01 Dec 2007 Price Increases and shortages of Refractory Bauxite
DSF refractories & Minerals is one of the largest users of refractory bauxite in the UK. Some is used in our refractory production, with the majority processed for onward sale into the refractories, road surfacing, welding and other industries.
DSF have been taking Chinese and Guyanese Bauxite's since the 1960s. The increases we are currently experiencing are unprecedented in this time.
We believe we have secured a supply of material for 2008, but the cost increases will severely impact on our prices for processed bauxite's and our bauxite based refractories.
Chinese Shaft Kiln Bauxite
It has been predicted for many years that on environmental grounds production of Chinese Shaft kiln bauxite would cease. This has now happened, except for a few illegal kilns, and we have taken delivery of our last consignment of Chinese "buff" shaft kiln bauxite. Once this is sold there will be no more available!
Chinese Rotary Kiln Bauxite
There has been a substantial increase in the capacity of rotary calcined bauxite production, but insufficient to replace the lost tonnages of shaft kiln and round kiln bauxites. The Chinese economy is booming and domestic demand for bauxite is very high and rapidly increasing. Bauxite is used in refractories for the steel and cement industries and for aluminium and alumina production.
This has lead to shortages and the resultant increasing prices. The Chinese government is trying to limit exports of raw materials and concentrate more on finished goods; the removal of export tax credits and tax changes have increased the price still further plus the continuing escalating fuel costs make the situation worse. Some prices have risen by over 100% during 2007
A controlling interest in the Guyanan bauxite operation was sold by the Canadian company Cambior to the Chinese minerals company Bosai Minerals during 2007. There had been a substantial investment in the business by Cambior to increase production and this will continue under Bosai's ownership.
Capacity has increased, but the output is small compared to that available from China. Increases in fuel costs have caused a dramatic increase in production costs as the kilns are fired using oil.
In order to fund investment and to cover the escalating cost of fuel, bauxite prices have risen by more than 80% with further increases likely.
Increases in freight costs and difficulties in finding vessels have also added to the prices of Bauxite. This is a worldwide problem that has affected other minerals and products besides bauxite resulting in some very large increases which we have no alternative but to pass on.