Zircon to go from oversupply to deficit in 10 years
Monday, 28 December 2009
Consumption in 2008 was virtually the same as in 2004 and 7.4 per cent below the record 2007 level, due to the sudden collapse of demand in the last quarter, as uncertainty gripped all markets. This trend continued into 2009, where a further decline in demand has occurred. However, there are signs of improvement as China, the largest market for zircon, leads a now-recovering world economy out of the crisis. On the supply side, where significant stocks had been built up in late 2008 and early 2009, production had to be adjusted downwards.
An detailed 322 page analysis by TZ Minerals International Pty Ltd details the expected transition from oversupply to significant structural deficit in the next decade. This shift in the market supply/demand balance holds consequences for all industry participants. TZMI expects the next decade to unfold in three phases.
Short-term zircon price weakness, but prices beyond US$1,000/t a medium-term reality
The first phase, starting in 2010, will be characterised by higher than normal opening inventory levels and a supply surplus with recovering demand. This situation is expected to last until 2012.
The second phase will be one of transition and likely to occur from 2012 until around 2015. In this phase the market is expected to achieve balance with growth in zircon demand and a flat supply level. Few new projects are expected to contribute to zircon supply and some decline is predicted from existing operations.
The timing of the third phase is dependent on the relative movements of the supply and demand components of the zircon market and is likely to start before 2015. The third phase onset will be caused by significant reductions in output from existing producers and limited contribution from new projects. This phase will see the market move into structural deficit.
The zircon price is not expected to fully react to the supply/demand situation in the short term as a result of pricing discipline by some of the leading zircon producers.
An detailed 322 page analysis by TZ Minerals International Pty Ltd details the expected transition from oversupply to significant structural deficit in the next decade. This shift in the market supply/demand balance holds consequences for all industry participants. TZMI expects the next decade to unfold in three phases.
Short-term zircon price weakness, but prices beyond US$1,000/t a medium-term reality
The first phase, starting in 2010, will be characterised by higher than normal opening inventory levels and a supply surplus with recovering demand. This situation is expected to last until 2012.
The second phase will be one of transition and likely to occur from 2012 until around 2015. In this phase the market is expected to achieve balance with growth in zircon demand and a flat supply level. Few new projects are expected to contribute to zircon supply and some decline is predicted from existing operations.
The timing of the third phase is dependent on the relative movements of the supply and demand components of the zircon market and is likely to start before 2015. The third phase onset will be caused by significant reductions in output from existing producers and limited contribution from new projects. This phase will see the market move into structural deficit.
The zircon price is not expected to fully react to the supply/demand situation in the short term as a result of pricing discipline by some of the leading zircon producers.