A shortage of zircon supplies will continue through 2015, but the market cannot sustain continued price increases, according to a report by Roskill Information Services. The U.K.-based metals and minerals research and consulting firm expects demand for zircon to increase 5.4 percent per year, led by ceramics and chemical output in China, and demand from western markets also is likely to continue.
Chemical uses for zircon include pigments, coatings and catalysts as well as the production of synthetic zirconia and zircon metal.
Zircon is produced predominately in Australia (40 percent of output in 2010), South Africa (29 percent) and the U.S. (8 percent). It historically has been a by-product of titanium mineral extraction, and output has long been constrained by titanium mineral demand, the report says. Growth in zircon production has lagged consumption since the early 2000s, but prices almost doubled between 2004 and 2006, putting more emphasis on primary zircon production. New deposits entering production, such as in parts of Australia, are being mined predominately for their zircon content.
According to the report, increased output from Australia and recovery of zircon from tin and gold tailings in Indonesia boosted supply in 2006 and 2007, but the global economic downturn significantly reduced demand in 2008 and 2009, leading producers to shutter capacity, reduce output and run down stocks. This led to higher costs and tight control of the supply chain. Demand started to recover strongly in the second quarter of 2009, and Chinese imports surged by more than 50 percent in 2010, but producers struggled to meet the rapid rise, so already-low stocks quickly became exhausted, and prices escalated to record levels by early 2011.
Capacity for zircon production might rise by only 2.3 percent per year through 2015, as only a few new projects are scheduled to be commissioned, the report says, and, with little prospect of additional supply to balance market demand, prices will move even higher. These continued price increases for zircon are unsustainable however, and may lead to thrifting of zircon use, substitution and increased interest in new sources of supply.