Overall consumption of mineral products is trending downward.

　　China’s traditional industries—including building materials, construction, steel, chemicals, refractories, papermaking, and plastics—are experiencing sluggish performance. In the first half of 2015, the markets for certain non-metallic mineral products showed mixed trends across different application sectors, with overall mineral product consumption trending downward. Prices of some traditionally used products have declined, enterprises face heavy tax and fee burdens, and production and labor costs continue to rise. Moreover, competition among enterprises has intensified due to product homogenization. Overall, the trend is not optimistic.

　　Graphite. In 2015, production resumed in March and April in major graphite-producing regions such as Xinghe County in Inner Mongolia, Jixi and Luobei in Heilongjiang Province, while regions like Shandong maintained normal production throughout the year. In the first half of this year, national output reached 250,000 tons, a 25% increase over last year. The primary reason for this growth is not better market conditions for graphite, but rather the increased confidence that graphite producers have in the graphite market—resulting in overproduction. Affected by the economic downturn in traditional industries such as steel, sales have declined. However, due to a requirement for delayed start-up in the Heilongjiang region, graphite prices remained stable compared to the same period in 2014, yet rose by 15% year-on-year for the entire year of 2014. Currently, product prices hover around 3,200 yuan per ton.

　　Fluorite. Over the past two years, influenced by market demand from industries such as fluorochemicals, metallurgy, and building materials, the fluorite industry has experienced an overall downturn in both production and sales. Relevant national authorities have launched rectification efforts, causing some mining enterprises to fail to meet standards. As a result, these companies have reduced or even halted production due to excessively high costs. In the first half of 2015, fluorite production totaled approximately 1.8 million tons, with sales reaching about 1.65 million tons—a year-on-year decrease of 9.1%. Product prices have continued to decline, hovering around 1,500 yuan per ton. This price level has essentially reached the cost of production for most enterprises, leaving them with only minimal profits.

　　The magnesite industry. Affected by the downturn in the steel and refractory materials industries, magnesite production and prices both declined year-on-year in the first half of 2015.

　　Talc. Due to the sluggish performance of China’s paper, plastics, and automotive industries, as well as the continued decline in the competitiveness of Chinese talc in the international market—largely driven by price factors—the talc industry showed a sustained downward trend in the first half of 2015. National production totaled 950,000 tons: Liaoning accounted for 450,000 tons, Guangxi for 350,000 tons, Shandong for 100,000 tons, and other regions produced 50,000 tons. Sales reached 800,000 tons, while inventories increased. Sales prices fell by 5% year-on-year.

　　Asbestos. In the first half of 2015, the nation's total asbestos production reached 120,000 tons, roughly flat compared to the previous year, with sales amounting to 115,000 tons. The primary reasons for the lower national production in the first half of the year were: first, cold weather in the first quarter led to the closure of mining operations, with production returning to normal in April; second, since 2013, market demand has been steadily declining, and currently most mines are operating on a “sales-driven production” basis, resulting in a general contraction of mining output.

　　Kaolin. Currently, China's kaolin production is mainly concentrated in the regions of Jiangxi, Guangdong, Guangxi, and Fujian. The products are primarily used in ceramics, coatings, chemical industry, and papermaking. Each year, from... Brazil 、 United States With substantial imports, domestic kaolin production in 2015 reached 1.6 million tons, with sales totaling approximately 1.45 million tons—essentially unchanged from the previous year.

　　Let’s first look at the export situation. From January to May, both the volume and price of China’s major non-metallic mineral exports declined to varying degrees. The main reasons for this decline are that, affected by rising production costs, labor costs, and export tariffs, China’s non-metallic mineral products have seen a continuous drop in international competitiveness compared to those from emerging countries, leading to a significant fall in exports. From January to May, fluorite exports totaled 130,000 tons, down about 15% year-on-year, with export prices falling by 10% over the same period. The decline in exports is attributed to lower overseas fluorite prices—Mongolia’s average fluorite export price was $145 per ton, while Myanmar’s... Vietnam Fluorite exports from other countries, with an average export price of around US$110 per ton, have led to a significant decline in China's fluorite exports.

