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Although the U.S. recession officially ended in November 2001, economic recovery over the past couple of years has been sluggish. As a result, consumption of many raw and manufactured materials were flat to slightly lower in many industrial segments in 2002. However, the ceramic industry appears to have bucked this trend, with material consumption in some segments-particularly pottery, tile and refractories-posting double-digit increases. Consumption in many other ceramic segments was also higher. While 2003 figures were not yet available at the time this article was written, the continued strength of the building industry, combined with solid gains in gross domestic product figures, likely provided an additional boost to the ceramic industry. The worldwide economy has also begun to stabilize, which could provide increased opportunities on a global scale.
Following is an overview of how some specific material sectors fared in 2002, along with their prospects for the near future.
AbrasivesEstimated production of regular-grade fused aluminum oxide (Al2O3) in the U.S. and Canada in 2002 was 20,000 metric tons (t) with an estimated value of $5.3 million. This was a decrease of about 60% by weight from the 2001 regular-grade fused Al2O3 production, largely due to a strike by workers at Washington Mills Ltd. in Niagara Falls, N.Y., that began in the third quarter of 2001 and lasted throughout 2002. Data on the production of high-purity fused Al2O3 could not be obtained. The total value of fused Al2O3 abrasive grain consumed in the U.S. was estimated to be $35 million in 2002-nearly a 45% decrease from 2001. Exports of fused aluminum oxide increased 15% to 10,300 t in 2002, and the value of those exports increased by 19% to $31.4 million. Of the exports shipped to 32 countries, 77% went to Canada, Germany and Mexico. Imports of crude fused aluminum oxide were received from 14 countries and decreased by 16% to 82,900 t valued at $20.2 million compared with those of 2001. Imports of ground and refined fused aluminum oxide were received from 24 countries and decreased by 8% to 95,900 t valued at $47.5 million. Some of the imported crude fused aluminum oxide was refractory-grade material. China, Canada and Venezuela supplied 63%, 21% and 16%, respectively, of the crude imports; while China, Germany, Austria, Brazil and Canada provided 70%, 7%, 6%, 5% and 4%, respectively, of the ground and refined material. Compared with 2001, ground and refined imports from China increased by 18%, while imports from Canada, Austria, Brazil and Germany decreased by 80%, 18%, 8% and 6%, respectively.
Production of silicon carbide (SiC) in the U.S. and Canada decreased 25% during 2002 to an estimated 30,000 t valued at $15.9 million, compared with an estimated 40,000 t valued at $24 million in 2001. However, the total value of SiC consumed in the U.S. was estimated to be more than $99 million in 2002-nearly a 27% increase from 2001. Much of this increase in consumption was filled by imports-imports of crude SiC increased by 26% during the year to 134,000 t valued at $42.6 million, while imports of SiC in ground or refined form increased by 15% to 30,600 t valued at $37.1 million. China accounted for 95% of the crude silicon carbide imports and 35% of the ground or refined SiC. However, a large portion of the Chinese imports reportedly included metallurgical-grade material.
SiC exports from the U.S. and Canada were also higher-the total value of crude silicon carbide exports increased by 16% to $3.36 million, while exports of refined or ground SiC increased by about 32% to 13,000 t valued at $8.96 million.
U.S. production of industrial diamond in 2002 rose 0.6% to an estimated 310 million carats. The U.S. remained the world's largest market for industrial diamond; however, U.S. apparent consumption declined 16% to 432 million carats. Much of this decline was likely in areas outside the ceramic markets, including stone cutting and highway building and repair.
According to a recent study by The Freedonia Group, demand for abrasives in the U.S. is projected to increase 3.5% annually to more than $5.3 billion in 2007.1 The increase is based largely on better fundamentals for many of the key markets in which abrasives are used-particularly the durable goods markets, which make up about three-quarters of total abrasive demand. The best growth opportunities will be found in the electrical and electronics market, which is expected to see gains of more than 9% per year through 2007. Some of these gains will result from an improved outlook for electronic products in general, as the U.S. recovers from the bursting of the tech bubble at the end of the 1990s. However, by far the more important demand driver will be improvements in and a greater acceptance of chemical mechanical polishing (CMP) processes in electronic component production.
