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[November 2003]
Kaolin Producers Under Pressure
A new report from Roskill says that for the past 20 years kaolin has faced increasing competition from calcium carbonates. 'The Economics of Kaolin (11th edition, 2003)' says that in the second half of the 1990s, kaolin producers experienced a downturn in demand in Asia, which had been a major growth area. An increase in the supply of low cost, high grade kaolin from Brazil put further pressure on suppliers in the USA and Western Europe. Mergers and acquisitions followed and majors such as Imerys diversified into the calcium carbonate market to broaden their base.
The report says that kaolin companies have come under pressure from consumers to offer a wider range of grades, mainly in paper and ceramics. This has been reinforced by advances in processing technology, which allow the production of grades with ever tighter specifications. Producers have generally been unable to charge significantly higher prices for these products, which cost more to process than traditional products.
The ability of a kaolin company to offer a large number of grades to a number of industries spreads the risk of a reduction in market share in any one particular application but requires greater investment. Only the large companies have the resources to research and develop a full range of kaolin products, but smaller companies can specialise in certain markets, especially ceramics and rubber.
Geographically, kaolin production has changed over the last decade with the development of three large operations in Brazil, one controlled by Imerys and the others by CVRD and its partners. Prior to this, the majority of kaolin was produced in the USA and Europe, especially the USA. Kaolin production in Brazil grew by an average of 8.3% per year between 1990 and 2002.
As far the ceramic market is concerned, the report says that the Asian crisis of 1997-98 caused a temporary fall in the region's demand for kaolin, but many Asian ceramic producers have taken advantage of currency devaluations to increase exports. The rise in ceramic production was an important reason for the increase in regional kaolin consumption in the 1990s. The report says that as the Asian ceramic output continues to recover, this sector may well be the fastest growing market for kaolin.
The report costs 1400/US$2800/€2450. For ordering details, e-mail: info@roskill.co.uk
ENDS