No improvement in magnesium ingots market

3 Sep 08 – Market participants told Asian Metal that there was no improvement in magnesium market conditions, with difficulties increasing in sales. Many of them seem reluctant to look too far into the future.
A Shanxi-based smelter reported that the magnesium market has been inactive, and buyers show little interest in purchasing. "Some buyers have indeed been inquiring, but they did nothing except asking for a price," said the source.
Due to the weakened demand, the smelter, with a capacity of 12,000tpy, has reduced production by half. It has no stock at the moment, but is still under great pressure of sales. "Considering the high production cost, we're reluctant to sell magnesium ingot at prices below RMB24,500/t (USD3,582/t) ex works, but no buyer accepts such a price," said the source, adding that they sold small quantities of magnesium ingot at around RMB24,300/t (USD3,553/t) ex works early this week.
A trader from Sichuan just purchased around 40t of magnesium ingot from a Shaanxi-based smelter at RMB25,000/t (USD3,644/t) delivered, with RMB800/t (USD1,17/t) for transportation cost. "The price has not changed much this week, but the magnesium market is still very weak," said the source, citing that they usually sell 120-150t of magnesium ingot to end users in the local market whereas the total trading volume in July and August was less than 80t.
The source mainly supplies manufacturers of magnesium alloy and aluminum profile. Due to the price hike in the first half of this year, many magnesium alloy producers switched to produce aluminum alloy, and aluminum profile producers reduced consumption of magnesium ingot.
The source said it is still too difficult to predict the market in the rest of the year, but believes that more activity will be seen in the spot market in the fourth quarter as long as the magnesium prices keep comparatively stable.