Fluorspar supply, demand & dynamics

Transcription

1 IM Fluorspar October, Marrakech Fluorspar supply, demand & dynamics Jessica Roberts, Senior Analyst, Roskill Information Services, UK Peter Huxtable, Consultant, Huxtable Associates, UK

2 Disclaimer The statements in this presentation represent the considered views of Roskill Information Services Ltd. It includes certain statements that may be deemed "forward-looking statements. All statements in this presentation, other than statements of historical facts, that address future market developments, government actions and events, are forward-looking statements. Although Roskill Information Services Ltd. believes the outcomes expressed in such forward-looking statements are based on reasonable assumptions, such statements are not guarantees of future performance and actual results or developments may differ materially from those in forward-looking statements. Factors that could cause actual results to differ materially from those in forward-looking statements include changes in general economic, market or business conditions. While Roskill Information Services Ltd. has made every reasonable effort to ensure the veracity of the information presented it cannot expressly guarantee the accuracy and reliability of the estimates, forecasts and conclusions contained herein. Accordingly, the statements in the presentation should be used for general guidance only.

3 Overview Fluorspar market overview Setting the scene recent production Prices Supply chain trends Factors for the future Environmental legislation Costs vs market prices Reserves & FSA potential Conclusions

4 Fluorspar market overview

5 Fluorspar supply showing stability Fluorspar output ~6.2Mt in 2012 to 2014 Peak of 6.4Mt in 2011 Production led by China, Mexico, Mongolia & South Africa Emerging production in Vietnam since ,000 6,000 5,000 4,000 3,000 2,000 1,000 0 World fluorspar production by region, kt China N America Eurasia Africa EU/W Europe Other Asia Others Source: Roskill Fluorspar Industry Briefing

6 Fluorspar supply showing stability 7,000 6,000 World fluorspar production by grade, kt Acidspar accounts for ~60% of total output 5,000 4,000 3,000 2,000 1, Acidspar Metspar Source: Roskill Fluorspar Industry Briefing Acidspar production ~3.7Mtpy in 2011 to 2014 Output led by China, Mexico, South Africa, Europe Metspar led by China, Mexico & Mongolia

7 Fluorspar demand China still growing Averaged Mtpy between 2011 & 2014 China main consumer at 3.4Mt in 2014, use still climbing World fluorspar consumption by region, kt 7,000 6,000 5,000 4,000 3,000 North American consumption starting to fall 2,000 1,000 Eurasian consumption down 50% since China North America Africa EU/W Europe Eurasia Other Asia Others Source: Roskill Fluorspar Industry Briefing

8 Fluorspar prices bottoming out Chinese average acidspar export prices, US$/t US$/t FOB China /01/ /05/ /09/ /01/ /05/ /09/2012 Source: Global Trade Atlas 01/01/ /05/ /09/ /01/2014 Chinese acidspar US$/t 01/05/ /09/ /01/ /05/2015 Average export values from China, indicative of contract pricing Peaked at US$440/t in mid-2012 Averaged US$300/t in H Are we at the bottom of the cycle yet?

9 Fluorspar supply new developments Masan Resources (Vietnam) ramping up to 200,000tpy acidspar EFS (Germany) online in late 2014, 40,000tpy capacity New producers in Thailand, Myanmar & Pakistan Kenya Fluorspar (Kenya) production stopped for 6 weeks in June 2015 Solvay (Bulgaria & Namibia) Okorusu suspended in October 2014

10 Hydrofluoric acid supply declining since 2011 Global HF output averaged Mtpy since ,400 1,200 World HF production by region, kt China main producer at >400kt in 2014 North America & EU output showing largest production falls Other Asia (India) expanding 1, China N America EU/W Europe Other Asia Eurasia Others Source: Roskill Fluorspar Industry Briefing

11 Hydrofluoric acid demand & prices levelling off 1,400 World HF consumption by region, kt China average HF export prices, US$/t 2,500 1,200 1, ,000 1,500 1, China N America EU/W Europe Other Asia Eurasia Others 0 01/01/ /05/ /09/ /01/ /05/ /09/ /01/ /05/ /09/ /01/2014 Chinese HF US$/t 01/05/ /09/ /01/ /05/2015 Source: Roskill Fluorspar Industry Briefing Source: Global Trade Atlas

