China Set To Benefit From Rising Bismuth Prices

The world's appetite for bismuth, an edible minor metal, could be set to grow as new applications emerge, and China looks set to benefit from rising prices.

Despite its heavy metal status, bismuth is edible and is one of the most effective treatments for stomach ulcers, said Yves Palmieri, secretary general of the Bismuth Institute.

It adds a "mother of pearl" sheen to lipstick and nail varnish, and as the dangers of lead erode the popularity of that metal, bismuth is increasingly replacing it in brass water pipes and gunshot throughout Europe and North America, he told Reuters by telephone from his office in the Belgian town of Grimbergen.

 

Palmieri and other industry sources say annual bismuth demand will double within five years to around 10,000 tonnes. Bismuth, which was priced around $3 a lb a year ago, had risen to around $3.50 by late 1996, where it languished until recently.

Traders in China say bismuth, increasingly difficult to get hold of, is now being offered at $4.20 a lb. One trader in Beijing said his suppliers are now demanding even more than that before releasing stock he has already ordered.

Traders said that because of tight supplies, prices could soar to $5 a lb in the short term. Bismuth is a hard, brittle, metallic element present in copper, lead, tin, tungsten, wolfram, silver and gold ore. It is a by-product of these metals and rarely mined for its own sake.

Of the 5,500 tonnes now used worldwide each year, up to 25 per cent is used in electronics, 10 per cent in yellow pigments, 10 per cent in metallurgical applications, 10 per cent in chemicals and catalysts, and six per cent in cosmetics. Pharmaceuticals account for 10 percent of world bismuth use, Palmieri said, with 300 tonnes a year used in China alone.

China produces up to 1,400 tonnes a year, traders said, exporting around 65 percent. Recent trends suggest China is keeping more of its bismuth as its use in the domestic pharmaceutical industry grows.

Industry sources say that now, with prices rising, Chinese producers are beginning to hoard their diminished stocks, thus helping to further tighten the market and push up prices.

But prices must rise if bismuth is to realise its full potential, said Frank Fauche, managing director of the Hong Kong minor metals trading firm Ferromin Ltd. Fauche said the metal faces a classic Catch-22 situation in that research into new applications rarely gets past the early stages because of fears about supplies, yet producers do not boost supply because demand does not seem to promise better returns.

Fauche said consumer stocks worldwide are at their lowest point in five years and secondary sources, such as the US Defence Logistics Agency and Eastern European stockpiles, have been depleted to insignificant levels.

Added to this, "there are no known immediate projects which will generate a new supply of the metal in the short term." But short term demand looks like increasing whether supply is boosted or not.

Bismuth use in yellow pigments, previously limited to just one colour, is set to increase with the development of a wider range of hues, from yellow-green to yellow-orange.

The metal's renewed popularity in medicines has seen the development of new stomach preparations that are now reaching the markets of Europe and North America, Palmieri said.

"Bismuth has healing power for eradicating the bacteria that cause peptic ulcers and immediately soothes the heartburn that accompanies peptic ulcers," he said.

Its replacement of lead in gunshot has already been mandated in Canada, the United States and some European countries, with more set to follow, he said.

"The real damage caused by lead is over wetlands because only five out of 100 lead pellets shot by hunters actually hit their target," Palmieri said. The rest fall to earth where the lead seeps into the water table and kills ducks that eat the pellets.

The United States has also approved the use of bismuth as an alternative to lead in brass pipes, Palmieri said, adding that lead content of seven to eight percent is replaced by one per cent bismuth.

World reserves are substantial, said Palmieri, but producing it does not become economical until the price reaches between $4 and $5 a lb.

Fauche's prediction that prices will rise in the short term is borne out, he said, by market fundamentals.

Many producers have sold out of stock or stopped producing bismuth, he said, with one Bolivian mine--one of the world's few pure bismuth reserves -- idle while its owner decides what to do.

China, he added, is the only place where bismuth is still available, although stocks are believed to have dwindled to historically low levels, possibly around 100 tonnes.

Major consumers in the United States, Europe and Japan have little stock left and "there is no possibility for a rapid supply increase by any of the major producers," Fauche said.

If prices do not increase, Chinese supply will not increase. And it would be two to three years before the Bolivian mine would be a viable supplier if it is exploited, he added.

"There might be extreme volatility in the market if new supplies do not come on stream in the next few years, and it is not unreasonable to expect wild swings between $5 and $10 a lb," he said.