3
BASIC MINERALS
Needs for many minerals are down JAMES H. KRIEGER, Bureau Head, Chicago, III.
As demand for autos, consumer durables, and industrial equipment decreases so does demand for some minerals, but overall production appears headed toward a 3.3% increase this year
T
he year 1967 is a year in which questions parry questions. "Will the domestic minerals industry mark up its sixth record year in a row?" is met with "Will the U.S. economy as a whole take an upturn in the fourth quarter, as many expect?" Like other sectors of the economy, the minerals industry—at least a large part of i t - h a s this year felt the effects of a slack demand for autos and consumer durables. It has felt the effects of a softening industrial equipment market. The dropoff in housing starts due to last year's tight money situation has left its mark. But for some minerals, demand continues to exceed capacity. Moreover, demands of the war in Vietnam exert a continuing influence, particularly on metals and fuels. C&EN's trend projection, based on the industry's performance during the past seven years, indicates a rise in production for 1967, with the value of refined minerals reaching to between $33.1 and $34.7 billion. The middle of this range—$33.9 billion—would represent a 3.3% increase from 1966's $32.8 billion. Whether short-term effects will drag production down below this level depends to a large extent on the still-shadowy fourth quarter. Many economists are predicting a slow third-quarter warmup in the U.S. economy, with a definitely faster pace in the fourth quarter carrying over well into next year. Although the economy has been just dragging along for most of 1967, no economic indica60A C&EN SEPT. 4, 1967
tors show any recession to be in sight, and some point in the other direction. The case for an upturn rests, in part, on an expected increase in consumer spending. Additional incentive could come from the restoration (as of March 10) of the 7% tax credit on industrial capital investment. The legislation restoring the tax credit was passed by Congress and signed by President Johnson in June. Defense spending will probably rise slowly, perhaps leveling off by year-end. Housing starts will continue in an upward climb. However, the imposition of a tax surcharge by Congress this fall would dampen, though not halt, the expected rise in consumer spending during the fourth quarter. The net result of these economic influences could be, in the optimistic view, a gross national product for 1967 of $780 to $785 billion, 5 to 6% higher than that of 1966. The Federal Reserve Board index of industrial production could reach 158, compared to 156.3 last year. Although the minerals industry will be sharing in and helping to create these overall economic trends, it is nevertheless a heterogeneous industry. Different sectors respond to different sets of influences. Steel production largely sets the pace for iron ore, fluorspar, and alloy metals, for example. Housing and commercial construction heavily influence cement and gypsum. Production of potash, phosphate rock, and sulfur is affected by fertilizer demand. Most predictions for steel show the
metal finishing out the year only a little below last year's record production of about 134 million tons. These predictions assume auto industry labor negotiations will have, at worst, only a modest effect on auto industry plans. A prolonged strike could, however, put a crimp in steel production in 1967 despite increased consumption for machine tools, goods for Vietnam, and the like. Since the steel industry will have its own labor negotiations again in 1968, the industry is also expecting a slight boost yet this year from buyers increasing inventories as a hedge against a possible strike. A drop in steel production would put a damper on iron ore for the year, although other factors that have helped domestic iron ore mines to set three straight annual production records will still be at work. Expansion of taconite plants continues, and the plants are turning out ore pellets at a cost competitive with high-grade imported ore. Total taconite operating capacity at the end of 1966, according to the U.S. Bureau of Mines, was 33.5 million tons per year (total iron ore shipments in 1966 were about 90 million tons). Construction of another 16 million tons of capacity was begun last year and about half of this will be completed by the end of this year. In addition, the amount of steel being made by the basic oxygen furnace (BOF) process continues to increaseby about 5 0 % in 1966. About a third of total steel production is now BOF. By 1970, it's likely to be half. This will, in turn, boost consumption of pig
Production of refined minerals could edge up to another record Billions of dollars
1964
1965
| Refined metals
|
1967a
1966 | Nonmetals
Refined fuels
1968a
• Totals
a
C&EN computer-calculated seven-year trend projections. Sources: Bureau of Mines, C&EN estimates
