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China steps in to tighten rare-metal markets www.asia.nikkei.com
TOKYO -- China is stockpiling rare metals and curbing output to tighten global markets, pushing up prices of some materials despite sluggish underlying demand.
The metalloid antimony went for around $7,100 a ton on the London spot market in early August. This marked a climb of a little over 10% from a recent low in early June, as well as a one-year high.
Over the past year, antimony has for the most part traded at $5,000 to $7,000 a ton, weighed down by sluggish demand and overproduction. China, which produces roughly 80% of the metalloid worldwide, has cracked down on smuggling and in early spring began using environmental regulations to halt operations at major producers. But this resulted in only a slight upturn in prices on the international market.
The recent surge came after the government said it would stockpile a total of 10,000 tons of the metalloid in two rounds: one in July, and the other in October. This spurred expectations of coming cuts to excess inventory, encouraging buying.
Don't care much
Global demand for antimony amounts to some 60,000 tons a year. China's stockpiling is thus "large enough to have a fair impact," said an official of Nihon Seiko, a major producer of antimony compounds.
But consumers of the metalloid appear unperturbed. Antimony trioxide is often added as a flame retardant to plastics used in electronic devices and autoparts. Yet demand has grown sluggish in the U.S. and Japan. "We never have to rush" to obtain antimony or its derivatives, a source at a nonferrous-metal trading house said. "If we put out a call, we could buy some immediately."
China has also stepped into the market for tungsten, used to make highly durable carbide tools. Market benchmark ammonium paratungstate, or ATP, traded at around $195 for 10kg in early August -- up 8% from a recent low in mid-July. The Chinese government in April began stockpiling 10,000 tons of the metal, or roughly a tenth of annual domestic production, causing prices to surge. But slowing demand for construction machinery and industrial tools put the market in decline once again in June and onward.
Not what we need
China's six leading producers of rare-earth metals, used widely in electronics, are set to stockpile around 5,000 tons of the materials this year. The government aims to buy up around 15,000 tons of rare earths from those suppliers for its own reserve. But the prices it is offering do not even meet the costs of production. So the stockpile plan has run aground, with no one willing to sell.
Rare-earth prices on the world market are sliding as companies outside China work to cut back on consumption. "Without demand, high prices won't remain that way for long," said Yoshikazu Watanabe, president of Japanese nonferrous-metal consultancy Tsukushi Shigen Consul.
The U.S. and the European Union in July challenged Chinese export restrictions on several raw materials, including antimony ore and other forms of the element, under the World Trade Organization. But global prices have felt little impact. Japan, which imports antimony as a base element and in oxide form, is not involved in the challenge, according to a Japanese trading house.
Published Date:2016-08-10