Increased competition from certain types of abrasives from low-labor-cost countries, particularly China, will prevent prices from rising greatly. However, such competition is also likely to force additional consolidation among the traditional suppliers in the Western industrialized nations, which could lead to fewer product advances and reduced customer service in the future.
Bauxite and AluminaWorld production of bauxite increased 5% in 2002 compared to 2001, with Australia, Brazil, Guinea and Jamaica accounting for about two-thirds of the total mined bauxite. In the U.S., nearly all bauxite consumed is imported; of the total imported in 2002, about 95% was converted to alumina. While overall consumption of bauxite in the U.S. was higher, bauxite for refractory uses declined by about 34% to 115,000 t (dry equivalent), compared to 175,000 t in 2001.
In the first six months of 2003 (the latest period for which data are available), imports of crude and dried bauxite in the U.S. increased 5% over the same period in 2002 to 3.9 Mt. Imports of calcined bauxite also increased by 43% to 157,000 t. Imports of alumina, however, were down 22% to 1.2 Mt. Domestic production figures for alumina could not be obtained, so it is uncertain whether the decrease in imports signified a drop in demand or an increase in domestic production.
World output of alumina increased 4% in 2002 compared to 2001, with Australia, China, the U.S. and Brazil (in descending order of output) accounting for almost 60% of the world's total production. U.S. production of alumina was essentially unchanged from 2001, and about half of its required alumina was imported. Of the total alumina used in the U.S., about 91% went to primary aluminum smelters, while the remainder went to nonmetallurgical uses such as abrasives, chemicals, refractories and advanced ceramics.
According to a report from The Freedonia Group, demand for advanced ceramics in the U.S. is forecast to increase 9.2% per year over the next several years to reach $11.6 billion in 2007.2 However, the increasing popularity of higher performing materials, such as ferrite, titanate and cordierite, could limit the growth potential for alumina materials in this market.
Bauxite resources worldwide are estimated to be 55 to 75 billion tons and are located in South America (33%), Africa (27%), Asia (17%), Oceania (13%) and elsewhere (10%). Resources of bauxite in the U.S. are inadequate to meet long-term demand, but the U.S. and most other major aluminum-producing countries have essentially inexhaustible resources of aluminum in materials other than bauxite. Many industry observers believe that there could be significant growth in worldwide aluminum demand over the next few years; however, supply expansions, especially in China, are expected to more than meet the increase in demand.
BoronBoron produced domestically during 2002 totaled 1.05 million metric tons (Mt), about the same as in 2001. The value, however, was slightly higher at $513 million, vs. $506 million the previous year, while the boron oxide content was about 3.4% lower at 518,000 t. U.S. exports of boric acid were down slightly (1.3%) to 84,400 t, while imports declined by about 13% to 48,500 t. The U.S. and Turkey remained the world's largest producers of boron in 2002.
U.S. consumption based on boric acid content was up 3% over 2001 levels to 359,000 t. The glass industry remained the largest market for boron production and again accounted for 78% of total consumption. Insulation-grade glass fibers accounted for an estimated 50% of domestic consumption (up 2% from 2001); textile-grade glass fibers, 19% (down 1%); boron sold to distributors, 8% (unchanged); soaps and detergents, 6% (unchanged); borosilicate glasses, 5% (up 1%); enamels, frits and glazes, 4% (unchanged); and other uses, 8% (unchanged).
Rio Tinto Borax, a leading supplier of refined borates and reportedly the world's largest boric acid supplier, announced plans in August 2003 to increase its boric acid production capacity by 90,000 to 100,000 metric tons by 2005. This increase is in response to growing global demand and will bring the company's total global boric acid production to more than 360,000 metric tons per year. The company reported that manufacturers in established markets such as reinforcement fiberglass and ceramic frits are increasingly converting from mineral feedstock to refined boric acid-or increasing boric acid concentrations-to lower energy use and improve product performance. Demand increases are also being driven by modest regional economic recovery; growth in existing markets; and promising development of new applications for boric acid, such as fuel cells.
