Three studies published by Roskill Information Services of London look at the fortunes of the industrial minerals magnesium, kaolin and natural graphite.
Magnesium, according to Roskill, always generates considerable interest in the metal markets. Prospects for the magnesium die casting industry appear good, with increasing offtake from the automobile industry as manufacturers struggle to lighten cars in an attempt to conform to ever-tightening fuel economy and emission legislation.
However, the research firm’s The Economics of Magnesium Metal 1991 says that environmental legislation may also be responsible for a reduction in demand for magnesium, in the desulphurization of steel.
The outlook for primary magnesium looks brightest in die casting applications, where the motor industry provides the largest market and the greatest growth potential. Roskill estimates that in 1990, an average of 4.5 lb. of magnesium per car were used in North America, compared with 1.6 lb. in 1985.
While environmental legislation could increase magnesium demand in automotive applications, it is predicted to have the opposite effect in steel desulphurization. This market has shown a substantial increase over the past decade, and may still continue to increase outside North America, but the long-term prospects for growth in magnesium demand for desulphurizing steel are not good.
According to Roskill, legislation will severely limit the allowable emissions of sulphur dioxide from steel plants, requiring the reduction of sulphur in raw materials and leading to a long-term decline in magnesium demand for this application.
With future demand for magnesium in aluminum alloys dependent on the prospects for aluminum, only a modest rate of growth is expected. This prediction is based on the importance of aluminum beverage cans in this end-use sector: the high level of substitution of aluminum for steel cans in the U.S. has reached the near-saturation point, while in Japan and Australia substitution is diminishing and recycling increasing.
In Europe the level of substitution is quite low and the position of steel and glass containers is likely to remain very strong, with only limited substitution by aluminum in the near future.
World production of kaolin has shown average growth of 4.5% per annum since 1985. However, according to Roskill’s The Economics of Kaolin 1991, world output increased by only 2% between 1988 and 1989, and preliminary indications for 1990 suggest that growth in output has slowed further. Future growth in demand for kaolin will be closely linked to the performance of the paper industry.
The strong growth in demand for kaolin seen in the late 1980s has come largely from the paper industry, which accounted for 50% of world consumption of kaolin in 1989. Demand for kaolin in paper increased by almost 9% per annum from 8.9 million tonnes in 1985 to 12.5 million tonnes in 1989. Forecasts made at the end of 1990 predicted growth of 6% per annum for production of coated printing and writing papers in western Europe to 1994. Using these forecasts, world demand for kaolin could reach up to 16 million tonnes by 1994. However, given the current recession in most economies, these forecasts seem optimistic and Roskill predicts that growth in paper production and consequently demand for kaolin will be more modest than forecast.
This year could mark the beginning of a new phase for natural graphite supply, according to Roskill. Growth in demand for natural graphite, which was strong throughout the late 1980s, mainly due to increasing demand for refractories from the steel industry, is now slowing down as recession affects many major graphite consuming countries.
New flake graphite production capacity, which was stimulated by the sharp rise in prices for certain graphite grades between 1988 and 1990, now threatens to tip the balance of world natural graphite markets into slight oversupply.
Although natural graphite is mined in many countries, supply of flake graphite has in recent years been dominated by China, which provided an estimated 65% of the 200,000 tonnes per annum traded in the 1980s. This development creates the potential for major problems for graphite users, who have to rely on one source of supply, and allows China to exert undue influence on the supply of raw material that is essential to a key industry such as steel production.
Roskill’s Natural Graphite 1991 says that expected growth areas for natural graphite consumption are in the use of flake graphite. Growing markets include exfoliated flake graphite rolled into sheet for the manufacture of gaskets and seals used in the automotive industry, and in the form of expanded graphite for use as a fire retardant in foam-filled furniture; high-alumina and magnesia graphite bricks for the refractory industry; zirconia-graphite; alumina-graphite refractories; and friction materials. Other growing markets are high purity graphite for speciality applications, metal powders and motor brushes.
Demand for graphite has grown rapidly during the last five years in refractories for the iron and steel industry, in the fire retardant industries and as an asbestos replacement in brake linings and gaskets. However, Roskill says this growth seems to have reached a plateau and that further significant growth will be seen only in the high-value, low-volume applications such as new hi-tech materials.
Be the first to comment on "Supply-demand equations shifting for industrial minerals"