Global Commodities Trade: State of Play in H1 2016

LONDON, August 8, 2016 /PRNewswire/ --

Roskill examines trade trends in the first six months of the year for key commodities, including lithium, tungsten, rare earths, tantalum, salt, vanadium and molybdenum 

The global commodities market saw tough conditions towards the end of 2014 and throughout 2015. As January 2016 unfolded, prices for crude oil, iron ore, copper and aluminium averaged between 21-69% of their levels when indexed against the same month of 2012. However, markets as of mid-2016 appear to be picking up; this was echoed by the World Bank in its quarterly Commodity Markets Outlook published last week, which revealed that most commodity price indices rebounded in Q2 2016. The organisation now expects a modest recovery in the majority of commodity prices in 2017, on the back of increasing demand and tighter supply.

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World trade patterns in some key commodities - lithium, tungsten, rare earths, tantalum, salt, vanadium and molybdenum - showed mixed performances in the first six months of 2016. Rare earths, vanadium and lithium recorded increases for some products over this period. Salt exports were 25% lower y-on-y because of falling demand in the de-icing segment, on the back of a milder winter in the Northern Hemisphere. Meanwhile in tungsten, exports of ores and concentrates were stable y-on-y, though regional totals echoed the supply changes that the industry has seen in the last 18 months.

Note: All values shown below are gross weight unless otherwise specified.

Lithium 

Combined exports of lithium carbonate from Chile and Argentina reached almost 45,250t in H1 2016, up 50% on H1 2015. The ramp-up at Olaroz in Argentina by Orocobre and increased output from SQM and Rockwood in Chile has all contributed to the rise, but FMC's output from Hombre Muerto in Argentina was only slightly higher y-on-y. An additional 515t was shipped from China in H1, down 37% y-on-y. Average values of exports were US$6,904/t and US$6,818/t for Argentinean and Chilean exports respectively, representing rises of around US$2,500/t and US$2,000/t on H1 2015 as 2016 contract prices witnessed a significant jump following undersupply-driven market tightness. Chinese exports at over US$25,000/t reflected limited off-contract (spot) material availability to plug the gap, having risen by around US$17,000/t y-on-y.

South Korean imports of carbonate exceeded 11,350t and Japanese imports were 9,925t in H1, up 70% and 50% respectively from 6,690t and 4,980t in H1 2015, reflecting greater requirements from two of the three largest battery/battery raw material producing countries. Chinese imports, largely from Chile, hit 6,150t, up 26% on H1 2015. The USA received 7,070t, more than two-thirds from Argentina and destined largely for hydroxide conversion by FMC, down 10% y-on-y, but Belgian imports were up 64% over the same period at 6,110t.

Exports of lithium hydroxide from the USA, China, Chile and Russia were almost 12,260t in H1 2016, down over 1,000t on H1 2015 largely on reduced US and Chinese exports, with increased Chilean exports offsetting these reductions by around 1,000t. Japanese imports of hydroxide were almost 3,340t, down 35% y-on-y, but South Korean imports were up 65% at 2,420t, as South Korean manufacturers boost output of high-nickel cathode materials. Belgian imports also rose 20%, with Russia (SQM tolling through CHMP) now the leading supplier. Average values of exports from Chile increased by almost US$1,500/t and China US$5,500/t, but Russian exports were only US$200/t higher and US exports fell by around US$500/t.

Tungsten 

World exports of tungsten ores and concentrates were stable in H1 2016 compared to H1 2015, totalling just over 9,700t. The bulk of shipments were from Russia (2,100t), Bolivia (720t), Portugal and Spain (around 600t each). Exports from Bolivia fell by half y-on-y and were also lower in Russia (-7%). The largest decrease was in Canada, however, which shipped more than 3,000t of tungsten concentrates in H1 2015 but zero in 2016, following the mothballing of North American Tungsten's Cantung mine in October 2015.

A new entrant to the market was Wolf Minerals, which operates the Drakelands mine at Hemerdon in Devon, UK. Commissioning at Drakelands was completed in late September 2015 and concentrate exports were reported to be nearly 550t between January and May 2016. Wolf's June 2016 quarterly report outlined the difficulties the company had encountered as it initially mines and processes the weathered portion of the granite deposit at surface.

Portuguese shipments were higher y-o-y, growing by 29%, following the acquisition of the Panasqueira mine by Canadian-headquartered Almonty Industries in January 2016. Rwandan volumes also recorded a significant rise, growing by 30% y-o-y to reach 610t.

World average tungsten concentrate export values, which more typically reflect contract pricing, fell sharply compared to H1 2015, dropping from US$10,890/t (US$168/mtu assuming a 65% WO₃ content) FOB to US$7,100/t (US$109/mtu) FOB in H1 2016. However, monthly unit values showed signs of improvement in the latter part of the period - which will probably continue into H2.

Rare earths 

In H1 2016, China - which accounts for >90% of rare earth supply - exported 23,200t REO of processed products. This was a 67% increase on H1 2015 exports, mainly as a result of consumer restocking of non-cerium compounds in the USA and Europe.

Cerium and lanthanum oxide, and lanthanum carbonate, are the most commonly traded rare earth compounds. Chinese shipments of cerium compounds rose by 49% y-on-y. Cerium is shipped for use by glass polishers and autocatalyst manufacturers, mainly from China to Japan. Lanthanum is used in FCC catalysts and NiMH batteries and shipped mainly from China to the USA.  Chinese exports of all non-cerium compounds (which are largely lanthanum compounds by volume) increased by 81% in H1 2016.

