China’s central government has taken aim at baijiu, the “national liquor” for its role in (charitably) oiling the wheels of business or (more sceptically) corruption.

And going down with it is one important sector for consumption in the 2,800 tpy selenium market.

Selenium is an element in virtually all clear glass production, from flat glass for windows in buildings and cars to container glass for bottles and jars. It is also used to produce darker glass for tinted windows in cars and buildings.

Baijiu distillers Wuliangye and Kweichou Moutai use selenium both to remove the greenish tint from their glass bottles and in a glaze for their ceramic bottles, according to sources in the glass industry.

Fewer premium bottles at banquets

China’s anti-corruption campaign is gathering steam. There are daily announcements of high-flying business executives and political officials who have been brought down under he new regime.  

Lavish Chinese banquets at which the price of a bottle of baijiu can be as high as 2,000 yuan ($237) are seen as a symbol of corruption in China and sales have slowed under the scrutiny.

Output growth of the 273 premium baijiu producers in Sichuan province dropped 20.6% in the first half of 2013.

The growth of sales revenue went down by 31.5%  in the first half, according to a report from Sichuan Provincial Economic and Information Commission.

Kweichou Moutai’s share prices plunged by the 10% daily limit on September 2 after the company reported its slowest half year gain since 2001. It first half net profit increased a mere 3.6%.

Impact on selenium consumption

Suppliers to the baijiu industry have suffered accordingly.

"Our sales of pigment glass have weakened significantly, “ an official from Zhonghui Chemical Color Glaze said.

The company is a supplier to producers of Wuliangye bottles.

“The ripples from China’s anti-corruption were already being felt, and many companies in China now hold back from ordering premium brand baijiu in dinners, meaning that demand has weakened a lot,”she added.

The glass and ceramics industry takes about 10-15% of China’s total selenium consumption, the second largest sector after manganese, market sources told Metal Bulletin.

Industry leaders include Jinhuan Pigments, Zhonghui Chemicals and Daqian Ceramic Pigment & Glaze.

“Some producers once had monthly demand of eight to twelve tonnes, but it has been dropping since the anti-corruption campaign began,” one selenium trader said.

“Besides, payment terms were less than ideal, they only pay bank acceptance bills,” he added.

“Smaller pigment users have also seen demand drop: a buyer who used to buy three tpm now only needs one tonne every month, “ another trader said.

The manganese sector is the largest buyer of selenium in China, but weak buying from the glass industry contributed to the slide in prices in the second quarter.

The slide in demand from the glass sector has flattened margins for importers that sell high-purity selenium into those markets, as they were forced to price the material in competition with the lower grade stocks offered to selenium dioxide manufacturers serving the manganese sector, sources said at the time.