

He added that some quantities produced this year may be needed to cover any outstanding volumes from last year’s contracts. His expectation is to run at full capacity throughout most of this year.

“There are no free volumes out there for the taking. Large buyers made sure they contracted early on, and even small buyers should have all agreed their supplies,” a trader said.

A second trader added: “If you need material now, you’re not in a great position. It doesn’t matter if you pay more, there just isn’t enough material around at this stage.”

The above trader said that he kept receiving inquiries from new customers, but he was unable to meet their needs.

Driving demand for the mineral was an improved performance of refractories end markets, due to rising steel output, and a widespread shortage affecting several other refractory raw materials, such as bauxite and alumina.

Andalusite can be used as an alternative to calcined bauxite for some refractory applications. As Chinese bauxite output was slashed last year following government-led inspections and shutdowns, some consumers tried to move towards andalusite in search of volumes and better pricing conditions.
This brought about a peak in demand in the andalusite space – a market that is much smaller and stable compared with bauxite. Market participants claim it will take some time before the supply/demand situation returns to normal.

Shorter contracts, higher prices

While andalusite is normally contracted with long-term, annual agreements, in a number of cases this year contracts were shortened to six months. In other deals, volumes were agreed for the year, while price was fixed only for the first six months – leaving the possibility to review the price for the second half of the year.

Some large buyers reported they managed to set year-long contracts for volume and price.
“All factors were there to drive prices upwards this year, although we should bear in mind that any movement in andalusite is going to remain quite moderate,” a second supplier said. “You are not going to see a surge similar to what we saw in [refractory grade] magnesia.”

At the time of the UniteCR conference in Chile last September, sources in contact with Industrial Minerals were already suggesting price growth was in the offing once contracts came up for renewal.

Industrial Minerals assessed the price of andalusite, min. 57% Al2O3, at €260-320($320-393) per tonne fob South Africa for 2018 contracts, compared with €240-290 per tonne last year.

While on the delivered Europe market, new contract prices for andalusite, min. 57% Al2O3, increased to €390-430 per tonne cif Europe, from €355-425 per tonne a year ago.

Both market prices have shown a rise of about 10% on previous levels, which is in line with earlier forecasts from market participants, who had pointed to an appreciation ranging from a low of 5% – for those buying particularly large quantities or managing to secure preferential conditions – to a high end of 15% for smaller purchasers or new customers.

“Your 2018 price would also depend on what kind of price you had last year – if your 2017 price was on the low end of the range, the increase may be higher. If it was on the high end [of the price range], the increase would be small,” a third trader source said.

A third supplier added: “All my selling prices have gone up this year – by different amounts, of course.”

Some market sources suggested that currency volatility may also have an effect on market prices, considering that the US dollar is going through a particularly weak phase and the South African rand has appreciated strongly over the past few weeks. However, the timing and length of contractual patterns do not support this view – as all contracts set during the final quarter of last year and the early stages of this quarter would have locked in a price level for either six or 12 months ahead, thus excluding any currency exchange effect for the time being.

If any deals were to be updated in the second half, currency effects may be factored in at that point.

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