“>The year 2023 witnessed the industrial minerals market navigating a complex landscape of geopolitical tensions, fluctuating supply and demand, and potential risks from China. Let’s explore three key factors that had a significant influence on the market and may continue todo so in 2024.
Regional Conflicts
Russia’s war in Ukraine and the Gaza conflict profoundly impact the global industrial minerals market
The Russian invasion has caused mine closures, infrastructure damage, and logistical obstacles that have greatly reduced production and exports from Ukraine. It has created shortages of certain minerals and forced consumers to seek alternative sources, often at higher prices due to disrupted logistics and supply chains. This is particularly true for minerals that Ukraine has in abundance, including Iron ore, Manganese ore, Titanium and Zirconium minerals, Graphite, Ball Clay, and Kaolin.
Due to the conflict in the Middle East, some ships are trying to reroute around Africa, by passing the Suez Canal to avoid attacks by Houthi rebels. This longer route has resulted in increased container shipping costs. For instance, the price of shipping a container from China to the Mediterranean increased by 44% in December. The Gaza conflict like any other regional conflict will keep impacting global trade as long as they continue.
The Oversupply Situation
In 2023, oversupply emerged as a significant factor impacting the mineral market. Several reasons contributed to this, including the global economy’s slowdown, increased mineral extraction from new mines, and geopolitical tensions. The oversupply led to a decrease in mineral prices, making it harder for companies to profit.
For instance, Nickel prices have dropped due to excessive supply from Indonesia and a slowdown in the Chinese property market. Similarly, weak demand from China has led to depressed Manganese prices as the Chinese housing industry adjusts after years of overbuilding and excess supply.
Additionally, the London Metal Exchange (LME) has observed Zinc as the second-lowest performer this year. Following two years of supply deficit, the Zinc market transitioned to an oversupply due to lower-than-expected demand and higher-than-expected production. Forecasts indicate an expected further increase to 367,000 tons in 2024.
Another factor is the Chinese mining in Africa. China has been the top destination for minerals exported from Africa. However, China has recently acquired mineral deposits, such as Lithium Ore, Titanium, and Zirconium, in the same regions and no longer requires big supplies from previous companies. This has contributed to the oversupply situation, as these mineral providers now need to find alternative destinations to ship their minerals to.
China’s Influence
China plays a major role in global metal and mineral production by mining about 63% of all rare earths and producing other important resources like Zinc, Gold, Aluminum, and Lead. However, there are two concerns that have influenced 2023 and may shape the coming year: tension between China and Taiwan and China’s threat to ban critical minerals exports.
The first issue could affect maritime trade as commercial shipping routes rely on maritime access surrounding China. Meanwhile, the potential ban might impact prices and the supply chain.
While these are just concerns, companies should consider alternative commodity suppliers as a Plan B. It’s always a good idea to have a well-defined and effective plan that has been clearly communicated to your team.
As we look towards 2024, it might seem uncertain but there are also opportunities for those who are prepared. By diversifying supply chains, implementing strategic planning, and remaining adaptable, companies in the industrial minerals sector can weather any storm and emerge stronger.
This material is provided by Ievgen Kondakov, Founder & CEO of Mineral Global Trading, a trading, logistics, and consulting group that specializes in supplying industrial minerals to industries such as ceramics, glass, metallurgy, polymers, and coating.
Sources:
Metals and the invasion: Ukraine aims for critical minerals after the war
Industrial mineral supply disruption: Ukraine crisis
Zinc market shifts to oversupply but where’s the metal
The Critical Minerals Institute October Report: A slowing global economy continues to temper demand
Why is lithium price dropping 2023?
China’s Threat to Ban Critical Minerals Exports Is a Bluff
Red Sea attacks make Suez Canal traffic perilous, companies reroute shipments while costs rise