Following Molycorp's closure in mid-2015, Silmet in Estonia imported compounds solely from Russia in H1 2016 having previously imported 5,300t from the USA in 2015. France does not report official data, but exports >6,000tpy of cerium compounds, mainly to Japan. Solvay Rhodia now imports an increasing quantity of raw material from Lynas in Malaysia for processing and re-export.

Rare earth metals and alloys account for a small part of rare earth trade, and are shipped mainly from China to Japan. China exported >12,000t of NdFeB magnets in H1 2016, which contained around 4,500t REO of neodymium.

Tantalum 

The tantalum market remained subdued during H1 2016. Imports of tantalum-niobium concentrates into China (the largest buyer) from Africa (its largest supplier) were up by about 15% y-on-y. This has not translated into upward price movement, however. In H1 2015, the quoted price for 30% Ta₂O₅ concentrate CIF China averaged about US$80/lb. During H2, the average dropped to US$62/lb. H1 2016 has seen an average below US$60. It may well be that buyers are in an inventory-building phase.

An interesting reported development is that buyers are becoming more aware of the value of the niobium units in the tantalum concentrates they buy. Historically, niobium contained in a concentrate where tantalum dominates has essentially been given away for free. Buyers are not necessarily now paying directly for the niobium content but they are reportedly prepared to pay a higher price for tantalum concentrate with a good niobium content.

Salt 

Salt trade data from H1 2016 shows a 25% decrease in global imports compared to H1 2015. The vast majority of this deficit can be attributed to a reduction in US salt imports from Chile and Canada for de-icing during Q1 2016, which was the result of the milder weather than during the same period last year. However, even with a 42% y-on-y drop, the USA remained the largest destination for shipments in H1 2016 and Chile remained the main supplier to the USA, supplying 2.3Mt.

Exports on a global basis in H1 2016 were down 17%. Australia's exports in H1 2016 were an estimated 5.2Mt, maintaining its longstanding position as largest salt exporter worldwide. However, this is down approximately 4% y-o-y. Australia exports salt to Japan, China, South Korea and Indonesia for use in the chemicals industry. Despite closures in the Asian chloralkali and soda ash industries, increased competition from Indian salt exports was the main reason for lower Australian shipments.

With Asian imports of salt increasing yearly, the region's total salt imports have the potential to account for over half of global salt trade, which will mainly supply the growing domestic chemicals market. This is something K+S Group is looking to exploit with the May 2016 announcement of plans to develop its Ashburton solar salt project in the Pilbara region of Australia. Currently at development stage, production capacity is an intended 3.5Mtpy salt.    

Vanadium 

Analysis of H1 2016 trade data shows a 40% increase in imports of vanadium oxides and hydroxides over H1 2015 levels. Higher imports from the Czech Republic and the Netherlands partly explain this increase but the main factor underpinning the surge in imports is the 4,700t of Russian material shipped to South Africa. South Africa does not traditionally import vanadium pentoxide although 600t was imported in H1 2015.

Over the same period, imports of ferrovanadium dropped 18% on a global basis. This is a result of lower demand in key markets including Germany, Japan, South Korea and the Netherlands (Dutch ports are the major route to north-western European steelmakers). Chinese (-26%) and South African (-42%) ferrovanadium exports fell considerably in H1 2016 compared to the previous year. Austrian output was also down: H1 monthly exports averaged 170tpm compared to 710tpm in H1 2015, owing to the fact that Treibacher's feedstock was mostly slag sourced from Evraz Highveld in South Africa (now under business rescue) and converted to pentoxide by Hochvanadium.

Czech ferrovanadium exports rose 11% making it the world's biggest ferrovanadium exporter in H1 2016. In the Czech Republic, Evraz Nikom converts the vanadium pentoxide supplied by Evraz Vanady Tula in Russia into ferrovanadium.  

Molybdenum 

Global imports of ferromolybdenum fell by roughly 9% in H1 2016, compared with the same period in the previous year. Germany remained the largest importer of ferromolybdenum, though imports into Germany fell 16% compared to H1 2015 as a result of weak steel demand from European steel mills.

The Netherlands reported a 42% increase in ferromolybdenum imports between January and April 2016, though this was countered by falling imports by the North American market. Lower demand for molybdenum steels in early 2016 resulted in the USA reporting a decrease of 38%, and Canada a fall of 43%, in ferromolybdenum imports during H1 2016 compared to H1 2015.

South Korea remained the largest exporter of ferromolybdenum in H1 2016 accounting for 22% of total imports, with export volumes increasing by 2% y-on-y.  Global exports however fell by 29% compared to the same period in 2015, mainly caused by fewer exports from Belgium which saw export volumes decrease by 54%. Other major exporters also reported lower shipments, with exports of ferromolybdenum from the UK falling 8% and Chile 20%, although the Netherlands reported a 17% increase in exports.

Roskill's annual Market Outlook reports on Rare Earths, Vanadium, Salt and Tungsten will be published in September 2016. Molybdenum (January 2016), Lithium (May 2016), and Tantalum (June 2016) are available now from http://www.roskill.com. To speak to the commodity specialists directly, please contact:

• Lithium: Robert Baylis (@robertbaylis) 
• Tungsten: Jessica Roberts (@jess_roskill) 
• Rare Earths: Suzanne Shaw (@sueshaw_roskill) 
• Tantalum: Patrick Stratton (@roskill_info) 
• Salt: Jack Anderson (@aluminati_1) 
• Vanadium: Jack Bedder (@jackbedder) 
• Molybdenum: David Merriman (@roskill_info) 

SOURCE Roskill Information Services