Fugu Magnesium Association and Semi-coke Association hold emergency meeting on market conditions
2020-12-03 18:46:15 [Print]
Since winter fell, raw material prices for magnesium ingot, semi-coke and clean coal production kept rising, especially feed coal prices soared; as a result, production costs of the above mentioned products which are already high increases further to become much higher than their selling prices, and related production enterprises bear great pressure
1. About magnesium industry . Participants discussed on how to take part in the Yulin Magnesium Industry (Group) model which will help enterprises store magnesium ingot for future selling. Main points are as follows:
(1) To ensure magnesium enterprises to have sufficient working flows during winter, Yulin Magnesium Industry (Group) will set up an intelligent warehouses in the Yulin Mahuangliang Industrial Park to provide magnesium ingot storing service to local magnesium enterprises; Ownership of stored products will still belong to the storing companies which can appoint transportation service providers to pick up the goods by showing bills of lading issued by the storing companies.
(2) To set up a pricing mechanism with comparatively high public credibility, and via the mechanism regular assessments on magnesium ingot prices should be done based upon ongoing market conditions so as to form guidance prices for magnesium ingot;
(3) At present there are warehouses located in Yulin of Shaanxi, Foshan of Guangdong and Wuxi of Jiangsu, and additional warehouses will be set up in Henan and Tianjin;
(4) The current storage capacity of Yulin warehouse is nearly 100,000t with a target of 50,000t this time;
(5) Storage fee: For enterprises which are shareholders of Yulin Magnesium Industry (Group), their storing fee rate is RMB1.32/d (USD0.20/d); for non-shareholder enterprises, their rate is RMB1.6/d (USD0.24/d). Loading fee rate is RMB25/t (USD3.83/t), and freight rate for transportation from Fugu to Mahuangliang is about RMB40-55/t (USD6 . 12-8.42/t);
(6) Value appraisals should be done at irregular intervals for magnesium ingot before they are stored to give price guidance. The current price guidance is RMB14,000/t (USD2,134/t) Inc-VAT EXW.
(7) Storing enterprises can apply to Yulin Magnesium Industry (Group) for loans in case of need, with the borrowing ceiling to be around 85% of their stored magnesium ingot value. Magnesium ingot stored this time can be mortgaged at RMB12,000/t (USD1,837/t) for loans and borrowing interests are calculated in line with bank rate of 4.35%;
(8) All local magnesium enterprises are required to store magnesium ingot of no less than one month output in Yulin warehouse or other warehouses appointed by Yulin Magnesium Industry (Group).
2. Semi-coke and clean coal enterprises are required to keep their quotations firm at RMB830/t (USD127/t) (medium size) and RMB800/t (USD122/t) (small size)
3. A coordination committee on magnesium and coke businesses will be set up to handle issues in relation to magnesium/coal price forming mechanism and market supply mechanism.
4. Meeting participants also discussed about issues in relation to industrial upgrading.
. Under this background, Fugu Magnesium Association and Semi-coke Association jointly held an emergency meeting on the morning of December 3, 2020 to review on the current market situation and to propose responding measures. The following decisions were made at the meeting:1. About magnesium industry . Participants discussed on how to take part in the Yulin Magnesium Industry (Group) model which will help enterprises store magnesium ingot for future selling. Main points are as follows:
(1) To ensure magnesium enterprises to have sufficient working flows during winter, Yulin Magnesium Industry (Group) will set up an intelligent warehouses in the Yulin Mahuangliang Industrial Park to provide magnesium ingot storing service to local magnesium enterprises; Ownership of stored products will still belong to the storing companies which can appoint transportation service providers to pick up the goods by showing bills of lading issued by the storing companies.
(2) To set up a pricing mechanism with comparatively high public credibility, and via the mechanism regular assessments on magnesium ingot prices should be done based upon ongoing market conditions so as to form guidance prices for magnesium ingot;
(3) At present there are warehouses located in Yulin of Shaanxi, Foshan of Guangdong and Wuxi of Jiangsu, and additional warehouses will be set up in Henan and Tianjin;
(4) The current storage capacity of Yulin warehouse is nearly 100,000t with a target of 50,000t this time;
(5) Storage fee: For enterprises which are shareholders of Yulin Magnesium Industry (Group), their storing fee rate is RMB1.32/d (USD0.20/d); for non-shareholder enterprises, their rate is RMB1.6/d (USD0.24/d). Loading fee rate is RMB25/t (USD3.83/t), and freight rate for transportation from Fugu to Mahuangliang is about RMB40-55/t (USD6 . 12-8.42/t);
(6) Value appraisals should be done at irregular intervals for magnesium ingot before they are stored to give price guidance. The current price guidance is RMB14,000/t (USD2,134/t) Inc-VAT EXW.
(7) Storing enterprises can apply to Yulin Magnesium Industry (Group) for loans in case of need, with the borrowing ceiling to be around 85% of their stored magnesium ingot value. Magnesium ingot stored this time can be mortgaged at RMB12,000/t (USD1,837/t) for loans and borrowing interests are calculated in line with bank rate of 4.35%;
(8) All local magnesium enterprises are required to store magnesium ingot of no less than one month output in Yulin warehouse or other warehouses appointed by Yulin Magnesium Industry (Group).
2. Semi-coke and clean coal enterprises are required to keep their quotations firm at RMB830/t (USD127/t) (medium size) and RMB800/t (USD122/t) (small size)
3. A coordination committee on magnesium and coke businesses will be set up to handle issues in relation to magnesium/coal price forming mechanism and market supply mechanism.
4. Meeting participants also discussed about issues in relation to industrial upgrading.