Ceramic Industry

Global Niobium Demand Expected to Recover Early (posted 3/24/09)

March 24, 2009

According to “The Economics of Niobium (11th Edition) 2009,” a new report from Roskill Information Services, demand for niobium (Nb) has seen enormous growth in recent years. At about 58,000 t contained Nb, processors' shipments in 2007 were double those in 2003. That trend continued into early 2008, with first-half shipments up 18% compared to the first half of 2007 and 12% vs. second-half 2007 (although primary production was down by 13%).

The niobium market is not, however, immune to global economic turndown, and with consumers both reducing purchases and running down inventories, total shipments for 2008 were probably little higher than in 2007. Demand in the first half of 2009 will very likely be flat, at best.

Global GDP and industrial production are expected to enter a recovery phase in 2010. Metal markets will tend to begin re-stocking before that, and Roskill predicts that demand for niobium will pick up as early as the third quarter of 2009 and quickly return to a growth trend. Niobium producers are well-placed to supply the world’s ferro-niobium needs for the foreseeable future. Several new tantalum-niobium projects are also expected to become operational over the next year or two.

The recent large increases in niobium consumption have not come as a result of new applications. The principal markets (HSLA steels, stainless steels and superalloys) are essentially the same as they have been for years. Growth has come not only from the overall rise in global production of these materials, but also from the greater penetration of niobium in markets where it is already well-established and often irreplaceable.

There is good scope for niobium consumption to grow considerably in some parts of the world. In 2008, the overall unit consumption of niobium in steel was around 55-60 g/t of steel produced. In the most highly developed countries, the figure was 100 g/t or more, whereas in China only around 40 g/t were consumed. There would therefore appear to be significant potential for the increased use of niobium. While in 2008, about 10% of the steel produced globally contained niobium, that share could rise to as much as 20% in the future.

Key characteristics of the niobium market are the important role played by long-term contracts, which now cover about 95% of total sales, and highly stable prices. From the early 1990s to the mid-2000s, the average export price for Brazilian ferro-niobium remained within the range of $12,500-$13,500/t contained Nb. That changed in 2007, when prices for ferro-niobium and other niobium products began to climb sharply. Average import prices for ferro-niobium reported by major importing countries in 2008 were more than double those seen in 2006. In the case of Japan, the average price rose from about $9000/t (gross weight) to over $22,000/t.

Roskill's view is that the increase in price is not temporary. In real terms, niobium prices had been falling for years at the same time as demand was increasing and producers were expanding capacity, probably at considerable expense. An adjustment to the benchmark price at some point was inevitable. Niobium prices, particularly ferro-niobium prices, are likely to remain at about the level seen in late 2008 and early 2009, and will display little volatility in the coming years. Even at the higher price, niobium inputs constitute a very small part of total production costs in the main end-use markets, and the opportunities to substitute for niobium in most applications are very limited.

For additional information, e-mail info@roskill.co.uk or visit www.roskill.co.uk.

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