iron relative to scrap, since the basic oxygen furnace requires a much heftier pig iron-to-scrap ratio than the usual 50-50 blend fed to an open hearth. Increasing demand for pig iron will thus boost demand for iron ore. Light metals The light metals sector of the minerals industry seems to recognize only one direction: up. Aluminum did not escape the dropoff in housing starts, cutoff of the 7% tax credit, or the drop in auto sales. It's major markets are construction and transportation, the two together accounting for just under half of aluminum consumption. But the growth in commercial air transportation and electrical appli-
cations, the demand for military goods for Vietnam, and a rapidly expanding packaging market will combine to boost aluminum production by 10% over last year's record of almost 3 million tons. In addition to these markets, aluminum is probably the first commodity to feel a major effect from restoration of the 7% tax credit. Railroad car orders responded immediately to the restoration, while other industrial equipment is for the most part reacting slowly. One of the headiest markets for aluminum is packaging; production of aluminum cans is undergoing a startling growth. Although tonnage is far below that of some other markets, consumption on a percentage basis is soaring. Shipments for metal and com-
posite cans in 1966, according to the Aluminum Association, reached almost 165,000 tons, 20% greater than in 1965. Shipments for cans in the first quarter of 1967 ran 40% ahead of those in the same period in 1966. A price increase for aluminum in January settled out at a half cent per pound, putting the price for ingot at 25 cents per pound. The industry seems a little more comfortable with the profit picture as a result. Thus, with markets and capacity growing, aluminum will do well for some time. The outlook for titanium is just as good. Growth is steady and solid. The Bureau of Mines doesn't report domestic production of titanium sponge, but it estimates that consumption in 1966 was about 20,000 tons, up
U.S. consumption of metals and minerals continues to climb 1964
Bismuth, short tons 1.08 Chromite, short tons 1,450 Cobalt, pounds 10,650 Copper, short tons 1,495 Fluorspar, short tons 832 Iron ore, long tons 132,328 Lead, reported, short tons 1,202 Manganese, short tons 2,242 Nickel, short tons 147 Petroleum, crude, runs to stills, barrels pei'day 8,857 Tin, primary, long tons 59 Tungsten, concentrates, content 12,311 Zinc, slab, short tons 1,207
1965
1.47 1,582 13,595 1,526 931 125,861 1,198 2,866 172 9,043 59 13,868 1,354
Figures In thousands 1966 1967
1.60 1,436 14,203 1,587 930 127,694 1,294 2,200 116 9,621 60 16,746 1,408
1968
1.79 ± 0.15a 1,658 ± 185b 14,854 ±1,145* 1,643 ± 14b 1,031 ± 66a 136,906 ± 10,764a 1,313 ± 32b 2,591 ± 373* 137 db 33b 9,705 ± 127a 62 ± l b 18,751 ± 575b 1,559 ± 35a
2.05 ± 0.151,771 ± 185b 15,973 ± l,145a 1,702 ± 14b 1,106 ± 6 6 a 143,210 ± 10,764a 1,356 ± 32b 2,741 ± 373a 136 ± 33b 9,981 ± 127a 64 ± l b 21,490 ± 575b 1,698 ± 35a
a
C&EN computer projections based on seven-year trends. C & E N computer projections based on four-year trends. Sources: Bureau of Mines, C&EN estimates b
SEPT. 4, 1967 C&EN
61A
from just over 12,000 tons in 1965. About 5600 tons were imported for consumption in 1966. The big increase is a reflection of the 90% of the titanium market occupied by military and civilian aircraft, missiles, and spacecraft. There is little doubt that the titanium industry expects growth to continue— in fact, to show a sharp upturn by 1970. The Bureau of Mines estimates that expansions now under way will boost capacity for sponge to 26,000 tons per year by then. Much of this will be going for the giant C-5A military transport and other military and industrial applications. And the supersonic transport program—now only a question of when, not whether —will consume very sizable amounts of titanium in engines and airframes when it takes to the skies. For nonferrous metals, the focus is more on the short term. As the copper industry headed into the second half of 1967, it had plenty to ponder: an apparent easing of what had been an extremely tight supply situation; the effects of the war in Vietnam; a potential and likely strike in the copper
U.S. production and values of minerals vary but are up for most 1967 and 1968 figures are computercalculated trend projections Sources:
Bureau of Mines; C&EN estimates
Of these users, utilities keep consumption of bituminous coal on the rise
30
1964
situation appeared more stable than in 1966 when the extreme imbalance produced a turbulent world market and high prices. Domestic mine production, which supplied about 60% of consumption, was a record 1.4 million tons. Despite high prices, imports edged up slightly over 1965 to 525,000
Cadmium, metallic, shipments
Gold
a
1968 1967a 1966 1965 1964
5,430 ±1,060 5,280 ±1,060 5,900 4,060 4,850
Cement, shipments
1968 1967a 1966 1965 1964
a
$775 739 763 773 534
1968 1967a 1966 1965 1964 a
Bauxite
1,519 ± 3 9 1,458 ± 3 9 1,422 1,352 1,247
Four-year trends.
