Antimony may extend its rally to a record in China after Hunan, the country’s largest producer, moved to curb output as part of the central government’s plan to protect the country’s resources.
The metal, used in car batteries and as a flame retardant in electrical appliances, surged 66 percent this year to reach a record 71,000 yuan ($10,461) a metric ton in Changjiang, Shanghai’s biggest cash market, on Sept. 2. Ingot with a minimum purity of 99.85 percent, the main industrial grade, traded between 70,000 yuan and 71,000 yuan yesterday.
“Hunan has begun cracking down on production, particularly in the biggest producing region of Lengshuijiang, and this has again brought attention on tighter antimony supplies from China,” Peng Bo, an analyst at Guosen Securities Co., said from Shenzhen. “We don’t rule out higher prices from here. If BHP can dominate the potash market, China is also free to protect its own interests.”
China, which accounted for about 90 percent of global antimony output last year, according to the U.S. Geological Survey, curbed shipment and production of minor metals this year to protect its resources and limit pollution. The land ministry cut export quotas and said it stopped accepting applications for new antimony and tungsten mines.
“Antimony ore supply has been tight for most of this year,” said Yang Xueling, senior antimony analyst at Beijing Antaike Information Development Co. “It’s all to do with the demand and supply fundamentals. Supply is drying up, while downstream consumption remains robust.”
Almost all antimony smelters in central Hunan’s Lengshuijiang city were shut this year for safety inspections after thousands of children were poisoned by pollution from lead smelters, Antaike said. Producers will be merged and qualified companies must reach a minimum annual capacity of 5,000 tons and meet emissions standards, the city government said.
“Prices reached a high in May as smelters in Lengshuijiang were shut,” said Geng Nuo, Beijing-based analyst at Great Wall Securities Co. “The market stabilized during the slow summer- demand period and may now be ready for another move higher.”
Producers of antimony, tungsten and rare earth must sign an agreement to keep within a production quota, the China Land Resource Network said on Aug. 31, citing the Hunan branch of the Ministry of Land and Resources. In March, China capped this year’s antimony output at 100,000 tons, compared with 90,180 tons in 2009.
Companies that don’t comply with the quotas will be investigated and have their production permits canceled, the report said.
China’s production of antimony, including compounds containing the silvery-white metal, was about 110,000 tons in 2009, Antaike said. China mined 89,400 tons in the first six months of this year, World Bureau of Metal Statistics data show. The metal, which is also mined in Bolivia, Russia, South Africa and Tajikistan, is used by the chemicals, ceramics and glass industries.
Higher prices are benefiting Chenzhou Mining Group Co., the world’s second-largest producer. Shares of Chenzhou Mining have jumped 40 percent in the past month, reflecting concerns that supply may not keep pace with demand. Both Guosen’s Peng and Great Wall’s Geng recommend holding the stock.
Antimony prices in Changjiang reached 67,000 yuan a ton on May 10 as consumers stockpiled the metal in anticipation of lower supplies, and fell to 55,000 yuan by the end of June, according to researcher and information provider Shanghai Metals Market.
“Prices in May fell short of our target of 70,000 yuan and have finally reached those levels,” said Wang Wei, an antimony analyst at Shanghai Metals Market. “As long as the economy holds up, prices may well be set for another rally.”