Fluorspar outlook: Q3 2014
July 2014 - Fluorspar trends
Tough market conditions for fluorspar producers continued into Q2 2014 with competition intensifying in the face of weak consumption levels.
Slow demand saw prices from Africa slump to new lows as acid-grade fluorspar (acidspar) producers sought to compete with Chinese suppliers, particularly in the Indian market which was one of the few areas to exhibit consumption growth throughout the quarter.
This price competition fuelled a divergence in the market at the start of the quarter, as some producers dropped prices to retain market share while attempted to insulate themselves from price decreases by focusing on quality and efficiency improvements.
Nonetheless, these producers eventually succumbed to market pressures as the summer buying season began in vain, with few signs of increased demand.
CIF prices into Europe and the US subsequently fell 13% and 17% respectively in June.
Further decreases in price could prevail entering Q3 2014, with IM Data sources reporting weak demand amongst Western consumers, in particular, and Chinese prices expected to continue fluctuating around the $300/tonne mark.
Excess capacities will also continue to be an issue with consumption in the fluorocarbon market expected to remain stable and aluminium fluoride production showing few signs of increasing despite some reports of tighter supply conditions.
In the metspar market, steady growth in steel production continued to insulate prices throughout Q2 2014.
While sales have been stable, the more rigid supply structure in this area of the market may see some slight price increases moving into H2 2014.
Any potential increases would be compromised by an upturn in metspar output, however. The Mongolian government had aimed to increase the country’s output at the start of the year but reaching this target looks unlikely should current market conditions persist.
Elsewhere, new fluorspar output from the UK and Vietnam looks set to be delayed, with major quantities now not expected to reach the market until H2 2014 at the earliest.
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