12 Aluminium fluoride supply continuing to ramp up World output up 300kt since 2009 Chinese production nearly doubled in ,200 1, World AlF 3 production by region, kt Eurasian output halved in same period Lower production in North America & Western EU China N America EU/W Europe Other Asia Eurasia Africa/ME Others Source: Roskill Fluorspar Industry Briefing

13 Aluminium fluoride demand & prices World AlF 3 consumption by region, kt 1,200 1, China N America EU/W Europe Other Asia Eurasia Africa Others Source: Roskill Fluorspar Industry Briefing China average AlF 3 export prices, US$/t 1,800 1,600 1,400 1,200 1, /01/ /04/ /07/ /10/ /01/ /04/ /07/ /10/ /01/ /04/ /07/ /10/ /01/ /04/ /07/ /10/ /01/ /04/2015 Chinese AlF3 US$/t Source: Global Trade Atlas

14 HF & AlF 3 supply developments China removed 10% tariff on HF exports in May 2015 Showa Denko (Japan) added electronic HF capacity in Japan & China KMG (USA) closed electronic HF operations in Q Mexichem (UK) consultations over closure of Runcorn HF plant in August 2015 Gulf Fluor opened HF/AlF 3 fluorides plant in Abu Dhabi in May 2015

15 Downstream fluorochemicals recent developments EU flags Honeywell-Chemours production agreement for HFO-1234yf (October 2014) Mexichem appeals to US International Trade Commission on Chinese HFC-134a (January 2015) American HFC Coalition files antidumping case with US DOC for Chinese HFC blends (June 2015) EU F-Gas phase-down kicks in from 2015 until 2030 (cut of 48% due in 2018)

16 Factors for the future

17 Future factors market drivers Main factors that could drive future acidspar trends: Environmental legislation Operating costs vs market prices Chinese fluorspar reserves Fluorosilicic acid (FSA) as feedstock

18 Future factors environmental legislation Previous phase-out of CFCs under Montreal Protocol because of ozone damage Ongoing legislation to reduce HCFC & HFC because of high global warming potential (GWP) F-Gas regulation Non-feedstock HCFC/HFC substitutes include fluorine & non-fluorine products Western countries may turn to higher use of non-fluorine substitutes

19 Future factors production costs vs market price Production costs are combination of: Deposit & mine e.g. grade, reserves, capacity Mining & processing capex Logistics costs to port Others: general & administrative costs, depreciation Operating costs vary from company to company Some producers (China, Mexico, South Africa) in good cost position even at current prices Low market price doesn t always lead to production cutbacks (e.g. Chinese molybdenum market)

20 Future factors operating costs, fixed vs variable RMB millions Chinese molybdenum output model Loss when at full capacity Loss when production suspended Production capacity utilisation Fixed costs Variable costs Revenue Source: Roskill

21 Future factors Chinese fluorspar reserves Chinese fluorspar reserves 100% CaF 2 (USGS 2015) Chinese output in 2014 was 97% CaF 2 7 years of Chinese reserves at current mining rate More exploration needed to extend reserves low incentive at current prices Other sources: South Africa (41Mt) & Mexico (32Mt)

22 Future factors fluorosilicic acid (FSA) alternative? Fluorapatite main feedstock for phosphate rock (2-5% fluorine content) FSA by-product of phosphoric acid production FSA direct feedstock for low-density AlF 3, or feedstock for HF then high-density AlF 3 Wengfu (China) opened FSA to HF process plant in 2008 World phosphate reserves ~67Bnt: 50Bnt in Morocco & Western Sahara No cost for FSA, needs link-up to phosphoric acid plant

23 Conclusions

24 Conclusions Ability to weather the current storm loss of Namibia & Russia vs new Vietnam, Germany & other entrants May see further consolidation of acidspar & HF operations Acidspar prices to recover in line with demand expected from 2017 onwards Falling reserves base exploration still necessary FSA may look more appealing in mid-term

25 All data covered in the Fluorspar Industry Briefing Please see Richard Pell or me for more information!