62A C&EN SEPT. 4, 1967
1968a 1967a 1966 1965 1964
249 ± 21 243 ± 21 253 241 217
Seve n-year trends.
$34,800 35,800 36,400 37,400 38,900
Four -year trends.
Millions of cubic feet
$1,154,000 1,108,000 1,024,000 957,000 813,000
a
1968 1967a 1966 1965 1964
765 ± 17 737 ± 17 698 699 667
$26,800 25,800 24,400 24,500 23,300
Four year trends.
llmenite , shipments Thousands of short tons
Thousands of short tons
$18,700 17,800 17,200 15,500 15,300
9,201 ± 290 9,470 ± 290 9,635 10,035 10,684
Helium, shipments
Fluorspar, shipments 1,949 ± 4 9 1,853 ± 4 9 1,795 1,625 1,601
1968 1967a 1966 1965 1964 a
Seve i-year trends.
Thousands of long tons
a
$1,280,000 1,250,000 1,200,000 1,230,000 1,210,000
a
Thousands of short tons
Seven-year trends.
1968a 1967a 1966 1965 1964
Four year trends.
Thousands of short tons
Copper, recoverable a
$73,100 67,700 62,900 58,900 51,000
Gypsum
Four-year trends.
Short tons
871 ± 112 830 ± 112 834 845 632
405 ± 9 396 ± 9 381 387 375
2,089 ± 8 3 1,933 ± 8 3 1,796 1,684 1,456
1968 1967a 1966 1965 1964 a
Four- year trends.
a
a
Antimony, ore content 1968 1967a 1966 1965 1964
$28,800 28,000 28,400 20,900 29,100
a
Millions of barrels
Seven-year trends.
a
Thousands of fine ounces
Short tons
Thousands of short tons
$1,704,000 1,582,000 1,454,000 1,349,000 1,210,000
1965 1966 1967« 1968a
industry as labor negotiations got under way for new contracts to replace those expiring at the end of June; and the ultimate effects of a then justended conference in Zambia of four foreign copper-exporting nations. At that, what with supply coming into closer balance with demand, the.
Aluminum
a
90
Sources: Bureau of Mines, C&EN estimates
a
3,407 ± 144 3,163 ±144 2,968 2,754 2,553
Billions of net tons
120
aC&EN computer-calculated seven-year trend projections.
Thousands of dollars
1968* 1967a 1966 1965 1964
Coke
$10,700 10,500 10,900 10,900 10,000
1968a 1967a 1966 1965 1964
1,099 ± 5 2 1,052 ± 5 2 975 949 1,004
^Seven-year trends.