ClaysTotal U.S. production of clays-including ball clay, bentonite, common clay and shale, fire clay, fuller's earth, and kaolin-decreased by about 0.7% in 2002 to 39.3 Mt valued at $1.58 billion. This follows a 2.9% decrease in 2001 and a 3.3% decrease in 2000. While 2002 exports were basically in line with 2001 levels, imports rose by 31.8% to 217,000 t.
Production of ball clay in 2002 was up nearly 1% to 1.12 Mt valued at $47 million. While consumption declined slightly (0.4%) for sanitaryware, it increased for virtually all other ceramic applications, including floor and wall tile (up 2%); pottery (up 11.3%); refractories (up 1.4%); and miscellaneous ceramics, such as catalysts, electrical porcelain, fiberglass, fine china/dinnerware, glass, mineral wool and other products (up 20.1%). These gains were offset by declines in exports (down 19.8%) and miscellaneous uses such as fillers, extenders, binders and waterproofing seals (down 26.4%).
Production of bentonite was flat compared to 2001 levels; however, consumption in heavy clay products, chemical manufacturing and other unknown uses was up 22.5%. (A separate figure for bentonite consumption in heavy clay products alone could not be obtained.)
Production of common clay and shale was slightly lower (down 0.9%), possibly due to a slight decline in consumption for heavy clay products (down 1.1%) and ceramic floor and wall tile (down 5.4%). However, the amount of common clay and shale used in refractory applications increased 6.8% over 2001 levels. The amount of fire clay used in refractory applications was also higher-up 16.7% over the amount used for refractories in 2001.
The amount of kaolin produced in the U.S. in 2002 was slightly lower, down 1.2% to 8.01 Mt, with Georgia kaolin accounting for 85% of the total, South Carolina kaolin accounting for 4.6%, and other sources (including Alabama, Arkansas, California, Florida, Nevada, North Carolina, Tennessee and Texas) accounting for the remainder. Although production of air-floated and calcined kaolin increased (up 1.9% and 11.6%, respectively), these gains were offset by reductions in water-washed and delaminated kaolin (down 6.2% and 2.7%, respectively). Consumption of Georgia kaolin in ceramic and glass applications increased by 0.8% to 560,300 t, while consumption in refractories increased 48.8% to 258,000 t. Consumption in heavy clay products was unchanged from 2001 levels. South Carolina kaolin also saw an increase in consumption for ceramic uses (up 1.9% to 104,000 t). However, consumption for refractory applications decreased slightly (down 4.4%).
Overall U.S. kaolin consumption (from all regions) in ceramic applications increased by 8% in 2002 compared to 2001 levels, with the biggest gains in pottery (up 65.8%), floor and wall tile (up 36.8%) and electrical porcelain (up 16.4%). Consumption for sanitaryware and fine china/dinnerware also increased (up 4.8% and 4.0%, respectively), while consumption for ceramic roofing granules and catalysts (oil and gas refining) declined slightly (down 2.4% and 0.9%, respectively). Consumption of kaolin for refractories increased by 29.5% to 904,000 t, while consumption for common and face brick declined by 41.9% to 70,900 t.
U.S. exports of ball clay declined by 27% compared to 2001, with the biggest decrease (97%) coming from exports to Mexico. Exports of ball clay to Canada, however, increased by 37.3%, while exports to other countries remained about the same. Exports of other clays, including bentonite, fire clay and kaolin, were higher (up 13.1%, 5.2% and 6.5%, respectively).
U.S. imports of ball clay were also significantly lower, dropping 88.6% to 407 t compared to the 3570 t imported in 2001. Much of the decrease was due to a 90.1% decline in the amount of ball clay imported from the UK. However, imports of china clay or kaolin increased 27.9%, with the largest increase (27.5%) coming from Brazil.
Imports of bentonite were also significantly higher, increasing 85.3% over 2001 levels. While bentonite imports from Canada, Mexico, Italy and Spain increased slightly, the largest quantity (24,400 t) came from Greece. This country was not included in last year's data, which most likely accounts for the significant increase in 2002 bentonite imports.
