Calcined bauxite demand to rise buoyed by proppants sector growth

Roskill's new release- a Non-Metallurgical Bauxite & Alumina report with forecasts to 2021, shows the ceramic proppants sector is poised to become the largest market for non-metallurgical bauxite by 2021, overtaking the refractories industry. Consumption of bauxite, the principal ore of aluminium, in refractories, both directly and via brown fused alumina, accounted for more than 20% of the total non-metallurgical bauxite market in 2015.

Demand for calcined bauxite in production of ceramic proppants is expected to grow by more than five percent per year out to 2021 as North America and China target greater exploitation of unconventional oil and gas reservoirs, according to Roskill's new Non-Metallurgical Bauxite & Alumina report.

Within only a decade, hydraulic fracturing has proved to be the key to unlocking vast resources contained in oil and gas shales, led by the USA. Hydraulic fracturing or 'fracking' is done to enhance permeability and increase flow to oil and natural gas production wells.

This has led to a booming demand for fracturing sands, used during fracking to prop open the fractures in reservoir rocks. In the USA, domestic frac sand demand leapt from 1.5Mt in 2002 to 54Mt in 2014, but subsequently fell to an estimated 45Mt in 2015.

The sudden drop in oil prices from US$105/bbl in June 2014 to below US$45/bbl by the end of January 2015 led to a drop in the US rig count of 17% over the period. Consumption of all proppants is estimated to have fallen by some 20% in 2015, but this was more pronounced in the higher-cost ceramic proppants sector.

Most proppants are based on natural, rounded quartz sands, but approximately 10% of the market comprises ceramic proppants manufactured mainly from kaolin and/or bauxite. Ceramic proppants have a better crush strength than natural sand proppants and are more suitable for high-pressure drilling situations.

Ceramic proppant consumption is likely to remain subdued in 2016, but from 2018 onwards demand is expected to increase; notably in North America and China where unconventional gas fields are currently being developed - such as the Sulige tight sandstone gas field in Inner Mongolia.