$24,000 23,000 21,300 20,800 22,000
Retail deliveries
Electric utilities
Industrial
Billions of net tons
Billions of net tons
Billions of net tons
400
20
120
300
15
90
200
10
60
100
30
1964 1965 1966 1967a 1968a
1964 1965 1966 1967a 1968a
1964 1965 1966 1967a 1968a
tons. Some of the heavy domestic demand had to be supplied by releases from government stockpiles. The releases continued, with 150,000 tons being distributed throughout the first three quarters of 1967. Abroad, strikes and political difficulties last year held production down,
and heavy demand drove prices to record highs on the London Metal Exchange (LME). In April 1966, with U.S. producer price held by the Administration's wage-price guideposts to 36 cents a pound, LME quotations soared as high as 9 8 3 / 4 cents per pound. In the U.S., scrap at that
time hit a record 63 cents per pound, and dealer prices reached about 75 cents a pound. Early this year, U.S. producer price moved up to 38 cents per pound, and the industry expects a further increase to result later this year from new labor contracts. At midyear, LME prices
Iron ore, shipments
Mercury
Silver
Thousands of long tons
1968* 1967* 1966 1965 1964
89,735 ±9,474 87,852 ±9,474 90,583 85,811 85,184
$964,700 944,400 973,800 922,500 915,700
1968* 1967* 1966 1965 1964
21,490 ±4,210 20,450 ±4,210 20,210 19,580 14,140
» Seven-year trends.
a
Pig iron, shipments
Molybdenum, shipments
a
107,294 ± 6 , 2 0 1 100,088 ± 6 , 2 0 1 92,158 90,432 85,693
$6,045,000 5,639,000 5,192,000 5,095,000 4,828,000
1968* 1967*
a
Thousands of long tons
$133,000 126,000 124,000 121,000 102,000
1968* 1967*
$102,800 95,800 93,500 91,400 74,900
1968* 1967* 1966 1965 1964 a
41,470 ± 2 1 6 35,770 ± 2 1 6 31,000 26,440 22,960
Seven-year trends.
Thousands of short tons
$374,400 322,900 279,800 222,700 180,000
1968* 1967* 1966 1965 1964 a
1968* 1967* 1966 1965 1964
5,661 ± 2 6 9 5,465 ± 2 6 9 5,220 5,027 5,201
Four-year trends.
3,319 ± 2 7 2 3,733 ± 2 7 2 4,300 4,363 5,674
$ 66,400 74,700 86,000 87,300 113,500
Seven-year trends.
Zinc, recoverable Thousands of short tons
Thousands of short tons
$59,200 58,500 56,400 57,100 55,700
7,721 7,251 5,859
$258,600 239,200 223,900 192,200 155,300
Uranium
Four-year trends.
Thousands of short tons
8,480 ± 8 1 5 7,843 ± 8 1 5
1966 1965 1964 a
Potash, sales
» Four-year trends.
38,555 36,334
Thousands of long tons
Magnesium 84±2 83±2 80 81 79
1965 1964
$61,000 57,300 54,800 49,900 47,000
Sulfur, native, shipments
Phosphate rock, marketable
Four-year trends.
1968a 1967a 1966 1965 1964
47,146 ± 1 , 0 2 3 44,340 ± 1 , 0 2 3 42,393
Four-year trends.
Seven-year trends.
Thousands of short tons
367 ± 10 342 ± 10 318 293 286
41 ± 5 39 ± 5 40 39 33
1966 1965 1964 a
Lead, recoverable 1968 1967a 1966 1965 1964
1968* 1967* 1966
Thousands of short tons
Seven-year trends.
a
$10,400 9,900 9,300 11,200 4,500
Four-year trends.
