The Kaolin Market

Kaolin is a platy white clay derived from the mineral, Kaolinite, an alumina silicate formed by hydrothermal weathering of igneous rock such as granite.

Chemically inert, nonabrasive and in possession of a number of characteristics make this commodity highly desirable for use in a broad range of industries including paper and paperboard, ceramics, fibreglass, paints and coatings, plastics, rubber, pharmaceuticals and medical, cosmetics, concrete and agriculture.

Imerys, Quarzwerke (Sibelco) and BASF accounted for over 26% of global production in 2017 and dominated the global market. Imerys alone accounted for 16.3% of the market; other producers include KaMin and Thiele Kaolin Co. (both US). Asian producers account for significant volumes but for the lower end of the quality spectrum*.

Global demand by volume was 30.6 million tonnes in 2017 and is expected grow at a compound annualised growth rate (CAGR) of 4.4% from 2017 to 2025 to reach 43.1 million tonnes by 2025.

In 2017, the paper industry was the major consumer of kaolin worldwide, where it is used as a filler or coating, accounting for more than 40% of market share in terms of volume. Kaolin increases gloss, smoothness, brightness and paint absorbency of the paper, which improves the printability.

Fibreglass is one of the major materials used for manufacturing lightweight composites for the automotive, marine, aerospace and other industries. Rising demand for fibreglass is likely to augment the demand for kaolin over the coming years as it’s often used in the production process.

Processing facility under construction

The ceramics segment is anticipated to witness considerable growth in the kaolin market over the coming years, owing to an increasing requirement for kaolin as a partial replacement to the base material. Kaolin increases the durability as well as smoothness and whiteness of the finished product.

Processing facility under construction

The Asia Pacific kaolin market accounted for 37.6% of the global volume share in 2017. Fibreglass and ceramics are expected to be the fastest growing applications for kaolin in the region over the forecast period to 2025. An increasing number of ceramic manufacturing companies in China has contributed to the growth of the kaolin industry in recent years and this trend is expected to continue.

Rising consumption of fibreglass is expected, as fibreglass composites and their superior strength to weight ratios, are anticipated to fuel utilisation in automotive and aerospace sectors.

Future demand for kaolin as an input into emerging technologies and products continues to develop, (eg. as a feed stock for High Purity Alumina production) as the telecommunications and electronics industries refine existing manufacturing processes and supply chains in line with evolving consumer preferences.

The Middle East is another potential market due to ongoing and upcoming construction projects, expected to witness the second-fastest growth over the forecast period to 2025, with the market expected to reach US$1.02 billion by 2025 at CAGR of 9.3%.

Pressure from regulators in China to improve environmental and safety standards has led to the closure of some kaolin producers and a tightening of supply. Market consolidation has occurred over the last five years with key players such as Imerys acquiring assets from competitors. From 1 June 2019, China increased the import tariff on US kaolin.

Opportunities are emerging in the market as end users begin to recognise the importance of product quality and brightness. Expanding population and rising consumer standards of living will grow kaolin demand for ceramic products in housing and construction*.

Due to the quality of WA Kaolin’s kaolin product, it has typically attracted a higher price than the market average.

WA Kaolin’s product is attractive to customers due to its high purity and brightness of 89–ISO.

Existing producers have announced price increases for kaolin in recent years, with some attributing the rises to ensuring long-term stability amid continued investment to meet regulatory requirements and increase production, while other competitors increased prices due to rising labour costs and increasing demand of the product, especially from the paints and coatings applications.

Furthermore, the reduction of capacity in China due to mine closures has placed upward pressure on prices.

Average kaolin prices (US$/tonne) have grown from US$130 per tonne in 2014 to circa US$150 per tonne in 2017, with forecasts expecting to see the price reach as high as US$213 per tonne by 2025*.

* Grand View Research report, Kaolin Market Analysis and Segment Forecasts to 2025

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