Magnesium buyers watch the market as export quotations rise
2007-04-18 11:21:18 【Print】
BEIJING (Asian Metal) 18 Apr 07 - Despite that magnesium ingot prices in China keep climbing up on series closures of smelters in Shanxi, exporters seem to have difficulties kicking the price up as most consumers and traders in overseas market keep watching without taking any steps.
According to statistics, China exported 173,212t of magnesium ingot in 2006, down by 4.78% year-on-year. Under the background that total magnesium production in China increased significantly in the same year, the decrease of export volume is attributed to sharp increase of Chinese domestic consumption as well as the changes in export policy. The exports were depressed by the removal of export tax rebate and continuous appreciation of Chinese currency. Additionally, the fluctuation of ocean freight caused by the fuel prices changes as well as competition by counterparts outside of China also carried weight.
Stimulated by the coal accident that happened in Linfen, Shanxi at the end of March, smelters began to raise offers in the name of tightening supply of coal, prevent the market, which just showed signs of slipping, from declining further. However, little improvement was seen in the export market for the metal, which was still shadowed by the weak demand from overseas buyers, and prices lingered at USD2,100-2,130/t FOB. Although some exporters intended to quote higher prices, foreign buyers showed little interest in the price adjustment. On the contrary, lack of activity incurred a price decrease with some suppliers claiming deals as low as USD2,080/t FOB. Meanwhile, the Chinese currency kept going stronger, and the ocean freight was said to rise, which together made export business more difficult to conduct.
Later, the environmental checkups on Yuncheng smelters provided another reason for suppliers to raise offers. Due to great decrease of output in the region resulting from shutdowns of many smelters, prices kept hiking. Thus, the export market broke the ice with quotations surging up. Up to the end of last week, export quotations have risen to USD2,140-2,170/t FOB from USD2,120-2,150/t FOB seen early April, and some large scaled smelters offered as high as USD2,180/t FOB. However, few deals could be concluded at prices higher than USD2,150/t FOB. Some smelters reportedly signed contracts for small orders at USD2,120-2,140/t FOB.
With prices in Chinese domestic market keeping climbing up, exporters continue to lift offers this week. A Shanxi-based trader reported that the lowest offer he received from domestic smelters yesterday was RMB16,800/t delivered to Tianjin. "That means we have to export at prices higher than USD2,200/t FOB in order to cover the purchasing cost. But foreign buyers will definitely refuse to accept such a price," said the source. The source, who usually trades 500-600tpm of magnesium ingot, predicted that the trading volume of the company would decrease a little in May. The source revealed that he concluded a few deals in late March when the market experienced a slight decrease, but most foreign buyers start to watch the market again for now.
Meanwhile, a Shanxi-based producer also confirmed that many foreign buyers are watching the market as the price keeps increasing. "Customers refused to accept USD2,140-2,150/t FOB we quoted them at the beginning of this month, let alone current USD2,180/t FOB," said the source.
According to the source, many exporters are disturbed by the appreciation of rmb and also high ocean freight. The freight from Chinese main ports to European main ports increased by around USD20/t to current USD80-86/t or higher level. Those exporters who sign contracts on CIF basis have to take higher transportation cost into consideration.
The smelter, with a capacity of 6,000tpy, halted production early last week to carry out environmental protection performance. The source revealed many smelters are now improving the anti-pollution facilities and would not resume production shortly. Therefore, the supply tightness is unlikely to ease in the short term.
According to statistics, China exported 173,212t of magnesium ingot in 2006, down by 4.78% year-on-year. Under the background that total magnesium production in China increased significantly in the same year, the decrease of export volume is attributed to sharp increase of Chinese domestic consumption as well as the changes in export policy. The exports were depressed by the removal of export tax rebate and continuous appreciation of Chinese currency. Additionally, the fluctuation of ocean freight caused by the fuel prices changes as well as competition by counterparts outside of China also carried weight.
Stimulated by the coal accident that happened in Linfen, Shanxi at the end of March, smelters began to raise offers in the name of tightening supply of coal, prevent the market, which just showed signs of slipping, from declining further. However, little improvement was seen in the export market for the metal, which was still shadowed by the weak demand from overseas buyers, and prices lingered at USD2,100-2,130/t FOB. Although some exporters intended to quote higher prices, foreign buyers showed little interest in the price adjustment. On the contrary, lack of activity incurred a price decrease with some suppliers claiming deals as low as USD2,080/t FOB. Meanwhile, the Chinese currency kept going stronger, and the ocean freight was said to rise, which together made export business more difficult to conduct.
Later, the environmental checkups on Yuncheng smelters provided another reason for suppliers to raise offers. Due to great decrease of output in the region resulting from shutdowns of many smelters, prices kept hiking. Thus, the export market broke the ice with quotations surging up. Up to the end of last week, export quotations have risen to USD2,140-2,170/t FOB from USD2,120-2,150/t FOB seen early April, and some large scaled smelters offered as high as USD2,180/t FOB. However, few deals could be concluded at prices higher than USD2,150/t FOB. Some smelters reportedly signed contracts for small orders at USD2,120-2,140/t FOB.
With prices in Chinese domestic market keeping climbing up, exporters continue to lift offers this week. A Shanxi-based trader reported that the lowest offer he received from domestic smelters yesterday was RMB16,800/t delivered to Tianjin. "That means we have to export at prices higher than USD2,200/t FOB in order to cover the purchasing cost. But foreign buyers will definitely refuse to accept such a price," said the source. The source, who usually trades 500-600tpm of magnesium ingot, predicted that the trading volume of the company would decrease a little in May. The source revealed that he concluded a few deals in late March when the market experienced a slight decrease, but most foreign buyers start to watch the market again for now.
Meanwhile, a Shanxi-based producer also confirmed that many foreign buyers are watching the market as the price keeps increasing. "Customers refused to accept USD2,140-2,150/t FOB we quoted them at the beginning of this month, let alone current USD2,180/t FOB," said the source.
According to the source, many exporters are disturbed by the appreciation of rmb and also high ocean freight. The freight from Chinese main ports to European main ports increased by around USD20/t to current USD80-86/t or higher level. Those exporters who sign contracts on CIF basis have to take higher transportation cost into consideration.
The smelter, with a capacity of 6,000tpy, halted production early last week to carry out environmental protection performance. The source revealed many smelters are now improving the anti-pollution facilities and would not resume production shortly. Therefore, the supply tightness is unlikely to ease in the short term.
