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[July 2004]
Zircon Prices Continue to Rise as Demand Exceeds Supply
Roskill Information Services Ltd (London, England) has forecast in its new report that the global zircon shortfall could be more than 100,000 tons in 2005 and some industry observers believe that, even if the planned mineral sands projects come into production over the next 10 years, demand will outstrip supply.
However, the report explains that the shortage of zircon is not a reflection of the mineral's availability - mineable reserves are sufficient to sustain current levels of output for over 30 years - but is largely a result of mineral sands production. Zircon is extracted as a co-product or by-product of titanium minerals, the market for which is over-supplied. Global demand for TiO2 feedstock thus has a major effect on both the production of zircon and the viability of new mining projects.
If zircon production does not increase to meet the expanding demand, prices will continue to rise to a point where consumers in one or more industries may switch to using alternative materials. Such a shift has taken place before. In the mid-1980s raw material shortages and spiralling prices led manufacturers of refractories in Japan to substitute alumina spinel for zircon in many applications. The result was a sharp decline in demand for zircon in refractories that has never been reversed.
In the ceramic industry, says the report, zircon is generally regarded as having no substitute as an opacifier. Should the price continue to rise, however, zircon millers will have little choice but to pass on the increases they have so far been absorbing and ceramic manufacturers will come under strong pressure to find alternatives.
Prices for zircon sand have been rising since 1999. Since the beginning of 2003, ceramic grade zircon sand prices have increased by nearly 25% - from US$370-400/t to US$450-500/t in June 2003, reflecting tight supply.
Over the same period the price for opacifier-grade milled zircon has increased from US$600-620/t to US$680-720/t, a rather lower rate of increase. This indicates the strong competition between zircon milling companies in the west and their need to remain competitive in an industry facing a strong challenge from China.
The report - The Economics of Zirconium (11th edition, 2004) contains 251 pages, 175 tables and 23 figures and is available at a cost of 1950/US$3900/€3415. E-mail info@roskill.co.uk for more details.
ENDS