18 Aug 08 – Many producers claimed that the current price of magnesium ingot is below their production cost, so they refuse to decrease the price further despite the still weak demand. Moreover, some producers even raise offers slightly, market sources reported to Asian Metal.
A Shanxi-based producer reduced output to less than 200tpm based on its capacity of 500tpm because of the sluggish market and also short supply of coal. The source acknowledged that the current price has dropped to around RMB25,000/t (USD3,639/t) ex works and some deals were concluded at RMB24,500/t-24,800/t (USD3,566-3,610/t) ex works in Taiyuan and Fugu. "However, we won't sell any below RMB25,000/t (USD3,639/t) ex works despite that we have around 300t of magnesium ingot in stock, as such a price is around RMB1,000/t (USD146/t) lower than their production cost," said the source.
AsThe source does not think the price will go lower as many smelters are suffering losses; otherwise, more smelters will be forced to halt production. Meanwhile, the source disclosed that they can not get sufficient coal supply from Shenmu, Shaanxi where they usually purchase coal, as many mines there were asked to shut down for safety concern.
Another Shanxi-based producer also claimed that they would not sell magnesium ingot at prices below RMB25,000/t (USD3,639/t) ex works. "Demand is indeed weak. However, if the price continues to go down, more smelters would rather choose to halt production than keep producing with great losses," said the source.
The source confirmed that a few deals in Taiyuan were closed at a relatively low price of RMB24,500/t (USD3,566/t) ex works recently, but added that those deals were with large quantities and the buyers and sellers have long-term relationships.
The source thinks that with more smelters reducing or suspending production, the stocks in the spot market will gradually decrease, and the market will be under less pressure of the high stocks.
The smelter is running at less than half of its production capacity of 600tpm with 100-200t of the material on hand.
A Shanxi-based producer reduced output to less than 200tpm based on its capacity of 500tpm because of the sluggish market and also short supply of coal. The source acknowledged that the current price has dropped to around RMB25,000/t (USD3,639/t) ex works and some deals were concluded at RMB24,500/t-24,800/t (USD3,566-3,610/t) ex works in Taiyuan and Fugu. "However, we won't sell any below RMB25,000/t (USD3,639/t) ex works despite that we have around 300t of magnesium ingot in stock, as such a price is around RMB1,000/t (USD146/t) lower than their production cost," said the source.
AsThe source does not think the price will go lower as many smelters are suffering losses; otherwise, more smelters will be forced to halt production. Meanwhile, the source disclosed that they can not get sufficient coal supply from Shenmu, Shaanxi where they usually purchase coal, as many mines there were asked to shut down for safety concern.
Another Shanxi-based producer also claimed that they would not sell magnesium ingot at prices below RMB25,000/t (USD3,639/t) ex works. "Demand is indeed weak. However, if the price continues to go down, more smelters would rather choose to halt production than keep producing with great losses," said the source.
The source confirmed that a few deals in Taiyuan were closed at a relatively low price of RMB24,500/t (USD3,566/t) ex works recently, but added that those deals were with large quantities and the buyers and sellers have long-term relationships.
The source thinks that with more smelters reducing or suspending production, the stocks in the spot market will gradually decrease, and the market will be under less pressure of the high stocks.
The smelter is running at less than half of its production capacity of 600tpm with 100-200t of the material on hand.
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