Several trends in the U.S. point to increased consumption of clays for ceramic applications in the near future. First, the U.S. housing market stayed strong through 2003 and is expected to remain robust in 2004. Remodeling and renovation spending has also continued to increase. These trends bode well for clay producers selling into markets such as floor and wall tile, which are closely tied to the health of the building industry. The advanced ceramics markets are also expected to recover in 2004, which will boost demand for electrical porcelain and other high-purity clays. And as the overall economy continues to improve, the effects of higher consumer confidence will undoubtedly lead to increased sales of dinnerware, pottery and other decorative ceramic products.
However, an increasing number of ceramic manufacturers are shifting their production facilities to low-labor-cost regions, particularly Asia. According to a recent report from Roskill Information Services Ltd., Asia might well be the fastest growing market for kaolin3-and this will probably also hold true for other ceramic clays and materials.
Feldspar and Nepheline SyeniteThe amount of feldspar produced in the U.S. declined slightly in 2002 to 790,000 t, compared to 800,000 t produced in 2001. The amount of nepheline syenite imported for consumption also decreased, sliding from 336,000 t to 333,000 t. (Nepheline syenite is not produced in the U.S.)
Of the feldspar sold or used in the U.S., approximately 67% went into the production of glass, including glass containers and glass fiber-down 3% from 2001. Pottery (including electrical insulators, sanitaryware, tableware and tile) and other uses, such as fillers, accounted for the remaining 33%. Consumption data were not available for nepheline syenite.
The largest use for both feldspar and nepheline syenite is in glass containers, so future demand for both materials will depend to a large extent on the health of the glass container industry. A recent report from The Freedonia Group indicates that glass containers will continue to hold their own in the U.S. beverage sector through 2007, as glass takes an increasing amount of market share from metal cans in the premium beer market and growing "malternatives" segment.4 However, glass containers will experience little overall growth, since plastic containers will continue to be the container of choice for most other beverages. Freedonia forecasts that glass beverage containers will grow only 1.1% per year over the next five years, while plastic containers will grow 4.9% per year.
Ceramic tile might provide more growth potential. According to Robert Daniels, executive director of the Tile Council of America, U.S. consumption of ceramic tile is currently the lowest for any developed country (9.3 square feet per person per year, compared to southern Europe at over 40 square feet),5 which leaves significant room for improvement. Continued low interest rates could help fuel demand-thereby boosting demand for feldspar, nepheline syenite and other materials used to manufacture tile.
GraphiteNo natural graphite was mined in the U.S. in 2002, but the reported production of synthetic graphite was 256,000 t with an estimated value of $657 million-a decrease of 14% and 28%, respectively, compared to 2001. However, U.S. consumption of natural graphite increased by about 17% to 39,400 t in 2002 from 33,800 t in 2001. The crystalline grade increased in 2002 by nearly 17% to 17,500 t from 15,000 t in 2001, and the amorphous grade increased by more than 16% to 21,900 t in 2002 from 18,800 t in 2001. This increased use translated to about a 16% increase in total graphite value in 2002.
Three major industries-refractories, steelmaking, and brake linings-continued to dominate in graphite usage and accounted for more than 55% of the graphite consumed by U.S. industry in 2002. The foundries and lubricants industries together made up almost another 17% of U.S. graphite consumption. The refractories industry was the major consumer of crystalline flake graphite, increasing its graphite use nearly 6% compared with 2001.
Despite the increased consumption, total imports of natural graphite decreased in tonnage to 45,100 t in 2002 from 52,100 t in 2001, a decline of a little more than 13%, and the value declined to $22.3 million in 2002 from $23.3 million in 2001. The principal import sources of natural graphite, in descending order of tonnage, were China, Mexico, Canada and Brazil, which accounted for more than 70% of the value of total imports. Mexico continued to be the major supplier of amorphous graphite, and Sri Lanka provided the lump variety. A number of other producers supplied various types and grades of graphite to the U.S., among the more notable being China and Japan. Total graphite exports decrease about 11% in tonnage to 81,700 t valued at $99.6 million in 2002, compared with 91,900 t valued at $100 million in 2001.