　　Let’s take a closer look at import trends. In 2015, China’s imports of non-metallic minerals declined to varying degrees compared with the same period last year. The import prices of spherical graphite and flake graphite were two to three times higher than their export prices, and the import price of ultrafine talc powder was also 2.5 times higher than domestic prices. The phenomenon of high imports and low exports for China’s non-metallic products persists, and there is still a certain gap between China’s finely processed non-metallic mineral products and their foreign counterparts. The unit import price of flake graphite was US$2,324, while the unit export price domestically was only US$845.

　　Overcapacity is currently the primary issue affecting the operation of the non-metallic mineral economy.

　　First, there is overcapacity in non-metallic mineral products, and market demand in traditional industrial application sectors remains weak. Currently, most major non-metallic mineral types in China are experiencing overcapacity. In the past two years, the actual utilization rate has been around 50%. Meanwhile, the non-metallic minerals industry generally suffers from excessive mining beyond permitted scales: mining licenses specify relatively small extraction capacities and scales, yet actual production capacity is significantly higher—some actual capacities can even reach three to five times the licensed levels.

　　Second, as the country and relevant local governments intensify efforts to rectify and standardize the use of safety, environmental protection, and resources, as well as labor practices, enterprises are facing continuously rising production costs. Currently, the state and local governments have stepped up their enforcement of environmental protection regulations, leading to increased investment by enterprises in safety and environmental protection measures. Labor practices for production workers are gradually becoming more standardized, while mines are experiencing labor shortages and wages are on the rise. As a result, enterprises’ production costs continue to climb.

　　Third, the non-metallic minerals industry faces a wide variety of taxes and fees, placing an excessive tax burden on enterprises. The taxes and fees borne by the non-metallic minerals industry include resource taxes, compensation fees, value-added tax, and more. For non-metallic mineral mining enterprises, although the value-added tax rate is 17%, the deductible portion is relatively small, resulting in an effective tax rate exceeding 12%. Moreover, the volume-based taxation system is detrimental to resource conservation and comprehensive utilization, further exacerbating the heavy tax burden.

　　Fourth, compared with emerging countries, China’s prices for non-metallic mineral products are higher, and its international competitiveness continues to decline. Due to rising production costs, labor costs, and excessively heavy tax burdens, the export prices of China’s non-metallic mineral products are currently significantly higher than those of other countries. India Mongolia, Pakistan, Egypt In emerging countries such as North Korea, the export prices of minerals like fluorite, graphite, and talc are 30% higher than those in other emerging countries, forcing foreign buyers to procure mineral products from these emerging nations. As a result, the international competitiveness of China’s non-metallic mineral products continues to decline.

　　Fifth, the transformation and upgrading, as well as structural optimization, lack effective technological support. Transformation and upgrading, along with optimizing existing assets, require new products and new technologies. However, due to relatively lagging standards and regulations, the non-metallic minerals industry has yet to effectively address issues such as insufficient technological reserves, low product added value, and inadequate fine processing. As a result, the industry’s capacity to independently supply high-end products still needs to be strengthened. The primary reason is the widespread inadequacy of enterprises’ capabilities in scientific and technological innovation and independent R&D—this is precisely the weak point in the non-metallic minerals industry.

　　Second-half 2015 Forecast for the Non-Metallic Minerals Industry

　　Overall, the industry’s outlook has been affected by factors such as a sluggish market for traditional industrial applications, rising production costs, and declining international competitiveness. As a result, the development prospects for the non-metallic mineral industry remain pessimistic in the second half of 2015. It is expected that sales volumes of major products in the second half will not see significant year-on-year growth, and product prices, already at low levels, are unlikely to decline substantially. However, there are also some positive aspects, including developments in the fields of electronic information and new materials. New energy Markets in emerging environmental protection sectors and other related fields are thriving, and the application scope of new non-metallic products will continue to expand.