Thousands of short tons
1968* 1967a 1966 1965 1964
Thousands of fine ounces
76-pound flasks
$135,900 131,200 119,000 117,600 121,700
1968* 1967* 1966 1965 1964
647 ± 31 625 ± 31 582 610 575
$181,200 175,000 168,800 176,900 156,400
Four-year trends. SEPT. 4, 1967 C&EN 63A
were about 44 cents per pound, and in the U.S. dealer prices were about 43 cents per pound. Scrap, at about 33 cents per pound, had returned to its normal position below refined metal price. In June, Zambia, Chili, the Congo, and Peru, meeting in Lusaka, Zambia, set up a new policy-making agency known as the Inter-Governmental Council of Copper Exporting Countries. It is to be headquartered in Paris. What policies will be made and what effect they will have probably won't be known for sure unless or until a world copper situation develops that drives foreign copper prices to an abnormally low level. The labor negotiations presenting the copper industry with a strike possibility at midyear posed a similar situation for lead and zinc producers. Tied strongly to the overall economy, lead and zinc may find the outcome of the negotiation period one of the major influences on their performance when 1967 totals start coming in. Lead, with 37% of consumption in batteries and 18% in gasoline additives, was in heavy demand in 1966. Total consumption reached a record 1.3 million tons. Domestic mine recovery of lead gained 7% to 320,000
Naphtha scores spectacular gain among chemical feedstocks taken from petroleum and natural gas Chemical feedstock offtake Natural gas, dry: Carbon black Other Total natural gas Petroleum LPG and LRG Naphtha, -400° F. Still gases Miscellaneous, +400° F. Total petroleum
1965
106.8 180.0 286.8
97.0 190.0 287.0
89.4 200.0 289.4
108.1 24.6 7.7 25.3 165.7
126.0 24.0 9.0 23.0 182.0
136.7 41.7 10.9 23.4 212.7
tons, and primary smelter output reached 450,000 tons. A weakening foreign market, however, was reflected in a price drop from 16 cents per pound to 14. For the early part of 1967, lead shipments were down slightly from early 1966 and production was up slightly. Battery shipments so far in 1967 have trailed those in 1966, and any strike-reduced auto production could further influence the market for original equipment batteries. Meanwhile, lead producers con-
Natural gas
Thousands of short tons
10,609 ± 482a 11,891 ±482* 12,951 15,400 17,184
Billions of cubic feet
$ 88.6 a 99.3 a 108.1 126.4 148.6
Bituminous coal 1968 1967 1966 1965 1964
Thousands of short tons 588,951 ± 3,561* 560,821 ±3,561* 532,000 510,000 486,998
18,831 ± 129b 17,922 ± 129b 17,117 16,129 15,547
$2,994b 2,850b 2,722 2,516 2,394
Millions of gallons
Coke 1968 1967 1966 1965 1964
1968 1967 1966 1965 1964
Natural gas, liquids $2,679* 2,552a 2,421 2,264 2,167
1968 1967 1966 1965 1964
21,843 ± 175b 20,715 ±175^ 19,683 18,545 17,744
$1,136* l,077 b 1,024 909 834
Petroleum, crude Thousands of short tons 72,345 ± 4,839b 69,273 ± 4,839b 67,146 66,466 62,145
Millions of barrels
$1,251* 1,198b 1,162 1,150 1,075
a C&EN computer projections based on fouryear trends. b C&EN computer projections based on sevenyear trends. 64A C&EN SEPT. 4, 1967
74.2 ± 0.4a 223.2 ± 0.4* 297.4
150.6 ± 5.0a 43.6 ± 9.2a 11.7*0.9* 23.6 =fc 1.5* 229.5
166.1 ± 52.6 ± 13.1 =fc 23.6 =fc 255.4
5.0* 9.2a 0.9a 1.5a
» C&EN computer projections based on four-year trends. Source: Bureau of Mines
Millions of dollars
1968 1967 1966 1965 1964
81.3 =fc 0.4» 211.4 db 0.4* 292.7
1968
Millions of barrels
U.S. values and production of fuels are mostly rising Anthracite
1966 1967 Billions of cubic feet
1964
1968 1967 1966 1965 1964
3,122 ± 45b 3,044 ± 45b 3,039 2,848 2,787
$8,991b 8,767b 8,752 8,145 8,027
Sources: Bureau of Mines, C&EN estimates
