Zircon markets signal steady recovery by end of 2014Zircon consumption is at its lowest point for a decade, having dropped by over 30% to 1Mt since its 2011 peak, but there are signs that demand in 2014 is set to stabilise. The use of zircon in some key markets, including traditional ceramics and foundries, has for several years been affected by substitution from competing minerals or its outright elimination from product formulations. This fall in consumption occurred in spite of continued growth in the traditional ceramics market, the largest application for zircon, as consumers sought to reduce their reliance on the opacifier mineral owing to high raw material costs. Zircon prices were volatile between 2010 and 2012, more than doubling in the space of 18 months to reach $2,500/t in mid-2012. This was the result of supply shortages, as end markets recovered from the financial downturn more rapidly than anticipated. In many cases, zircon consumers were unable to pass on increased costs, particularly in the traditional ceramics market. Substitution trends stabilise Lower consumption of zircon has been achieved by manufacturers through substitution, changing fashions and manufacturing innovations. In ceramics, zircon substitution has been particularly pronounced in the traditional Western European hubs of Spain and Italy. Ceramic producers have achieved similar quality levels by partially or completely substituting zircon with aluminosilicate minerals such as calcined alumina and feldspar in some applications. While some substitution has also been seen in Asian ceramics, mainly those produced for the export market, producers in the much larger domestic markets in the region have sacrificed quality in favour of lower production costs. In many cases consumers have entirely removed zircon from their formulations. As a result of lower zircon demand, supply significantly exceeded consumption which led to the creation of large stockpiles. During this period, prices stabilised and then fell sharply. Australian zircon export prices fell to an average of $1,650/t in late 2012, and continued to fall throughout 2013 and into 2014. By mid-2014, they had reached an average of $1,000/t. Zircon use in chemicals and refractories also showed a decline between 2011 and 2013, but this was linked to lower output of these end-products rather than raw material substitution. Downstream zirconium product demand picks up Zircon is used as the feedstock material in numerous downstream zirconium products, principally in the form of chemicals, zirconium oxide (zirconia) and metal. Zirconium products are used in myriad end markets, but typically in low-volume and high-value goods. World production of zirconium chemicals is dominated by China, where over 88% of capacity is located. Chinese companies have invested substantially in chemical facilities over the last decade, particularly for zirconium oxychloride which is the feedstock material for downstream zirconium chemicals. Global zirconium chemical capacity is estimated to be 523,000tpy in 2014, with zirconium oxychloride (ZOC) comprising 80% of this. The Chinese ZOC market is currently in a state of acute overcapacity with few profits available to suppliers. The largest market for zirconium oxychloride is now in the production of high-purity chemical zirconia, which itself is being influenced by the ceramic pigments market. The introduction of digital inkjet printing has revolutionised the decoration of ceramic tiles and has spurred demand for zirconia-based pigments. Ceramic pigments are also a major consumer of fused zirconia, although the dominant application for this material continues to be in refractory materials particularly for crude steel and glass manufacture. Advanced ceramics & environmental growth In the last three years the chemical zirconia market has seen healthy growth in the very high-value sectors of advanced ceramics and environmental markets, particularly bioceramic uses and oxygen sensors. Environmental markets have also spurred demand for zirconium basic carbonate and its derivative products, namely in the catalyst sector. Automotive catalyst demand is being driven by environmental concerns over the release of pollutants from automotive exhaust gases, which is prevented with the use of a catalytic converter. Over 95% of all new vehicles sold globally each year are now fitted with catalytic converters. The main influence on the zirconium metal market is the nuclear industry, accounting for around 60% of zirconium sponge capacity, where zirconium alloys are used in the manufacture of fuel tubes, cladding and other components. World demand and investments in nuclear power are recovering from the March 2011 Fukushima accident in Japan and its subsequent impact on global confidence in nuclear power safety. Price traction expected from 2016 World zircon demand is forecast to grow by 3.7%py between 2014 and 2019. The chemicals sector is expected to see the highest growth rate at 4.1%py, but will be closely followed by ceramics. Lower growth rates are projected for demand into the foundries and refractories sectors. Zircon prices are anticipated to be buoyed by higher demand and are forecast to stabilise in the latter part of 2014. While prices are expected to firm slightly in 2015, sizeable stockpiles currently overhang the market. These are likely to be drawn down until late 2015, after which higher sales and demand could encourage stronger prices. Roskill
Date : 26-09-2014 |
