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Asociación Nacional de Fabricantes e Instaladores de Productos Refractarios, Materiales y Servicios Afines - Página 74 de 93 - Asociación Nacional de Fabricantes e Instaladores de Productos Refractarios, Materiales y Servicios Afines

Nov 13

A rock and a hard place

Demand for refractory products is evolving, forcing suppliers to upgrade their offers and processes to stay ahead of the game, while Chinese-origin raw materials are appreciating on the back of supply shortages, making productions costlier, Davide Ghilotti, IM Chief Reporter, finds.

The refractory industry has come to find itself between a rock and a hard place, faced with challenges on the supply side as well as in end markets.

While total demand for refractory products continues to reduce in the face of readjusting steel output, production is also moving downwards. For their part, suppliers cannot afford to stand still but must innovate, revisit their current models, relentlessly pursuing new markets and securing new business.

At the same time, a number of raw materials markets have become increasingly short in supply: magnesia, alumina, bauxite and graphite are only a few among several commodities affected, with drastic effects on prices.
This is triggering a rise in sourcing costs, denting refractory producers’ margins at a time of weak end-market consumption.

Monolithic refractories are having an overall better ride amid these tough times, compared with bricks and basic shaped refractories, but the challenges for the industry are there for all to see.

For its size and share of the global refractory industry, China remains a barometer of the health of the sector.
China’s total production of refractory products – this includes both shaped and unshaped materials, as well as insulation and other products – stood at 23.91m tonnes in 2016, according to data from The Association of China Refractories Industry.

This marks a drop of about 9% against the previous year, when output was a higher 26.15m tonnes.

All segments suffered a decline year-on-year.

a-rock-and-a-hard-place

 

Dense shaped refractories, which is by far the single largest category produced in China, lost over 1.2m tonnes (-11%) worth of output in 2016, falling below 14m tonnes. Fireclay base bricks and high-alumina bricks shared a similar fate, decreasing by 11% and 13% respectively, to 2.84m and 2.03m tonnes. Si-based bricks output dropped 38% y-o-y to 1.17m tonnes.

China’s refractories industry exhibited substantial growth in the last couple of decades, moving from just below 10m tonnes in 2000 to 32m tonnes in 2006, but today’s numbers are far from that peak.

It was not that much better on the export front: 2016 exports of Chinese refractory products (excluding source materials) were 5% down y-o-y.

The picture between segments is slightly mixed. While alkali refractory exports rose 5% to 867,600 tonnes, Al-Si based refractory exports fell 9%, to 662,400 tonnes. Shipments of other materials, at 110,700 tonnes, were down 32% y-o-y.

Back in March, IM reported that 2016 export value of both refractory products and source materials had reached its lowest level for the past five years at $2.57bn, down 12% on 2015 and 23% lower than 2014.

Demand for refractory products as a whole has been dwindling in recent years, mainly on the back of decreasing steel production. Steelmaking is the single largest end market for refractories, accounting for over 60% of end market demand.

Steel capacity in the western world has fallen, with facilities shut all over Europe and North America. At the same time China, which alone supplies over half of global output, has been forced to reduce output, and plans to gradually shut excessive capacity to bring the market back from oversupply.

This crucially meant that, while refractory demand in Europe fell due to local plants closing, Chinese demand also restructured, and was not in a position to pick up the slack created in the West.

India is arguably the sole destination where steel capacity is still increasing, and one of the few markets where new operations are being set up.

This has created fierce competition among refractory suppliers trying to elbow their way into the country. China has a prominent position on the Indian market, not only due to its logistical proximity. Some western suppliers are trying to ‘go local’ by teaming up with domestic companies or setting up operations in the country to try to bridge the geographical and cultural gap and gain real access to the market.

Monolithics on the up
Amid falling demand in main end markets, the buying patterns of refractory consumers are evolving.
With the widespread slowdown in steel output and weak pricing conditions, end users have seen profit margins shrinking. This has created an impending need for containing costs while maximising performances.

