Antimony Prices in China May Extend Record on Supply Outlook

By Glenys Sim

May 13 (Bloomberg) -- Antimony, up by more than half this year, may extend record prices in China after the government moved to close illegal mines and smelters to curb pollution.

The metal, used in car batteries and as a flame retardant in electrical appliances, reached 67,000 yuan ($9,813) a metric ton in Changjiang, Shanghai’s biggest cash market, on May 10. Ingot with a minimum purity of 99.85 percent, the main industrial grade, traded between 64,500 yuan and 65,000 yuan a ton yesterday and has doubled in the past year.

“Antimony has had a phenomenal ascent as a result of a variety of reasons put together, which have resulted in concerns about supply tightness,” Yang Xueling, senior antimony analyst at Beijing Antaike Information Development Co., said by phone today. “Demand is steady and it doesn’t look like output is going to increase in the short-term.”

Antimony jumped 53 percent this year as China, the biggest producer and user of the metal, curbed output as the global economic recovery improved demand. An October accident at the mining operations of Hsikwangshan Twinkling Star Antimony Co. also lowered production.

Last month, the city government of Lengshuijiang in central Hunan province cut power supplies to smelters and shut mines for safety inspections as part of a crackdown after thousands of children were poisoned by pollution from lead smelters.

Producers will be consolidated and qualified companies must reach annual capacity of 5,000 tons and meet emission standards, the city government said. In March, the land ministry said it stopped accepting applications for new antimony mines to protect the country’s resources.

Drought, Correction

A drought in China’s southwest this year also contributed to the tightening supplies by reducing smelting in Yunnan and Guizhou, according to Founder Securities Co.

“We may see a correction very soon as speculators take profit and consumers buy from hand-to-mouth,” Founder’s Beijing-based analyst Deng Xinrong said yesterday. “After that, prices have the potential to go even higher because the supply situation doesn’t look like it will be solved anytime soon.”

Higher prices aren’t benefiting Hunan Nonferrous Metals Corp. and Chenzhou Mining Group Co., China’s two largest producers. Shares of Chenzhou Mining have fallen 12 percent this year, reflecting a slump in Chinese equities after the government moved to slow growth in the world’s largest metals user. Shares in Hunan Nonferrous, which owns Hsikwangshan Twinkling Star, are down 0.3 percent in Hong Kong.

The miners’ shares are being more influenced by external economic conditions and other financial markets rather than metal prices, according to Zhang Liyang, an analyst at Everbright Securities Co.

Antimony Consumption

China accounts for more than half of global antimony consumption, estimated at between 110,000 tons and 120,000 tons a year, according to Antaike’s Yang.

Its production, including compounds containing antimony, was about 110,000 tons, she said, making the industry worth about $1.04 billion at today’s prices. The silvery white metal is also used by the chemicals, ceramics and glass industries.

“In addition to curbs laid down by the government, a lot of producers cut output when the global economic downturn hit,” Founder’s Deng said. “Unlike base metals producers, minor metals producers don’t tend to bring capacity back online as quickly.”

--Editors: Gavin Evans, Matthew Oakley.

To contact the reporter for this story: Glenys Sim in Singapore at gsim4@bloomberg.net

To contact the editor responsible for this story: James Poole at jpoole4@bloomberg.net