World production of natural graphite decreased about 1% in 2002 to an estimated 813,000 t from 821,000 t in 2001. China maintained its position as the world's leading graphite producer with 450,000 t. India was the second largest graphite producer with 130,000 t, followed by Brazil, Canada, the Czech Republic, Mexico and North Korea, in decreasing order of tonnage produced. These seven countries accounted for more than 92% of the world production. Sri Lanka continued to account for nearly all the high-purity lump graphite produced, with deposits estimated to average 95% graphite in situ. China accounted for more than 55% of world production.
Many believe that the graphite market is a large growth industry, particularly in the high quality coarse crystalline flake used in the production of fuel cells. The refractory use trends of graphite will closely follow the events in the steel industry because it is mostly used in the manufacture of refractory brick used in iron and steel furnace linings. In December 2003, the Bush Administration decided to prematurely drop the steel tariffs implemented in March 2002 to stem the flood of low-priced imports, and this decision could have an adverse effect on the industry. However, the steel industry is reportedly working with the Administration to establish other protective measures against import surges.
Brake linings and other friction materials are expected to steadily consume more natural graphite as new automobile production continues to increase and more replacement parts are required for the growing number of vehicles. Flexible graphite products such as grafoil (a thin graphite cloth) will probably be the fastest growing market but will consume small amounts of natural graphite compared with major end-use markets, such as brake linings and refractories.
LithiumAlthough U.S. data for lithium production in 2002 were unavailable, consumption continued to decline, falling an estimated 21% to 1,100 t. This followed a 50% decrease in 2001. A decline in primary aluminum production, a major end use for lithium carbonate, has probably been partially responsible for the decrease. However, the largest use of lithium in the U.S. is in ceramic and glass manufacturing processes, so it is likely that demand was also weaker in these areas. (Specific data on glass and ceramic consumption could not be obtained.) Imports of lithium compounds also decreased by 4% in 2002 following a 31% decrease in 2001. An estimated 84% of lithium imports came from Chile, 9% came from Argentina and 7% from other countries. Lithium concentrates from Australia, Canada, and Zimbabwe were believed to have been consumed in the U.S., but no import data were available.
Total exports of lithium compounds from the U.S. increased by 9% compared with 2001. About 44% of all U.S. exports of lithium compounds were to Germany and Japan.
Worldwide, Chile, China and the U.S. were the leading producers of lithium carbonate, in decreasing order of quantity. Significant quantities of lithium compounds and concentrates also were produced in Argentina, Australia, Brazil, Canada, Portugal, Russia and Zimbabwe. Total production was down about 11.4% to 32,000 t, compared to the estimated 36,102 t produced in 2001.
In the U.S., the future health of the lithium industry remains closely tied to the performance of the primary aluminum and the ceramics and glass industries, as well as the U.S. economy in general. Recently there has been a push on the part of lithium suppliers to incorporate lithium in glass batches as a means to reduce energy consumption. According to Charles Merivale, senior vice president of Amalgamet Canada (a Division of Premetalco Inc.), "There are documented cases of glass and ceramic companies adding lithium to their batch and lowering melting/firing times and furnace temperatures, thereby conserving fuel."5 These cases suggest that as much as 5-10% of energy use can be saved through this simple measure. Lithium can also provide other benefits, such as increased production speeds and improved product quality. While the U.S. glass and ceramic manufacturers have so far been reluctant to consider the use of lithium as an energy-saving solution, this may change as companies are forced to look for more ways to reduce costs without compromising productivity and product quality.
Talc and PyrophylliteApproximately 791,000 t of talc valued at $76 million was sold, used or exported in 2002, an increase in tonnage from 784,000 t valued at $84.8 million in 2001. Domestic sales by U.S. producers declined to 629,000 t in 2002 from 671,000 t in 2001. Exports and imports increased to 166,000 t (up 17.5%) and 232,000 t (up 22.4%), respectively, while apparent consumption in the U.S. declined about 7.2% to 841,000 t. Talc was sold for paint, ceramics (sanitaryware, tile, etc.), paper, roofing, plastics, rubber, miscellaneous applications and cosmetics, in decreasing order of consumption. Sales for paper applications accounted for most of the decline; other applications (including ceramics) were relatively unchanged.