This shift is behind falling demand for basic refractory bricks, as more facilities move to monolithics.

While refractory usage globally remains dominated by bricks, a process of substitution is nevertheless taking place, with shaped products on the down and castables growing.

Currently, monolithics account for just over one-third (31%) of the total market in volume terms, with the remaining 69% share taken up by bricks, according to Calderys data released at the IM Bauxite & Alumina conference in Miami in March.

Even within bricks consumers, the vast majority (72%) of material consists of basic, magnesia and dolomite-based, brick products, while 28% is in acidic bricks. Conversely, the pattern of usage is essentially the opposite for monolithics, where 68% is in acidic mixes, and 32% in basic mixes.

According to Calderys, substitution between bricks and monolithics is «almost complete» in mature/developed countries – where castable usage is put at 40-50% of the total.

In developing countries, meanwhile, monolithics have not reached the same level of penetration, due to a number of factors that support bricks. These include low cost of labour, large availability of brick supply, and a lack of skills and expertise in monolithics. This underlines a long-term continuation of brick material usage in these markets, which will persist in the foreseeable future.

Raw materials: getting shorter
If demand from end consumers has dampened profitability as of late (due to a number of reasons which IM contributor, Richard Flook, explains in detail on pp 36-44), refractory producers have been struggling also with raw materials sourcing this year.

China, a leading producer of refractory minerals, has seen several of its key mineral production supply chains severely curtailed by environmental inspections by local authorities, amid an ongoing plan to curb the high level of air pollution in the country’s most industrialised areas.

This is actually a continuation of a policy that Beijing started in the first half of 2016. At that time, the clampdown on polluting industrial operations had mainly affected bauxite mining and brown fused alumina production (more on this later).

Since Q1 this year, environmental controls have intensified and spread to virtually all mineral production operations that are deemed polluting, as well as secondary processing and downstream sectors.

The immediate effect of the controls has been the shutdown of hundreds of operations in various provinces of China. In some cases the closures were temporary, while companies updated where possible their facilities to bring them in line with regulations. In many cases, however, small-size, obsolete operations were closed for good. Depending on the commodity, this took a sizeable share of production off the market.

At the time of publication, local sources told IM environmental teams are heading back to areas they had already inspected for a second round of checks. With elections in the ruling Communist Party due later this year, Beijing is keen to continue its clean-up action. It is early to assess the real impact this will have on future mineral production and supply, but several markets have been affected already, with lower output, falling inventories and rising prices.

Bauxite and alumina
Bauxite was among the first materials to be hit by the restrictions imposed by the Chinese government on pollution thresholds and operating processes of companies.

It first started in Q2 2016 with the intention to clamp down on illegal bauxite mining, which then added to Beijing’s strive to put a stronger effort towards environmental preservation. Facilities still relying on coal as an energy source were forced to switch to natural gas, or be closed. Shanxi and Guizhou were among the main areas affected. By the end of the year, many bauxite production operations had been shut for good.

Alumina, especially brown fused (BFA), suffered a similar fate. Stricter anti-pollution checks in main producing provinces of Shanxi and Henan hit production and started lifting spot prices already in August last year, as IM reported at the time.

Disruption to mining and production operations caused supply shortages and supported high prices for both bauxite and BFA well into the second half of this year. Securing volumes has become extremely problematic for some grades, such as high-purity bauxite 86%, 87% or 88%.

The bauxite shortage triggered a run for alternative materials. Andalusite suppliers told IM that demand from bauxite consumers has surged this year to date. Unfortunately, this material is also short. Andalusite production in both main origins – South Africa and Peru – was slashed in Q1 by heavy rain and flooding hitting mining areas. Many suggest 2017 supply will be insufficient to cover existing contracts, let alone meet demand from consumers who cannot find any bauxite.

Magnesia
The global magnesia market received a first shake in December, when China unexpectedly announced the scrapping of its existing duty regime and quota system for exports of magnesia products.

