Trade Resources Industry Views Chinese Magnesium Prices Surge to New High

Chinese Magnesium Prices Surge to New High

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Chinese domestic magnesium prices have surged to fresh three-year highs due to tighter supply, stronger domestic demand and rising costs this year, magnesium trade platform Northeast Asia Magnesia Material Trading Center said in a report on its website Thursday.

As of Friday, ex-plant prices for 99.9% magnesium ingot in Fugu and Wenxi counties were Yuan 15,800/mt ($2370) and Yuan 16,000-16,100/mt ($2,361-$2,376) respectively, up from Yuan 15,100-15,120/mt and Yuan 15,300-15,400/mt in the third week of October, the center's figures showed. Fugu and Wenxi are located in Shaanxi and Shanxi provinces, Northwest China, the key Chinese magnesium production base.

The center said this month's prices have risen to the highest level in the last three years, citing limited inventories and rising ferrosilicon and coal prices.

The center quoted one exporter in North China as saying that on October 19, 99.9% magnesium ingot could be purchased at Yuan 15,600/mt, but by October 20-21, prices had surging, spurring traders to replenish stocks as they thought prices were unlikely to dip in the short run.

The North China trader forecast domestic magnesium prices would rise slightly in the coming weeks, citing an anticipated rise in ferrosilicon and coal prices, as well as magnesium producers' limited stocks, with some having just 200 to 300 mt of inventories.

The center report said that magnesium producers in general were facing less pressure from any shortage of funds this year, with some financially weak producers having been ejected from the market, and the surviving ones having stronger risk aversion, resulting in less selling at low prices this year.

Also, demand for magnesium from the domestic aluminum and steel, alloy and sponge titanium sectors is better than last year, boosting overall demand, it said.

In addition, due to mainland China's supply side reforms, tightening magnesium supply as well as a continual rise in ferrosilicon and coal costs, domestic magnesium producers are more united in selling this year, thus boosting magnesium prices, the center said.

FOB China magnesium ingot prices were at $2,410-$2,440/mt as of Friday, above the average price of $2,315/mt in September, the center said, noting that overseas buyers are expected to buy before Christmas, causing firm demand, thus supporting prices.

China's national refined magnesium demand is forecast to hit 750,000 mt by 2020, up from 532,000 mt in 2015, with average annual demand growth of 7.1% during the 13th Five-Year Plan period (2016-20), the Ministry of Industry and Information Technology said on its website in mid-October.

Source: http://www.platts.com/latest-news/metals/hongkong/chinese-magnesium-prices-surge-to-fresh-three-26580300
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Chinese Magnesium Prices Surge to Fresh Three-Year High
Topics: Metallurgy