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IM outlines a transparent guide to the opaque world of industrial minerals prices and contracts
Clarity and transparency are not two words that spring to mind when talking about industrial minerals pricing as a whole. Within the industry, there is a wide range of pricing mechanisms and contracts but to an outsider looking in trying to track the health of an industry through any sort of benchmarks, industrial minerals pricing appears almost a black art.
This article looks at the world of industrial mineral pricing, recent trends within different sectors and the parameters that can be incorporated into a mineral price. Industrial mineral pricing is changing, increasingly being shaped by technology and the ease of communications across the globe. Add to this the fact that mineral suppliers often operate in global markets, incidents which can be natural or government-led in one country can have far-reaching implications in the marketplace.
That said, there are still many operators selling on no more than a handshake to local markets, with prices almost literally scribbled on the back of an envelope. From one extreme to another, it certainly means that industrial minerals pricing is not always straightforward, particularly when compared to metals pricing on an exchange, which it often can be as investors seek parallels between industry sectors.
Fixed or formal exchanges
Neodymium oxide, 99% large purchases, FOB China ($/kg)
Solid lines = top of range; broken lines = bottom of range
Many other commodity sectors such as grain, oil, and metals have quoted prices in a futures or formal exchange, for example, the non-ferrous metals, steel and plastics on the London Metal Exchange (LME).
The LME publishes a set of daily reference prices based on the most liquid trading sessions of the day and also provides a transparent forum for the trading of futures contacts. A combination of these two factors means that the daily prices published by the exchange are then used globally as the basis of price negotiations for the physical sale or purchase of non-ferrous metal, steel and plastics commodities.
Antimony trioxide typically 99.5% SbO3, 5 tonne lots, CIF Antwerp/Rotterdam, $/tonne
Solid lines = top of range; broken lines = bottom of range In the case of the LME, it also offers clients a physical...