2018 REVIEW: Eight things that changed in the minor metals markets this year

Fastmarkets MB looks back at some of the major changes in the minor metals markets over the course of 2018.

China intensified action on antimony smuggling
China’s growing focus on antimony smuggling along the China-Vietnam border took the market by surprise when it created a sudden shortage of material earlier this year. Chinese customs officials seized over 3,000 tonnes of antimony in a smuggling crackdown operation in August pushing European antimony prices to this year’s high of $8,600-8,800 per tonne.

China’s government has implemented anti-smuggling strategies in recent years because more and more material has been shipped out through the illegal China-Vietnam border channel, avoiding China’s official customs and, therefore, export tariffs. Typically, smuggled antimony is collected from the major production hubs of Hunan and Yunnan provinces and then shipped to Nanning, Guangxi Autonomous Region before being finally delivered out of China via the border with Vietnam.

But the government’s inspections on the smuggling channel through the China-Vietnam border usually intensify during Lunar New Year as well as the National People’s Congress (NPC) and National Committee of the Chinese People’s Political Consultative Conference (CPPCC) with all the shipments usually being stopped during these times.

Ningxia Tianyuan’s production disruption had a far-reaching impact

Production curtailments at Chinese producer Ningxia Tianyuan have been a major driver of the manganese flake price rally this year. The producer, which accounts for around 40% of global manganese flake production, reduced its manganese flake output in May this year by around 16,000 tonnes per month after closing one of its three facilities for maintenance.

Manganese flake prices started the year at $1,800-1,950 per tonne and have been in an upward trend for most of 2018. The price peaked at $3,000-3,100 per tonne in August on a continued supply squeeze in Europe – the highest level since April 2012, according to Fastmarkets MB historical data.

The impact has also spread into the selenium market – Ningxia Tianyuan is the biggest selenium dioxide consumer. China’s domestic selenium price dropped to a year-low of 180-240 yuan per kg in September – its weakest since December 2016 – on decreased buying appetite from the manganese flake producer.

Ningxia Tianyuan is currently operating at a reduced capacity of 600,000 tonnes per year but it is expected to resume full production at its 800,000-tpy site in December, sources told Fastmarkets MB last month.

Underperformance of Japanese auto sector changed silicon procurement habits

The disappointing performance of the Japanese automobile industry this year has changed Japanese traders’ purchasing habits, and has kept the Chinese silicon export price under pressure since March.

Though the majority Japanese traders, the largest buyers of Chinese silicon metal, still conducted quarterly procurement through tenders this year, they reduced the quantity for each tender and increased the frequency of procurement in order to avoid stockpiling. As a result, the noticeable price hikes ahead of the start of each quarter witnessed in previous years barely took place in 2018.

Chinese germanium prices fluctuated dramatically amid changing fundamentals

China’s germanium prices saw greater fluctuation in 2018. Metal prices had continued to move up over early January-March, on the backdrop of the increasing demand from the infrared, photovoltaic, and jewelry-making industries.

Fastmarkets’ price assessment for China’s domestic germanium metal, min 99.999%, hit a multi-year high at 10,800-11,800 yuan ($1,566-1,711) per kg on March 21, 2018.

But prices lost momentum in late March amid the mixed impact of the growth on the supply side and some sellers cutting offer prices for the purpose of seizing more market share, according to sources. Meanwhile, high prices had lured new market participants to the germanium industry, and these new suppliers continuously lowered their prices to attract buyers.

As a result, Chinese germanium metal prices continued moving down and fell to an eleven-month low of 7,800-8,300 yuan per kg as of October 31, Fastmarkets data showed.

But bismuth prices showed greater stability

Chinese bismuth exports were mainly consumed by long-term orders this year, resulting in a less active spot market and less volatile bismuth prices.

The shift can be attributed to the downstream automotive coating industry, which accounts for about 50% of domestic bismuth exports, and has little intention to stockpile bismuth against the backdrop of sluggish demand from end-user-international automobile industry.

Bismuth export volumes fell as a result, totaling 3,188 tonnes in the first ten months of 2018, down by 15% from the 3,771 tonnes in the corresponding months of last year, according to data collected by Fastmarkets MB.

US-China trade war tensions stifled minor metals trading
The escalating trade tensions between China and the United unsettled minor metals markets in the second half of this year after the US announced it was imposing new tariffs on $200 billion worth of Chinese goods.

Minor metals that appeared on the list of tariffs include bismuth, cadmium, germanium, germanium dioxide, selenium, tellurium, silicon, magnesium, mercury, arsenic, rhenium, hafnium and cobalt.

Bismuth has been particularly affected with trade tensions slowing down demand for the metal with free market prices now at $3.40-3.80 per lb - the lowest level since 2005.

And while tensions between China and the US have now eased amid a temporary 90-day truce, US importers of minor metals are still sitting on heavy inventories after they increased imports ahead of a proposed 10% tariff that never happened for some of the minor metals. Indium, gallium and antimony were ultimately excluded from the final list of trade duties and part of this stock is yet to be depleted.

US cobalt consumer preferences shifted in the face of tariffs
The increase in tariffs payable on US imports of Chinese cobalt metal, and a possible increase to 25% during 2019, have resulted in dwindling fresh physical trade of the concerned material over the course of 2018. In anticipation of US President Donald Trump’s administration introducing tariffs in September, Chinese suppliers with long-term agreements to supply US customers attempted to ship all cargoes under this year’s long-term contracts to the US ahead of the mooted implementation date. As a result, the tariffs caused no immediate disruption to supplies, but discussions subsequently to supply the US super-alloys industry have focused around brands of metal produced outside of China.

Regional discounts and premiums for certain brands of cobalt were mooted as a possibility as trade flows adjust to consumer brand preferences post-tariffs, but they are yet to materialize, in a market that has weakened considerably in the second half of the year…

Cobalt metal prices plummeted, triggered by China sell-off

Underpinned by a healthy outlook for the battery sector and strong associated demand from investors and consumers, low-grade cobalt metal prices rallied to near ten-year highs in April, when they hit $43.70-44.45 per lb. The rally lost steam in May, amid increased availability of Chinese metal, turning sentiment, weaker summer demand, and concerns over mounting hydroxide supplies. Prices have since fallen more than 35%, according to Fastmarkets data. For their part, consumers have largely retreated from the spot market since the summer, working through high-priced stocks built up earlier in the year, when it was expected that prices would continue to strengthen.

What will drive prices in 2019? Join our webinar on 15 January to find out, as the team discuss recent and upcoming trends and how we price the minor metals markets. Register here.

Charlotte Radford

charlotte.radford@fastmarkets.com

Susan Zou

susan.zou@metalbulletinasia.com

Ewa Manthey

ewa.manthey@fastmarkets.com

Huaqing Fu

huaqing.fu@fastmarkets.com

Amy Lv

amy.lv@fastmarkets.com

Published

Charlotte Radford

Susan Zou

Ewa Manthey

Huaqing Fu

Amy Lv

December 21, 2018

07:00 GMT

Shanghai, London