WEB SEMINAR Q&A: What will drive minor metals prices in 2019?

Date: Jan 18, 2019

Fastmarkets’ minor metals team answers some of the key questions raised during our recent web seminar, discussing recent market trends in minor metals, and the factors expected to drive price moves in 2019.

If you missed it, follow this link to listen to the free recording

Has smuggling affected any other metals apart from antimony? Is it only antimony that is being smuggled? 
It is not only antimony that is being smuggled through the illegal channel at the Chinese-Vietnamese border. There were five rounds of government operations against smuggled goods last year and more than 700 suspects were arrested. In the latest crackdown in December, more than 90,000 tonnes of goods were confiscated, including not only antimony but also waste plastics, slag as well as some exported ferro-silicon. 

But since the proportion of antimony that is being smuggled is the most significant compared with other markets, the effect on prices is most evident. For example, around 93% of Chinese antimony imported into the European Union was not included in China’s customs data during January-June period in 2017. 

You haven’t mentioned Fanya stocks at all. Do you expect it to have any effect on minor metals price this year? What is going to happen with the stocks held at Fanya’s warehouses? 
Until the case against the failed Chinese Fanya Exchange is completely resolved, the uncertainty surrounding the release of the inventories will of course continue to weigh on minor metals markets. Last year, concerns over the vast minor metals stocks the exchange holds re-emerged following the summer trial of suspects involved in the exchange. A verdict is yet to be made by the court with the questions of just how the investors will be paid back or how the stocks will be dealt with still looming over the market. 

According to our market sources, there are two potential scenarios. 

  • The government will either put the stocks on auction or sell them to one or a couple of major players, and/or… 
  • Fanya’s more valuable metals, such as indium, gallium and germanium, could be bought by China’s State Reserve Bureau (SRB), for strategic stockpiling.

There remains a third option that no announcement will be made, and the Fanya stocks will be released to the market quietly over a longer period of time. 

Whatever the case may be, market participants believe that the stocks of minor metals will be locked in the exchange’s warehouses until the end of the legal proceedings, which is not expected to come any time soon. 

Have you looked at the effect of tariffs on the cobalt market? 
Yes. In effect, tariffs on US imports of Chinese cobalt are likely to mean a shift in trade flows, and regional discounts and premiums for certain shapes and brands of metal while that happens. But in fact, as with some of the other minor metals markets, the cobalt market shifted last summer in anticipation of tariffs being introduced: Chinese suppliers with long-term agreements to supply US customers attempted to ship all cargoes under 2018’s long-term contracts to the US ahead of September. 

How would a no-deal Brexit affect Reach? 
The UK government published in September additional documentation on how the UK will manage chemical regulation if it is no longer part of the European Union’s Reach (Registration, Evaluation, Authorization and Restriction of Chemicals) legislation. According to this information, If the UK withdraws from the EU without a deal, the UK plans to replicate EU Reach in the form of a UK Reach. In this scenario, UK companies will need to transfer registrations to an EU company to continue to have access to the EU market. The UK and EU regulatory agencies would operate independently, which means that companies will have to register the same chemicals independently with both agencies. 

To read full article please click here