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Fluorspar Changes in the Fluorspar Market

| Editor: Wolfgang Ernhofer

HaloPolymer experts presented an analytical overview of the fluorspar global market. Main market trend, according to the company, is reducing volume of extracted raw materials in China and geographic shift in production.

World Mine Production and Reserves
World Mine Production and Reserves
(Source: U.S. Geological Survey, Mineral Commodity Summaries, January 2012)

Moscow/Russia – Fluorspar is the main raw material for the production of fluorinated chemicals (e.g. hydrogen fluoride, refrigerants, and fluoropolymers) used in automotive, electronics, and electrical engineering, chemicals and petrochemicals, construction industry, and other industries.

According to international experts, world fluorspar production reached 6.3 million tons over the last year, and China still holds the world leading position in the mining, sale and consumption of fluorspar. Its production volume of fluorspar is now 58% of the world production.

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HaloPolymer estimates a great demand for fluorspar due to increasing consumption in the global chemical industry by 2017. It is expected that the annual consumption growth will amount to 4-4.6%. This demand exceeds the volume which can be provided by supplies from China or through expansion of the existing facilities. Thus, there is a serious need for research and development of new fields to keep up with the growing demand for this raw material.

It should be noted that during the first quarter of 2011 fluorspar prices began to rise. Meanwhile, the prices of Chinese fluorspar increased particularly sharply due to the increased production costs, appreciation of RMB against U.S. dollar, and growing demand per se. At the same time, there are minor variations in the prices for Chinese fluorspar caused by the reduction in demand for its derivatives, such as fluoropolymers, in particular.

New Fluorspar Markets

The experts underline that the situation has been changing over the last years, and due to imposition of the tax on extraction of natural resources and due to reduction of spar production in China, the new players have been penetrating the spar market: Mexico, South Africa, Mongolia, and Spain. Taking into account competition in the market and the need for new investments in mining and enrichment of fluorspar, as well as weakening of the role of China, a further price increase for the years to come is predicted.

According to the experts, one of the ways for the manufacturers of fluorochemicals to remain competitive in their industry is to provide themselves with their own spar stock, which involves vertical integration into raw materials – creation of a raw materials supplies base.

Raw materials manufacturers as well as finished goods suggest the integration as the most stable and long-term development prospect. Along with the assumptions of many research companies in 2011, HaloPolymer's experts believe that vertical integration is a real way to reduce production cost. Moreover, it is becoming a necessity for participants of the fluoropolymer market to maintain their market share and competitiveness, as some large manufacturers have already integrated in raw materials.

According to the General Director of HaloPolymer, Maxim Doroshkevich, "The manufacturers of fluorinated products suggest vertical integration as a way of stable access to the source of the main raw material, ability to control the quality of products and reduce costs".

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