Shanxi magnesium smelters tend to raise offers

BEIJING (Asian Metal) 24 Mar 08 - Considering the increasing price of ferrosilicon, tight supply of coal and also the possibility of production decrease on environmental crackdown, magnesium smelters in Shanxi Province refuse to lower offers further after the price in the region fell by more than RMB500/t (USD71/t) late last week to around RMB28,500-28,700/t (USD4,043-4,071/t) ex works. Many smelters cease quoting today and tend to raise offers again in view of more inquires.Asian Metal CopyrightThe source thinks that the magnesium prices will not drop dramatically as market fundamentals remain strong.Asian Metal Copyright
 
A Shanxi-based smelter, running with an output of 900-1,000tpm, suspended offering today seeing more inquiries coming from domestic buyers. "Buyers are usually active in inquiring on Monday no matter whether they are in need to buy or not.Asian Metal CopyrightThe source is also watching the market and plans not to rush into the market at the moment.Asian Metal Copyright "That may be one reason for more inquiries today," said the source.Asian Metal Copyright However, the higher prices may drive consumers out of the market as the price increase may not be accepted by downstream buyers in a short time.Asian Metal Copyright "Additionally, consumers are also aware that the supply is still comparatively tight, so the magnesium price may not continue to drop greatly.Asian Metal Copyright However, the higher prices may drive consumers out of the market as the price increase may not be accepted by downstream buyers in a short time.Asian Metal Copyright Therefore, for fear that smelters would lift offers again, they intend to purchase some now."
 
The source confirmed that a few deals were concluded at around RMB28,500/t (USD4,043/t) ex works late last week in the local market, but many smelters would not like to sell any below RMB29,000/t (USD4,113/t) ex works today. "Our pre-April output has been booked out, so we're not in a hurry to sell," said the source, predicting that the price may surge up again soon.Asian Metal Copyright "Some stopped quoting and some claimed that they would not sell magnesium ingot at a price below RMB29,000t USD4,113t ex works," said the source, confirming that a few deals were concluded at around RMB28,500t ex works late last week and some small smelters even reportedly undersold magnesium ingot at RMB28,000-28,300t USD3,972-4,014t ex works.Asian Metal Copyright
 
A major domestic trader who purchases over 1,000tpm of magnesium ingot to mainly supply domestic consumers confirmed that smelters in Shanxi tend to push the price up again by holding back from offering. "Some stopped quoting and some claimed that they would not sell magnesium ingot at a price below RMB29,000/t (USD4,113/t) ex works," said the source, confirming that a few deals were concluded at around RMB28,500/t ex works late last week and some small smelters even reportedly undersold magnesium ingot at RMB28,000-28,300/t (USD3,972-4,014/t) ex works.Asian Metal CopyrightA Shanxi-based smelter, running with an output of 900-1,000tpm, suspended offering today seeing more inquiries coming from domestic buyers.Asian Metal Copyright 
 
The source reported that few deals have been heard of today as not only sellers but also buyers are watching the market. "The market is so confusing that all of us dare not make any prediction on the market trend," said the source.Asian Metal CopyrightA major domestic trader who purchases over 1,000tpm of magnesium ingot to mainly supply domestic consumers confirmed that smelters in Shanxi tend to push the price up again by holding back from offering.Asian Metal Copyright Meanwhile, the source disclosed that major smelters in Taiyuan and Wenxi act together to prevent the price from declining further, and that might be another factor causing smelters in the province to consider raising offers again.Asian Metal Copyright "Buyers are usually active in inquiring on Monday no matter whether they are in need to buy or not.Asian Metal Copyright
 
The source thinks that the magnesium prices will not drop dramatically as market fundamentals remain strong. However, the higher prices may drive consumers out of the market as the price increase may not be accepted by downstream buyers in a short time.Asian Metal Copyright Meanwhile, the source disclosed that major smelters in Taiyuan and Wenxi act together to prevent the price from declining further, and that might be another factor causing smelters in the province to consider raising offers again.Asian Metal Copyright "What major smelters should do is to help the market keep stable at a level acceptable for both parties rather than adding fuel to the market rise," the source stated.Asian Metal Copyright "Buyers are usually active in inquiring on Monday no matter whether they are in need to buy or not.Asian Metal Copyright
 
The source is also watching the market and plans not to rush into the market at the moment.
 
Meanwhile, despite the price change in Shanxi, the spot market in Shaanxi, where the price fluctuation usually lags behind, saw a significant price decrease last weekend. Some smelters reduced offers to RMB28,500/t (USD4,043/t) ex works from previous RMB29,000/t (USD4,113/t) ex works, and small smelters reportedly concluded deals at RMB28,000/t (USD3,972/t) ex works or even lower prices.