Antimony market to remain volatile while China restructures for the future

World antimony production peaked at 203,500t Sb in 2011, driven by continued growth in consumption in flame retardants and lead-acid batteries, according to a new study by Roskill. Growth in consumption is set to continue through 2012 and beyond, but how supply will match demand will depend on investment in new production over the medium term.

Consumption growth driven by flame retardants and lead-acid batteries

Growth in consumption has been led by high growth rates in Asia, particularly in China, over the past few years.

Overall, antimony demand remains highly dependent on the level of consumption of antimony trioxide in the flame retardants sector and antimony metal in lead-acid batteries.  Roskill estimates that these two sectors accounted for nearly 80% of antimony consumption worldwide in 2011.

Non-metallurgical markets for antimony are forecast to increase by nearly 4% per year through to 2016 with higher growth for flame retardants, plastic catalysts and heat stabilisers tempered by lower growth in ceramics and other uses.

Metallurgical markets are forecast to increase by nearly 2% per year, as the antimony content of new lead-acid batteries continues to fall.  Lead alloys will show higher rates of growth because of increasing usage in construction applications in emerging economies.

Chinese production under pressure

China remains by far the world’s largest producer of primary antimony; six companies, including Hunan Hsikwangshan (Twinkling Star), Guangxi China Tin and Hunan Chenzhou Mining account for 90% of supply.   Roskill estimates that China accounted for around 70% of official mine production in 2011, down from around 80% in earlier years. Production in China is unlikely to increase over the next few years and could even fall in the face of government determination to limit environmental damage from smaller operations.

Efforts to improve the environmental impact of the industry have led to a number of suspensions and closures at mines and smelters, with some plants unable to meet the costs of upgrading and improving their facilities.  This, together with increasing crackdowns on illegal mining and smuggling, has contributed to volatile production levels.  Roskill considers that illegal supply from China amounted to 15-20% of total world supply from 2008 to 2011.  If the Chinese government is successful in halting or diminishing both illegal production and exports of antimony, the impact on global supply will be considerable.

Further, whilst official Chinese statistics still report considerable reserves, independent estimates suggest that they might be reaching exhaustion, particularly in the area of Lengshuijiang City, the centre of antimony mining in China. Although some resources were discovered in 2011, very few deposits have been explored or developed in recent years. There is, therefore, an increasing need for China to import more concentrates from abroad to sustain levels of refined production.

New capacity could enter the market to meet growing demand.

Increased production elsewhere is likely to offset any declines in Chinese production in the short term. Roskill has identified a number of significant additional sources of antimony concentrates in Europe, N. America, Africa and Oceania that could add over 14,000tpy Sb to world mine capacity within the next four years.

Most notably, Australian production could increase by as much as 5,500tpy if a buyer is found for the Hillgrove operation and if the new investors in Anchor Resources bring the Bielsdown deposit on stream. Meanwhile production from Russia could be augmented by more than 2,500tpy if Rusant commissions its operations at the Ilinskoye deposit and should GeoPro Mining further expand its operations.  Although at an early stage, developments in Turkey and Canada also have the potential to supply considerable quantities of antimony concentrates.

Developments in Bolivia and Mexico, and in the longer term Peru and Turkey, also have the potential to increase smelter capacity outside of China.

Volatility likely to continue as prices rise.

Given China’s dominant position as a producer, changes in Chinese government policy have been the most important factor affecting antimony prices since the early 1990s. Concerns over diminishing reserves in China, together with the cost to producers of environmental compliance, and increasing crackdowns on illegal mining and smuggling have all contributed to sharp price increases over the past few years.

Antimony prices increased steadily throughout 2010, as mine closures in China restricted global supplies, and reached their peak in March 2011. However, prices fell back as smelters came back online in Hunan, and as a result of continued weak demand in Europe and Japan. Subsequent smelter closures following environmental checks have since caused prices to increase periodically.

Continued growth in demand for antimony, especially trioxide, combined with the uncertainty over the ability of China to increase production because of resource and environmental limitations, means prices are likely to stay high and volatile.  Prices for antimony trioxide could rise to US$15,000/t by 2016 (in 2011 dollar terms), eclipsing the US$13,000/t peak witnessed in 2011.

Antimony: Global Industry Markets & Outlook (11th edition) is available at £3500 / US$5800 / €4600 from Roskill Information Services Ltd, 54 Russell Road, London SW19 1QL UK.

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