Covid19 and environmental closures wreak havoc on refractory raw materials
The end of 2020 for the refractories industry was marked with unease, as yearly environmental inspections and plant shut downs caused disruption to Chinese refractory raw material supply chains. China dominates supply of refractory raw materials mainly non-metallurgical bauxite and alumina, natural flake graphite and magnesia.
Frail refractory markets through the first half of 2020, caused by the effects of the COVID-19 pandemic, left consumers and traders of refractory raw materials reluctant to hold large quantities of stocks. As demand recovery gains pace, such companies have found themselves vulnerable to supply chain fluctuations.
Now in the mid-2021, harsher than usual restrictions were put in place just as the refractory industry had turned a corner and reported stronger than expected growth. This has left Chinese producers with lower availability to meet orders and led to strong price rises for refractory raw materials.
Whereas some Chinese producers had made necessary equipment alterations and obtained licences to return to operation by early 2021, this season’s restrictions have led to bottlenecks at Chinese ports. The situation has not been helped by the cancellation of shipping lines in early 2020 when COVID-19 hit, with vessels and containers being abandoned at ports and now needing to be relocated, leading to soaring shipping costs. Meanwhile, some provinces have blocked the use of trucks on major roads.
Industry experts are predicting Chinese supply disruption to stay for several months with restrictions in place until now, potentially affecting the refractories market through to the end of the year.