Russian invasion of Ukraine squeezing antimony concentrates market

Russia's invasion of Ukraine and the unfolding Western sanctions are expected to worsen the situation for antimony concentrate supplies, adding extra pressure to an already tight market for the metal and its derivative trioxide

In early March, a Chinese buyer of antimony concentrates from Russia was unable to pay using a transfer to a bank included into the European Union’s sanction list, two sources told Fastmarkets.

Another large buyer from China was holding back from buying concentrates from Russia and instead adopting a wait-and-see position, another source said.

On February 24, the Russian army invaded Ukraine. And while no antimony mines were directly affected, the market did start to see some effects. Since the beginning of the invasion, the United States, the EU, the United Kingdom and other countries have introduced a set of sanctions aimed at Russia’s banks and financial institutions.

As a result, several market participants halted payments in US dollars and are considering switching payments to Russia to Chinese yuan (renminbi), a trader and a Chinese buyer told Fastmarkets. However, setting up the payments could take up to three months, the trader added.

“We are not oligarchs, so sanctions should not [affect] us. But we are worried about disruptions to financial flows,” a Russian market participant told Fastmarkets.

Ukraine does not produce antimony, while Russian antimony production facilities are in the Asian part of the country, well away from military action.

Over time, the shortage of raw materials is likely to become more serious, two Chinese producers of antimony trioxide (ATO) said – a view echoed by a European trader.

Antimony concentrate is used for making antimony metal; standard-grade II antimony is used for lead alloys, in paint and in munitions; while the trioxide grade is used in flame-retardant applications.

The market has been facing tight supplies in recent years, resulting in the price for antimony max 100 ppm Bi, in-whs Rotterdam increasing to $13,700-14,200 per tonne on February 25, up from $11,800-12,000 per tonne a year ago.

It remains unclear whether Russian companies will still be able to supply concentrates to their customers abroad.

“It is not that Chinese are not willing to buy from Russia due to the war, but more that the Russians don’t have enough material to sell to China,” a third trader told Fastmarkets.

China continues to be the leading global antimony producer in 2021, accounting for 55% of global mine production, followed by Russia with 23% and Tajikistan with 12%, according to the US Geological Survey.

In recent years, though, China has been importing antimony concentrates to produce antimony metal and trioxide, with the main suppliers being Russia and Tajikistan.

But problems with supplies was already a factor before the start of 2022 and, according to Russian customs data, there was a 38% year-on-year decline in China’s imports of Russian antimony concentrates in 2021.

In particular, Russia’s biggest gold producer, Polyus, which also produces antimony and started offering the material to the global market in 2018, has recently been reducing antimony production, the company said.

A spokesperson for Polyus told Fastmarkets the company did not produce any antimony concentrate at all in the fourth quarter of 2021. Total production for 2021 was just 2,500 tonnes – down from almost 11,000 tonnes in 2020 and 14,773 tonnes in 2019.

Tajikistan, the other key supplier of antimony to China, saw a 50% year-on-year decline in shipments of antimony concentrates in 2021, a source said.

China imported about 34,000 tonnes of antimony concentrates in 2021 overall, they added, which is roughly half of the 63,000 tonnes imported in 2019.

China switched to importing concentrates a few years ago, after the depletion of mines in the key production area near the city of Lenshuijiang in Hunan province, market participants said.

“I was there 12 years ago and the mines had started depleting back then,” one trader said.

A few years ago, the Chinese authorities decided to reduce output at local antimony mines to avoid depleting domestic supplies, another trader said.

But the ongoing shortage of concentrates is a normal situation for the market, one seller of antimony concentrates and metal suggested. And low prices were just an anomaly, he said, pointing at two factors.

In 2019, stock from the defunct Fanya Metal Exchange in China entered the market, softening prices for several minor metals, including antimony. At the same time, Russia’s Polyus continued offering antimony concentrates.

Both these factors contributed to the market’s oversaturation and led to several years of low prices, “but now this time is gone,” one of the market participants said.

Several others were not sure where new supplies might come from.

Some said they hoped that Talco Gold, a Chinese-Tajik antimony and gold joint-venture mining operation in western Tajikistan, might start production in mid-2022 and ease the supply concerns. The facility, which is jointly owned by Talco and China’s Tibet Huayu Mining Co, was due to start up in 2019, but that was postponed because of the Covid-19 pandemic.

High prices may force consumers to search for an alternative to antimony trioxide in flame retardants, a European seller of antimony trioxide said.

But another trader said there were no alternatives to antimony trioxide in flame retardants for now, so that was just “a daydream.”

Ruby Liu in Shanghai contributed to this article.

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