With hindsight, a first sign of the country’s intentions could be seen from late October. When the government announced the 2017 export quotas for all agricultural and industrial commodities, magnesia did not make the list.
Authorities went quiet for a few weeks until they finally announced that magnesia exports from 1 January would not be subject to duties nor quotas.

According to the preceding regime, export tariffs were set at 5% for caustic calcined magnesia (CCM) and 10% for both deadburned magnesia (DBM) and fused magnesia (FM).

The industry’s immediate reaction was one of widespread concern. Most market participants feared that a no-duty regime would lead to Chinese sellers flooding the international market with low-priced product, aiming to secure whatever demand was left after a long period of weakness in refractory end markets.

Confirming the industry’s fears to an extent, in the first few months of this year Chinese FOB prices for all magnesia products – CCM, DBM and FM – declined.

The downtrend was short-lived, however. As Chinese authorities tightened the controls over industrial pollution, many magnesia operations were affected and had to shut. Unable to produce, producers resorted to selling from stockpiles, which rapidly decreased. As short supply became evident, prices moved upwards again.

By early May, virtually all magnesia production facilities had stopped and fused magnesia had become unavailable in Liaoning province. Prices of all three products surged during the summer months, exceeding pre-quota scrapping levels.

It did not take long before the magnesia shortage came to affect refractories end markets. In June, the Refractory Industry Association of Yingkou, in Liaoning, recommended its member companies to raise sale prices of magnesium-based refractory products, to compensate for the rising raw material costs.

Graphite
As it did with magnesia, Beijing also scrapped duties on natural graphite exports, which were subject to a 20% tax until last year. New offers for flake and amorphous graphite decreased further as a result, despite several years of weakness due to oversupply and low demand. It seemed that another downtrend awaited.

However, the restrictions to mining eventually came to affect graphite production as well. Environmental inspection teams first reached Heilongjiang province, then Shandong. Operations closed, and those that remained in business have found it increasingly difficult to source quality ore.

Constraints to supply are starting to be felt, not least because the limitations on chemical processing have restricted acid-based graphite purification processes. Output of plus mesh graphite sizes has been particularly squeezed.

So prices, which had fallen in Q1, picked up again in Q2 and, by August, posted further upticks. Graphite remains in an overall better supply situation compared with bauxite or magnesia, but sellers see further disruptions to availability and aim to up their prices as a result.

All in, refractory suppliers are waging battle on various fronts. Contingencies on the raw materials side mean sourcing and production costs will remain higher for the foreseeable future, while evolution in end markets will affect demand for what products customers will want and how much of them they will buy. Refractory suppliers need to brace themselves as they see through a continuously-evolving scenario on both ends, in the hope that the industry will eventually settle and find a new normal.

Nov 06

MagMin 2017: Magnesia supply shortage won’t last long, China says

MagMin conference delegates heard from the Chinese government that the severe supply squeeze that has hit the sector will not last long but no timescale can be given.

The magnesia supply shortage in China is not expected to remain for long but is unclear when production will normalise, Chinese government official told delegates during the MagMin 2017 in Dalian, China on 11 July.

MagMin was held in China for the first time. Global market participants gathered in the northern Chinese trade, port and industrial city of Dalian to discuss the harsh reality of the supply shortage in Liaoning Province, the main magnesia producing area, and to hear the view from the government. Other topics included the latest environmental techniques for the industry as well as professional presentations from downstream steel and refractory sectors.

The major area of interest for delegates was the government’s view on the supply squeeze. In Q2, China’s magnesia industry was hit by a severe supply shortage following environmental checks and dynamite restrictions, which led to all production being stopped without notice. It was considered a harsh move by upstream producers and downstream buyers alike and has left a lot of uncertainty in the market.

«The source material shortage will not continue for long,» Guangqi Han, Deputy Director of People’s Government of Liaoning Province, Special Industrial Resource Protection Office, told delegates.

He explained that the environmental inspections were not intended to restrict material but were about future development of the sector.

