Strong demand and tight supply means higher zirconium material pricing in 2022
The persistent tight supply of zircon sand has continued in H2 2021 and is set to continue in 2022 and beyond. Following a high annual output of 1.2Mt in 2019, output dropped to 1.0Mt in 2020 during the pandemic, when lower demand was expected. But demand has rebounded faster than anticipated and there is a shortage of available capacity to react to this upturn. Projected demand is expected to increase from 1.1Mt to 1.5Mt by 2030 at a time when existing supply grades are declining and there is a shortage of new greenfield supply coming on stream. Even with new supply scheduled for 2025 there is a projected deficit of 100,000t a year.
The growth in demand is led by a strong performance in the ceramics industry with extensive home renovation taking place during lockdown, exacerbated by low inventory levels. Growth continues to be strong in the main market, China, however the industry is monitoring the Chinese real estate industry very closely as this has considerable influence on demand. Other industries such as refractories, foundry and zirconium chemical production are robust and experiencing sustained growth.
Iluka Resources's published benchmark zircon pricing shows price levels of USD 1,800/mt CIF China port however the spot market in China is in reality much higher with current pricing at USD 2,700/mt Ex Works China warehouse. Pricing is being driven higher due to tight supply and also preference in some industries for premium grade material from Indonesia and South Africa. In recent years the zirconium chemical industry has been using a higher amount of material from RBM in South Africa. The closure of this facility during the summer has added to the shortage of available sand.
The zirconium chemical industry, including high grade zirconium oxides, has seen a sharp increase in pricing over the last 6 months. With increased raw material and consumable costs, high freight rates, power restrictions at Chinese processing facilities and continued strong demand, there will be ongoing upward pressure on zirconium material pricing in 2022.
Zircon sand is the starting raw material for the majority of zirconium chemicals, including zirconium basic carbonate, zirconium hydroxide and zirconium oxide.
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Date : 24-11-2021