Output cuts to support China antimony market

Chinese antimony prices are expected to hold firm on smelter shutdowns in the country's major producing area, despite lower demand from downstream sectors and higher spot availability of metal and ore feedstock.

All seven private-sector antimony producers in China's major producing region Lengshuijiang in central China's Hunan province have halted production this month, after the local government required one producer to comply with environmental regulations.

The government has yet to order all the seven smelters to shut down as antimony production is the mainstay industry in the local economy. But the other six smelters voluntarily suspended production to stabilise the market.

Sanjiu Antimony, Senyi Antimony, Guangrong Antimony, Xinghua Nonferrous, Yanshan Antimony, Zhirong Antimony and Xiangfeng Antimony have a combined output capacity of 41,000 t/yr for antimony metal, accounting for 35pc of China's total production.

The closures will last for three months and all the smelters have run out of inventories. This is expected to prevent prices from falling further as the smelters are expected to scale back sales in the next few days.

Prices for 99.65pc metal has fallen a 31-month low of 42,000-44,000 yuan/t ($6,250-6,550/t) after falling consecutively for six weeks since 21 February when market participants returned from the lunar new year and lantern festival holidays. Low restocking interest from trading companies and consumers prompted metal and trioxide producers to reduce prices to attract sales because of ample stocks.

High availability of imported antimony concentrate pushed domestic ore producers to lower offer prices to reduce inventories. Increased supplies and weak buying interest pulled concentrate prices down by Yn4,500/t after the lunar new year holiday.

China produced 9,700t of antimony concentrate during January-February, up by 7.2pc from a year earlier. Metal production reached 13,730t in the two-month period, up by 91.9pc from the same period in 2018.

The country's concentrate imports rose by 37pc from a year earlier to 4,680t in February. Imports during January-February fell slightly by 8.6pc to 14,120t.

Domestic concentrate output and imports are estimated to rise further in March, which may lead to surplus supplies, while downstream demand from the flame retardant and battery alloy industries has remained flat since the start 2019.

China's cut in its value-added tax to 13pc from 16pc effective 1 April has created profit margins for several producers to reduce prices to generate cash flow, which has weighed on prices.