Iron & Steel
2011 saw iron ore prices seesawing from record highs to abysmal lows. The declining demand for steel in spite of China’s strong economy was a major factor influencing the trend. Investments in both new and expansion projects however, continued unabated and iron ore producers are optimistic that the steel market will change for the better.
Late October recorded the sharpest fall (7.2%) in iron ore prices. Several Chinese steel making companies stopped buying iron ore and instead focused on depleting their stocks. Some shut down for maintenance during that period in an effort to tide over the phase. This was in sharp contrast to the steel market in May, when China produced a record 60.25 million tons of steel to meet the needs of its booming housing and infrastructure sectors.
Asia’s weak demand for steel also brought losses to two of Japan’s largest steel making companies—JFE Holdings Inc and Nippon Steel Corp. The losses in Japan were of course multiplied by the effects of the catastrophic earthquake and tsunami earlier in the year. South Korea meanwhile glutted the market with steel and that did not help the price fall at all.
The iron ore industries presently attracting the highest interest are those in the Pilbara region of Western Australia, the Gulf of Guinea, and India.
Rare Earths
Sliding rare earth prices are likely to stabilize in the near future given the various measures taken by China and several non-Chinese rare earth companies to remedy the situation. The slowing demand has been the primary cause for the declining prices over the latter part of 2011. During the January to September period, China exported 11,000 tons of rare earth metals, which is only 40% of the export quota.
Several large Chinese rare earth companies have reduced or stopped production completely for a short period in an effort to improve the price curve. The government is also considering making regulatory changes to stabilize the rare earth market. Rumors indicate that to push prices up, China might create a special value added tax invoice and also add an export duty on neodymium-praseodymium stritcast alloy (NdFeB).
Another factor triggering the declining demand and the consequent price fall is the fact that European, Japanese and American companies that use rare earth metals are exploring and developing alternate materials to free themselves from the strong hold that China has over the global rare earth market. Germany’s auto parts manufacturer Continental AG, Germany’s wind turbine manufacturer Enercon, and US based GE are a few examples.
Manganese
China’s lower demand for steel has affected the manganese market as well—prices of both manganese flake and silico-manganese have been low since September. The possibility of South Africa beginning production at several world class manganese deposits over the next two years has also kept prices low. China on the other hand, has been building its stockpiles of manganese.
In addition to the steel industry, manganese in various forms has found other markets to conquer. Lithium-manganese batteries are already used in automobiles such as the Nissan Leaf and the Chevy Volt. Nanotechnology has showed ways to dramatically improve the performance of manganese-based super conductors. Studies are underway at the Ames Laboratory to explore the possibility of using electrolytic manganese as a replacement for rare earth elements in magnets.
Magnesium
China’s production of primary magnesium increased by about 3% during the first nine months of 2011 and exports increased by almost 7%. The Netherlands, Japan and Canada are the biggest buyers of China’s magnesium and prices rose accordingly. However, prices are now sliding down because of lower global demand and lower prices being quoted by China’s suppliers.
Molybdenum
In June this year, analysts believed that the molybdenum market would have surplus supply this year. The positive outlook for steel meant a positive outlook for molybdenum also. However, October records show that the relation between the two is not so simple. In spite of steel and iron ore prices being stable in summer, molybdenum prices showed a decline. It is possible that China’s decision to no longer remain a net importer of molybdenum may have resulted in the strange divergence in steel and molybdenum prices.
