SHANGHAI This year will
likely be another of slow growth for Chinas minor metals
sector, but companies looking to the long term will benefit,
market players told AMM sister publication Metal
Chinese minor metals companies
face a cautious and uncertain market environment, pressured by
high inventories and relatively weak demand, while smaller
companies will be squeezed by rising labor costs and stricter
environmental oversight, sources said.
"Tight liquidity and stormy
outside markets will sink many companies this year," one market
participant said. "A lot of companies are operating on cash
flow at the moment rather than profits. Without a large war
chest, that strategy will not last long."
Trade figures give little
encouragement, with bismuth exports down 43 percent in the
first 11 months of 2012. Meanwhile, long-term contract talks
have exposed weakness in demand for the year ahead.
"As far as my order book for
next years long-term contracts go, it appears our own
production can already meet demand and we wont need to
buy from the spot market anymore," one Chinese bismuth producer
Even some recent positive signs,
like rising selenium prices, might prove misleading, some
"I dont think what is
happening right now is going to be a forerunner (of the
selenium market) of the year ahead," one selenium importer
said. "It is not sustainable."
But some might see opportunities
to grow market share despite the apparent slowdown. Bigger
companies, for example, have been able to focus on
technological and environmental investments to stay ahead of
The other advantage of scale is the ability to raise cash
externally. "After going public, companies will suddenly have a
big pile of money waiting to park itself," one market
participant said. "It enables them to really consolidate the
A version of this article was first published by AMM sister
publication Metal Bulletin.