Participants divide on magnesium market
2008-02-01 10:01:16 【Print】
BEIJING (Asian Metal) 1 Feb 08 - The magnesium ingot market has been quieter this week after a slight increase last week caused by the severe weather. With the Chinese New Year approaching, coupled with the traffic standstill, fewer activities are seen in the market. Participants are divided on whether the magnesium market will keep stable or head further downwards.
A Shaanxi-based producer, running regularly with a monthly output of 500t, revealed that their stocks amount to 400t. The source said that demand has been weakening since the middle of January, as most buyers expected that the market would have gone down further. The snow-caused closures of magnesium smelters in Shanxi has little impact on the market in Shaanxi where most smelters are in normal production, though traffic becomes slower also due to the snow.
The source worries that the price may drop further after the Spring Festival as supply will increase during the holiday period when smelters have increasing stocks on hand. The smelter insists on the offer of RMB23,000/t (USD3,194/t) ex works, while the source revealed that some other small smelters agree to sell at RMB22,000-22,500/t (USD3,056-3,125/t) ex works by cash in order to collect money.
A Shanxi-based producer, with a capacity of 10,000tpy, holds that the market will either keep stable or go up after the Spring Festival. The source worries that the short supply of coal as well as the higher price will trouble many magnesium smelters. According to the source, due to series coal mine accidents in Linfen, Shanxi, one of the largest major coal production bases, many magnesium smelters have to turn elsewhere to source coal and consequently bear higher cost. "Furthermore, the 1st Session of the 11th National People's Congress (NPC) and the 1st Session of the 11th National Committee of the Chinese People's Political Consultative Conference (CPPCC) will begin in early March. The local government will take more stringent measure to crack down on small coal mines incompliant with the safety standard.
The smelter, having been fulfilling some signed contracts, has not concluded any new deals in the past two weeks. The source said that major smelters in Shanxi still insist on offers at or above RMB24,000/t (USD3,333/t) ex works with few deals concluded.
Nevertheless, most participants opine that the market is more likely to stay steady or decline slightly rather than move up.
A Shaanxi-based producer, running regularly with a monthly output of 500t, revealed that their stocks amount to 400t. The source said that demand has been weakening since the middle of January, as most buyers expected that the market would have gone down further. The snow-caused closures of magnesium smelters in Shanxi has little impact on the market in Shaanxi where most smelters are in normal production, though traffic becomes slower also due to the snow.
The source worries that the price may drop further after the Spring Festival as supply will increase during the holiday period when smelters have increasing stocks on hand. The smelter insists on the offer of RMB23,000/t (USD3,194/t) ex works, while the source revealed that some other small smelters agree to sell at RMB22,000-22,500/t (USD3,056-3,125/t) ex works by cash in order to collect money.
A Shanxi-based producer, with a capacity of 10,000tpy, holds that the market will either keep stable or go up after the Spring Festival. The source worries that the short supply of coal as well as the higher price will trouble many magnesium smelters. According to the source, due to series coal mine accidents in Linfen, Shanxi, one of the largest major coal production bases, many magnesium smelters have to turn elsewhere to source coal and consequently bear higher cost. "Furthermore, the 1st Session of the 11th National People's Congress (NPC) and the 1st Session of the 11th National Committee of the Chinese People's Political Consultative Conference (CPPCC) will begin in early March. The local government will take more stringent measure to crack down on small coal mines incompliant with the safety standard.
The smelter, having been fulfilling some signed contracts, has not concluded any new deals in the past two weeks. The source said that major smelters in Shanxi still insist on offers at or above RMB24,000/t (USD3,333/t) ex works with few deals concluded.
Nevertheless, most participants opine that the market is more likely to stay steady or decline slightly rather than move up.