China has passed the stage of fast economic development at the expanse of environment, and the government is now looking at ways to develop the industry economically as well as environmentally, he said.

The government is yet to make a clear and unified standard on a national level, but it is working on it. No timeline has been confirmed.

«It won’t take long because even domestic steel companies won’t allow this to happen – they need to produce normally,» one Chinese delegate told IM. «A decision might be easy to make – so too a plan – but its execution is difficult. There are so many magnesia companies – if the government has a plan to control the total output, it won’t be easy to realise. [It is] not like the rare earths industry which has been consolidated into six major companies after years of painful regroupings as well as M&As guided by both central and numerous local governments, and needless to say the constant conflicts among different players,» one official from Liaoning Provincial Association of Nonmetallic Mineral Industry said.

Uncertainty persists, no end in-sight
The government’s message to delegates was that the supply shortage will not last long, but they do not know when it will end.

«What the government said is useless and completely bureaucratic; it doesn’t solve any problem or promise anything,» one Chinese producer said. «Even if they promise something, it feels empty and helpless because they don’t have a unified standard yet.»

«[When] the governments of Liaoning Province, Haicheng City and Dashiqiao City all showed up at this seminar; it means something – something serious,» another delegate said.

«Obviously the whole industry has no clue about what happened or what will happen, but at least the government is here to show they are paying attention. If they get many opinions from market players, even if they are just complaints, the government will know and do something. So this is a great chance for us to meet and talk with government officials, especially the provincial officials who sat at the seminar from the beginning to the end,» he added.

Oct 30

El pasado día 25 de octubre tuvo lugar en la sede de ANFRE en Madrid la Junta Directiva y las reuniones de los comités Técnico y de Montadores

El pasado día 25 de octubre tuvo lugar en la sede de ANFRE en Madrid la Junta Directiva y las reuniones de los comités Técnico y de Montadores.

junta-directiva
En estas últimas reuniones del año se han tratado tanto temas internos de ANFRE como temas del sector del Refractario que preocupan e interesan a todos.

Un punto bastante importante dentro de las reuniones ha sido el Curso de Montadores que tendrá lugar en Bilbao del 20 al 24 de Noviembre. Se están dando las últimas pinceladas a este gran proyecto en el que se encuentra inmerso ANFRE.  Desde aquí queremos agradecer la colaboración de todas y cada una de las empresas involucradas.

En esta ocasión hemos contado con la participación de dos compañeros de la empresa Abaltex, Juan Marcet y Raquel Rodríguez, asociados nuestros desde hace algún tiempo pero que por motivos de agenda no podían asistir a las reuniones. Os damos la bienvenida y esperamos poder seguir contando con vosotros.

Una vez finalizadas las reuniones pudimos disfrutar, ya de una manera más relajada, de la buena compañía en la comida ofrecida por ANFRE.

Una vez más daros las gracias a todos por vuestra asistencia a las reuniones.

Os esperamos en Febrero!

Oct 23

Chinese magnesite supply: 80% to come under state control & consolidation

The prospect of China’s magnesite mining sector coming under state ownership accompanied by consolidation of major players into one entity is looking increasingly likely to come to fruition this year.

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The Huaziyu magnesite mine, Haicheng, the second largest magnesite mine in Liaoning province. This magnesite source and others like it are soon to be part of one huge part state-owned entity, China Magnesite Mining Co. Ltd, in an effort to modernise and stabilise the Chinese magnesite industry.

Further to our recent report on Chinese mineral supply shortages (see Newsfile 28 July 2017: China minerals supply squeeze: hangover to 2018 likely), on Monday 31 July, the State Owned Assets Supervision and Administration (SASAC) of Haicheng, Liaoning announced plans to establish China Magnesite Mining Co. Ltd.

According to Adam Zhang of the Northeast Asia Non-metallic Materials Exchange, “This is a major matter for China’s refractory industry, since it is expected to control 80% of the national production”.

