Magnesium market slow
2008-01-29 15:23:40 【Print】
BEIJING (Asian Metal) 29 Jan 08 - Magnesium ingot market slows down with Chinese Spring Festival around the corner and traffic remaining slow caused by the heavy snow. Participants do not expect any good business this week.
Heavy snow has been paralyzing traffic in many major magnesium producing areas, especially Shanxi Province. Most small smelters in South Shanxi were forced to stop production due to lack of raw materials. Meanwhile, bad traffic also troubles many smelters who are still running.
A Yuncheng-based smelter, with a capacity of 500tpm, halted production last week due to lack of coal and FeSi. "Raw materials we booked half a month ago were still strained on the way due to the harsh weather, and even if we resume production, out products are difficult to be delivered for the same problem," said the source, planning not to restart before the Spring Festival.
According to the source, the market in Wenxi and Yuncheng has come to a standstill. Although some large smelters in the region sold some magnesium ingot at higher prices of over RMB24,000/t (USD3,333/t) ex works last week to consumers nearby who were anxious to purchase to satisfy their production, few deals have been closed since late last week. Meanwhile, smelters who are eager to collect money before the holiday agree to sell at RMB23,000-23,500/t (USD3,194-3,264/t) ex works if they can convey goods to customers.
A smelter located in North Shanxi reported to Asian Metal that the market is cooling down with the Chinese New Year approaching. According to the source, fewer consumers are still buying in the market. Furthermore, transportation becomes more difficult due to the Chinese New Year travel peak. "Although it did not snow heavily in the region, and the traffic condition is much better than that in South Shanxi, the transportation is still tightening as many drivers will also begin having holidays," said the source.
The source closed a few deals at around RMB23,000/t (USD3,194/t) ex works lately, and said that the price did not change much as it did in South Shanxi. As the Spring Festival is drawing nearer and many downstream customers will also embrace the New Year celebration, the source predicts that little business will be done in the rest of this week.
The smelter, running with an output of 200-300tpm currently, has just completed the expansion project which endows the smelter with a capacity of 500tpm, and the new furnaces will be put into production after the Spring Festival.
Other than Shanxi Province, snow also hit Ningxia Hui Autonomous Region and Shaanxi Province, the two major magnesium ingot production bases, and worsens the traffic condition in those areas. Some smelters are also facing the danger of reducing production on lack of raw materials caused by bad traffic. However, as demand remains low at the eve of the Spring Fesival, the market has not changed much in those areas.
Meanwhile, major smelters such as Tongxiang and Huiye insist on high offers at or above RMB25,000/t (USD3,472/t) ex works.