Of the 232,000 t of talc imported in 2002, an estimated 85,000 t was consumed in plastics; 40,000 t, paint; 22,000 t, cosmetics; 20,000 t, ceramics and refractory products; 14,000 t, paper; and 7,000 t, rubber. The remaining 44,000 t went to unknown uses.
Both production and sales of pyrophyllite increased in 2002. Pyrophyllite was used in refractory products, ceramics, paint, insecticides and rubber in decreasing order of consumption. Sales for paint and refractory products increased, while sales for ceramics, insecticides and rubber decreased. Ceramic and refractory uses accounted for more than 70% of domestic pyrophyllite sales.
China remained the world's leading producer of talc, followed by the U.S., India, France, Brazil (crude) and Australia. The Republic of Korea was the largest producer of pyrophyllite, followed by Japan and Brazil. China, Japan, the Republic of Korea and the U.S. produced 70% of the world's talc and pyrophyllite.
Future demand for both materials depends largely on the continued strength of the building industry. In the U.S., housing is expected to remain robust as interest rates stay relatively low, and the commercial and industrial building sectors are also expected to recover. In the refractories industry, higher-performance mag-carbon and dolomite-carbon products are increasingly being used in place of pyrophyllite, which could lead to declines in pyrophyllite demand in this sector.7
As with other materials, Asia is expected to offer significant growth opportunities. The region is currently estimated to account for more than 40% of world talc consumption and over 85% of pyrophyllite consumption, and these numbers will undoubtedly increase as the building and industrial sectors in Asia continue to grow.
WollastoniteU.S. wollastonite production in 2002 was essentially unchanged from that from 2001 and was estimated to be between 115,000 127,000 t. Consumption was also estimated to be about the same as in the previous year.
Imports were estimated to be between 2,500 and 3,000 t in 2002. The U.S. imported 600 t to 800 t from China, 1,400 t to 1,500 t from India and about 1,000 t from Mexico. However, Imports from China and Mexico were probably in the form of lower-value wollastonite grades. A small amount (about 115 t) of wollastonite was also imported from Finland. Exports were estimated to be between 4,500 t and 5,000 t in 2002, with the greatest portion of exports being shipped to the Netherlands.
Worldwide production of wollastonite was estimated to be between 550,000 t and 600,000 t in 2002, with China comprising about 53% of the total. India, the U.S., Mexico and Finland were the other key producers, in decreasing order of quantity.
The improving economy is expected to boost demand for wollastonite, especially in plastics. Although growth rates in the ceramic industry overall are expected to remain modest, consumption in Asia could see significant increases over the next several years.
ZirconiumU.S. production of milled zircon decreased by 37% to 37,000 t in 2002, while production of zirconium oxide (ZrO2) decreased by 18% to 17,600 t. Domestic production of zircon concentrate also decreased from 2001 levels. Demand for zircon, however, continued to increase, leading to a further tightening of supply. As a result, prices were also higher-the average value of imported ore and concentrates increased by 11.5% to $397 per metric ton in 2002, compared to $356 per ton in 2001. Although actual figures could not be obtained, domestic prices of standard- and premium-grade zircon were also higher as a result of a shortage in domestic supply and an increase in global demand. The greatest demand was from foreign markets for ceramics, especially in China and Europe.
Excluding U.S. production, world production of zirconium mineral concentrates in 2002 was estimated to be 756,000 t, a minor decrease compared with that of 2001. Australia and South Africa supplied about 87% of all production outside the U.S. World reserves of zircon are estimated to be 37 Mt of ZrO2, while identified world resources of zircon are about 72 Mt of ZrO2.
Demand is expected to increase an additional 3% to 5% per year during the next few years, which will push prices higher in the short term. Longer term, however, the zircon supply and demand are expected to be in closer balance as new deposits and plant expansions come online, especially in the U.S. and Australia. Expansions in supply are also expected in Mozambique and South Africa, and further exploration and development efforts are under way in Australia, Canada, India, Kenya, South Africa, the Ukraine and the U.S.