China Magnesite Mining Co. will be 51% owned by Haicheng Magnesite Factory (owned by SASAC Haicheng). The remaining 49% will belong to other partner companies which appear to still be in the process of pledging their participation.

Among those confirmed, include Haicheng Linli Mining Co. Ltd (wholly owned subsidiary of Puyang Refractories Group Co. Ltd) and Beijing LIRR High Temperature Materials Co. Ltd.

With a reported total registered capital of RMB2bn, China Magnesite Mining is aimed at accelerating the effective integration of magnesite mineral resources in Haicheng, encouraging green, intensive, efficient and sustainable development, as well as enhancing the magnesite industry’s dominance in domestic and overseas markets.

“In the past, due to dispersion of magnesite mining rights, irregular mining, some environmental problems in magnesia processing enterprises, the price of magnesite and magnesia has been at a relatively low level in recent years.” said Zhang.

It is hoped that if China Magnesite Mining succeeds, it will effectively change China’s traditional magnesite resources supply scene, stabilise magnesia raw materials supply and demand expectations, and promote the development of the entire supply chain of refractories.

Whether this new organisation concludes before or after the 19th National Congress in October is unclear, as are other aspects of the general situation regarding changes in China’s mineral supply sector.

What is clear is that:

1. Environmental inspection teams are due to return to Liaoning in August, and processing facilities are unlikely to re-open unless they meet MEP standards.

2. Mineral supply shortages, as a result of 1. and ongoing mining explosives control will continue: for fused minerals, such as fused magnesia and fused alumina, there is an additional reported problem of an acute shortage of graphite electrodes, with a consequent price increase of 400% to 500+%. (learn the latest trends in graphite supply at Graphite Supply Chain 2017, 5-7 November, Newport Beach.)

3. There is a definite move to state control and consolidation of China’s magnesite sector.

Oct 14

Alteo to increase alumina products’ prices

The French calcined alumina and ATH producer will raise its products’ prices at the end of Q3, citing increasing raw material costs as the reason.

Alteo will be increasing its speciality alumina products prices due to rising raw material costs with effect from 1 September, the France-based company said.

«Alumina production has suffered over the past months from significant cost increases which cannot be absorbed anymore,» said Alteo on 13 July.

The company told IM that production has been impacted by higher freight rates, bauxite, caustic soda and energy prices.

In 2017, the average natural gas prices were €15-16/MWh, up 29% compared to €12/MWh in 2016, Alteo cited.
The rising freight rate has also added to the production cost. According to Baltic dry index, the shipping rate for bulk cargo was $1,000/tonne in June, up $400/tonne compared to $600/tonne in January 2016, the company cited.

Alumina is a key raw material and prices have increased since September 2016. According to IM’s sister publication Metal Bulletin, the benchmark alumina index was last calculated at $307.75/tonne on a FOB Australia basis 13 July. Although the value of alumina has fallen compared to the peak of $347.78 at the beginning of this year, it is still up 22.5% or $69.50 year-on-year compared to the prices on 22 July 2016.

«In a very tight market environment, Alteo will raise prices on its whole product portfolio. Price increases will depend on markets and products and will apply on products shipped as of September 1st,» the company added.

Alteo did not indicate how much it will raise on existing contracts stating only that the increase would likely be «significant» and that it will address each contract on a case-by-case basis.

Furthermore, Alteo indicated that demand has been high and «most of the customers globally asked for more material than anticipated.»

Calcined alumina and aluminium tryhydroxides are Alteo’s key products in its portfolio and the company supplies the ceramic and refractory industries as well as special glass, catalyst, fillers, polishing and flame retardant industries globally. Alteo’s facility in Gardanne, France has a production capacity of 635,000tpa.

Alteo’s strategy is to focus on speciality alumina products and the company will aim to reduce sales of wet hydrate (ATH).

Alteo alumina plant in Gardanne is an independent speciality alumina producer with HIG Capital as one of its shareholders.

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