China's Export of Fluorite Resources Grew Rapidly in 1H 2010    

As the international chemical ore market has been gradually recovering this year, China's chemical ore export increased rapidly. In the first half, China exported 3.222 million tons of chemical ores in total, up 93.9% year on year, with an export value of US$510 million, up 110.7% year on year. Out of China's chemical ore export, apatite, light (heavy) caustic magnesite, natural barium sulfate (barite) and calcium fluoride (fluorite) accounted for more than 95%. In order to control the exports of apatite and light (heavy) caustic magnesite, China has imposed an export quota license management and export quota bidding system on its exports, and the total export volume is determined by the Chinese Ministry of Commerce. Beginning 2010, the export quota bidding system for the export of fluorite was abolished. The export of barite abides by the same export management system as general goods.
   China is traditionally a big exporter of fluorite. In recent years, China has gradually restricted the export of mineral products and strengthened its control of fluorite exports. China has included fluorite in the catalog of goods whose processing and trade are banned. China lifted the export tariff rate of fluorite and has been strengthening the export control of fluorites. In 2010, China canceled the system of managing fluorite export by quota bidding, but it still levies a low temporary export tariff of 15% on exported fluorite.
   In the first half of 2010, China exported 311 000 tons of fluorite in total, up 231.4% year on year, with an export value of US$67.756 million, up 142.2%. The export of fluorite grows fastest among chemical ores which have not had the export quota management system. In the first half of 2010, the volume of fluorite exported accounted for 13.9% of the total volume of chemical ores exported from China.
   While the volume of fluorite exported grows rapidly, its export prices are declining. Customs data show that after the monthly average export price of fluorite reached a record high in November 2008, it has begun to decline in a wavering way. In the first half of 2010, the average export price of China's fluorite was US$217.6 /ton, down 26.9% year on year. It has now dropped to the 2007 level.
   China has abundant fluorite resources, surpassed only by South Africa and Mexico. Its fluorite resources are widely distributed, but high-grade fluorite ores account for only a small proportion of them, and associated ores account for a large proportion. China is a large fluorite producer and exporter, but in the international fluorite market, its voice is very weak. Currently, China's fluorite is mainly exported to the United States, Japan, the Netherlands, India and Canada. In the first half of this year, China exported 231 000 tons of fluorite to those five countries, up 171.4% year on year, accounting for 74.3% of its total export volume, and the export value of fluorite to the five countries was US$52.021 million, up 98.7% year on year, accounting for 76.8% of China's total export value of fluorite. In the first half of 2010, China exported 75 000 tons of fluorite to the United States, up 543.5% year on year. Since the late 1990s, the United States has stopped exploiting its own fluorite ores and has become a net importer of fluorite.
   While China's export of fluorite to these five countries rose dramatically, its average export price was constantly declining. In the first half of 2010, the average export price of China's fluorite to the five countries fell by 26.8% year on year.
   Through a series of restriction measures, China's export volume of fluorite decreased year by year, but the export volume of fluorite in disguised ways was growing. Some Chinese companies make fluorite into hydrofluoric acid (HF) and then export the latter in order to avoid the export control measures of fluorite. This has greatly reduced the effect of the policies that China has taken to protect its fluorite resources. On July 1st, 2009 China reduced the temporary export tariff rates of preliminary fluorine chemical products, such as HF, by 10% averagely. After this, the temporary export tariff rate of HF drops to only 15%. This has stimulated the export of HF. In the first half of this year, China exported 77 000 tons of HF, up 103.6% year on year, with an export value of US$82.802 million, up 120.4%. In March 2010, China's HF export volume reached 16 000 tons, creating a five-year high. If producing 1 ton of HF needs 3 tons of fluorite ore, China's export volume of fluorite under the name of HF was equivalent to 230 000 tons in the first half of 2010.
   Therefore, China Petroleum and Chemical Industry Federation puts forward the following proposals:
    First, the Chinese government should impose a special export tariff of 35% on fluorite and HF, strictly restrict the export of fluorite, HF and low-value-added fluorine containing chemicals and control the total export volume of fluorine.
    Second, the Chinese government should reduce the export tariff of high-value-added fluorine containing chemicals (such as fluorine resin, fluorine rubber) and fluorine-containing products that adopt the international advanced production technology (such as anhydrous aluminum fluoride), encourage domestic enterprises to extend their industrial chains, improve the utilization rate of ores and export high-value-added fluorine containing chemicals.
   Third, the Chinese government should work out relevant taxation policies to encourage enterprises to speed up the development of high-end fluorine containing chemicals, such as high-grade fluorine-containing fine chemicals and fluorinated polymer materials.

Destinations for China's exported fluorite in 1H 2010
Destination     Volume/     YOY     Average price,    YOY
            thousand tons    growth/%     US$/t            growth/%
The United States    75      543.5    230.1    -20.0
Japan               32      205.6    204.6    -30.9
The Netherlands     45      115.7    237.7    -27.2
India                  51      168.7    211.2    -27.8
Canada              28      21.4     242.3    -24.0
Combined            231     171.4    225.4    -26.8
Source: CNCIC