http://imformed.com/chinas-refractory-mineral-supply-a-new-world-...

http://imformed.com/chinas-refractory-mineral-supply-a-new-world-review-outlook/
Some of the highlights:

• A range of factors arising in 2017 and spilling into 2018 significantly compounded the shortage of key refractory (and other) mineral exports from China vital to the world’s refractory manufacturing sector.
• The situation created real problems for refractory manufacturers requiring the likes of dead burned magnesia (DBM), fused magnesia (FM), calcined bauxite, graphite, and fused alumina for making refractory bricks and monolithics.
• What is fundamental to understand is that despite past supply bottlenecks occurring over the last two decades, these were short-lived. This time it’s serious, it is not a cyclical phase. The fall-out is unlikely to be temporary for many Chinese mineral and refractory operations.
• Unfortunately for the global refractories industry, where certain regions, such as India, have relied almost entirely on raw material supply from China, the crisis continues apace into 2019 and the world market must react and adapt to the new world of Chinese refractory mineral supply.
• Although refractory mineral prices stabilised into early 2018, albeit remaining at high levels, 2017’s “perfect storm” of robust pollution controls and environmental inspections (= mine and plant closures), restricted and banned explosives provision (= lack of primary ore availability), and closure of illegal businesses (= reducing capacity) continued through 2018 to tighten refractory raw material supply and increase prices, pretty much living up to 2018’s Chinese zodiac animal – Year of the Dog!
• Uncertainty over physical supply availability and future pricing continues to challenge traders and refractory raw material buyers desperate to secure supply for 2019.
• In addition to continuing environmental inspections, China has upgraded its customs audit of minerals trade resulting in significantly more stringent requirements and declarations for exporting and importing parties, and the ongoing US-China trade tariff war is not helping prospects.
• China’s war on pollution, zealously driven by President Xi Jinping, accelerated in 2018 with the passing of a new Environmental Protection Tax Law and the old Ministry of Environmental Protection becoming the Ministry of Ecology and Environment (MEE).
• “We will step up the environmental enforcement and inspection” said Li Ganjie, Minister of Ecology and Environment. This crusade and its ramifications on Chinese industry is not going away anytime soon, particularly when 2020 has been officially designated a milestone year for China to be a “Moderately Prosperous Society” (let alone 2049, the centennial of the founding of the Republic).
• By Q3 2018, almost all production of high purity magnesia in Liaoning remained closed; all magnesite mining had closed, and had not yet restarted in the Anshan and Dashiqiao area, with some 90% plants closed failing to meet new environmental standards.
• Indeed, new emission standards for the magnesia refractory industry in Liaoning are planned for 1 January 2019, and expected to further restrict both magnesia and refractory production capacity in the province.
• Reports suggest that there are plans to restart magnesite mining and exploration in the Haicheng area from mid-September 2019 earliest.
• India’s refractory, and steel industry have been particularly hard hit by the China situation. In late September 2018, the Indian Refractory Makers Association (IRMA) reported that refractory imports had risen sharply, by 40% to Rs25.29bn in 2017-18, against that of Rs18.04bn for 2016-17.
• Lack of refractory raw material (both domestic and import sources) is one of the major causes for the rise of refractory imports. India’s steel sector consumes 75% of Indian refractory production, which in turn relies heavily on Chinese raw material imports.
• With reduced Chinese refractory raw material availability (either for direct export or domestic refractory manufacture), Indian refractory companies have been forced to delay supply to steel plants, prices have been uncertain, with the upshot that the steel industry has suffered production and cost setbacks.
• Within China, among these is a drive to develop alternative and upgrade existing mineral processing methods to better utilise lower grade refractory mineral deposits.
• Outside China, certain refractory producers, such as Wonjin Wordwide, South Korea, have been forced to develop its own captive production of FM
• Unsurprisingly, the China situation has boosted the prospects of new and alternative refractory mineral projects in development worldwide, in particular: magnesite in Saudi Arabia, Serbia, Greece, Morocco, Turkey, Jordan, Australia, Brazil, Pakistan;
• The ongoing US-China trade war had initially scared the US refractory industry with all refractory minerals on the new import tariff list. However, industry lobbying succeeded in eventually excluding bauxite, BFA, DBM, FM, graphite, silicon carbide, and tabular alumina (remaining on the list are: andalusite, chamotte, dolomite, fused silica, kaolin, mullite, quartzite, sillimanite, zircon, abrasives, ceramics, refractories, slags, mineral wool).
• That said, there has been talk of some commodities possibly being reinstated on the list, so perhaps the US industry is not out of the woods yet.
• So the outlook is one of expected continued tight supply of refractory raw materials from China, remaining at relatively high price levels, although unlikely to rise much higher, for the foreseeable future.
•  So at the same time there will be urgent evaluation by the refractory sector for securing raw material supply outside China combined with the increasing likelihood of a step-change in refractory formulations.