tinued an intense development of new capacity, mostly in the Missouri lead belt. By mid-1968, domestic lead capacity is due to increase 70% over the 1966 production of 320,000 tons. Zinc price this year underwent its first break in two and a half years, finally settling in midyear at 13.5 cents per pound for Prime Western grade. Prior to that, the price had been stable at 14.5 cents per pound. So far this year, deliveries of slab zinc are running behind those for the same period last year, but production is a little above that for the like period last year. In 1966, domestic mine production of recoverable zinc dropped for the first time in eight years, but most everything else was up. Ore imports were the highest since 1959. And record consumption of 1.4 million tons of the metal pushed smelter production to a 1.1 million ton record itself. Autos represent the largest single market for zinc, appliances the second. Both consume zinc in the form of die castings and galvanized steel. Thus, the effects of auto industry negotiations and the trend of consumer spending for durables the rest of the year will be strong determinants of zinc's 1967 performance. Fuel output With energy demands increasing, the output of fuels continues to rise. For petroleum, 1966 marked a historical point. For the first time, domestic production of crude petroleum went above 3 billion barrels, an increase of 6.7% over 1965 production. Another gain will be made this year. As it will for many minerals, the war in Vietnam will be exerting an influence on 1967 results for petroleum, particularly with demands for jet fuel. Another influence is the Arab-Israeli war that took place at midyear. With disruption of petroleum supplies to Europe from the Middle East, U.S petroleum companies began taking up the slack. A large amount of 1966
production went into stocks to meet 1967 demands. But with the Middle East situation resulting in an unexpected drain on stocks, production at midyear was being expanded. Moreover, import quotas could go unfilled this year as a result of shortages of foreign oil for importing. The effect could be an increase in crude oil prices. At midyear the question was current as to whether petroleum companies would be allowed to carry unfilled quotas over into 1968. Petrochemicals continue to take an increasing amount of feedstock from petroleum. Naphtha, which is converted to light hydrocarbons, scored a spectacular gain in 1966 to 41.7 million barrels—up 74% over 1965. Over the longer term, changing technology will be causing shifts in the fuels consumption pattern. Nuclear power, for example, is beginning to have an effect on fuels used to generate electricity. Moreover, with the Department of Interior's Office of Coal Research coal conversion programs well along, it will likely be only a few years until the conversion of coal to gasoline and pipeline gas will be technically and economically feasible. Earlier this year, Project Gasoline moved into an advanced development stage with dedication of a 1-ton-perhour (coal feed) pilot plant at Cresap, W.Va., for producing gasoline from coal. Another effect on fuels could come from the growing concern with air pollution, since the sulfur in fuels winds up, on burning, as sulfur dioxide. Fertilizer consumption increased again this past spring season, if not by the heady amounts the industry expected. As a result, consumption of potash and phosphate rock should show further increases in 1967. In 1966, domestic production of potash, at 3.3 million short tons ( K 2 0 equivalent), was up only slightly from the year earlier. Increased demand was met by increased imports from Canada, where capacity continues to climb. Phosphate rock production in 1966 increased 17% above that in 1965, to just under 31 million long tons. Exports of phosphate rock moved up to 8 million long tons, compared to 6.7 million a year earlier. With phosphate fertilizers putting a heavy demand on sulfuric acid, sulfur remains in tight supply. Last year, consumption again outpaced supply, and producers' stocks dwindled by more than 700,000 tons. Production from all sources in 1966 totaled just over 9 million tons, about 7 million tons coming from Frasch operations. Frasch production represented a 6.5% increase over 1965 output, and production continued at high levels during the early part of 1967.
Gasoline paces petroleum products output Distillate aC&EN computer-calculated four-year trend projections.
1000
Millions of barrels
Sources: Bureau of Mines, C&EN estimates
Gasoline 2000
Millions of barrels
1500
1964 1965 1966 1967a 1968a
1000
Residual 400
500
Millions of barrels
1964 1965 1966 1967a 1968a
Kerosine, including jet fuel 400
Millions of barrels
300
1964 1965 1966 1967a 1968a
200
Lubricants Millions of barrels
100
1964 1965 1966 1967a 1968a
1964 1965
1966 1967a 1968a
SEPT. 4, 1967 C&EN 65A
