Analysis: China's magnesium industry calls for support to develop deep processing

Chinese experts are calling on the domestic magnesium industry to accelerate the research and development of magnesium alloy technology and products to undergo the financial crisis.

Magnesium metal enterprises suffer great loss

China, as a big country in term of magnesium resources, production capacity, output and export in the world, has reported a fast reduction of magnesium orders. Many provinces' exports have more than halved, and some written up quarterly orders were rescheduled for a month-by-month order basis.

Shanxi, one of the largest producers of magnesium in China, exported 24,800 tons in the first five months of this year, dipping 71.6 percent year on year. The export value amounted to approximately 70 million U.S. dollars, down 78.9 percent, dragging down the province's exports by 7.1 percentage points.

Ma Jinting, general manager of Ningxia Taifeng Magnesium Industry Co., Ltd., said that the factory's production capacity during the first half was 12,000 tons, but that the operational rate was less than 50 percent, while output was about 2,000 tons.

Besides, the price of magnesium ingots was 38,000 yuan/ton during June 2008, and has since dropped to less than 15,000 yuan/ton, pushing the company into losses of 1,000 to 2,000 yuan/ton.

The retreat of magnesium ingot prices was attributed to fallen demand in European and American markets, where the automotive industry was weakened by the financial crisis, and accordingly requiring less magnesium alloy.

About 80 percent of China's magnesium ingot relies on export, and domestic market is less developed to consume too many magnesium products, leading to the industry's low operation rate, or even off production.

Qin Jie, general manager of Ningxia Zhongning Shengdehua Magnesium Industry Co., Ltd., said that the price of magnesium ingots is still declining, and many enterprises' costs are 17,000 yuan/ton. The situation has flared price war in some regions.

Magnesium product prices will linger at a low level during 2009, and enterprises' production won't recover to normal in the short run, estimated Qin.

Expanded industrial investment leads to higher risks

China's magnesium metal investments have expanded over the past two years. Ningxia, Shaanxi and Qinghai provinces all introduced projects with high production capacities.

However, the majority of investments focus on the field of raw magnesium production, rather than products with high added value.

Although the domestic market developed with increased demand for magnesium alloy used in products such as automobiles, motorcycles, aircrafts and laptops, most enterprises were less inclined to invest in high-end magnesium alloy products. The lack of inclination is attributable to technological difficulties and market uncertainty.

It's feared that China's magnesium production capacity will double within several years, leading wasted resources and capital, granted that the industry's R&D and applications still lag behind.

Supportive policies for downstream magnesium alloy needed

Because China's processing technologies are weak, the country lacks of magnesium pricing right. The country produced 630,000 tons of magnesium metal in 2008, accounting to 85 percent of the world's total output.

Compared to developed countries, China's application scale of magnesium alloy was limited with relatively higher prices, restraining enterprises from injecting considerable capital into new product development.

However, some experts said the use of magnesium alloy will help produce lighter automobiles, which due to environmental regulations are becoming ever more important. The country is also expected to emphasize the R&D of downstream products, rather than expanding industrial scale.

China must now reinforce capital supports for some qualified enterprises and assist them in upgrading their technology over the long run, cultivate professionals and establish a public R&D platform for magnesium alloy. It must also consider designing policies to provide a stable domestic market for magnesium alloy enterprises. – China Mining

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Lead, tin prices increase

Base metals prices were mostly lower on Tuesday.

The major exception was three-month lead, which reached a new record high again on Tuesday at $3,215 per tonne before falling back to $3,190 per tonne in late afternoon trade on the London Metal Exchange for a gain of $100.

The gain in lead prices came after a production cut following an explosion at a smelter in Missouri.

Shipments from the Herculaneum smelter won't stop, but repairs of the damage caused by the explosion are expected to take a week to a week and a half.

Tin also gained ground, rising to $14,300 per tonne.

Copper prices were lower, dropping 1 cent to $3.55 per pound in early afternoon trade in New York and falling by 0.4 percent to $7,776 per tonne on the London Metal Exchange as inventories increased and strike news was mixed.

The price of nickel fell $155 to $31,850 per tonne in London as demand from steel mills declined and LME stockpiles remained at their highest level in over a year.

Aluminium prices were also lower, falling to $2.796 per tonne.

 

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Tin lower in London as China exports decline

Base metals prices were lower Friday as tin approached its biggest weekly decline in twenty years on news reports that exports of the metal from China dropped 21 percent in June from the previous year at the same time after rising 36 percent in the second quarter and going up by 72 percent in the first half of 2009.

The recent decline after those gains are seen as an indication that demand is declining.

Tin dropped $705 to $11,900 per tonne in late afternoon trade on the London Metal Exchange as inventories stood at 17,720 in LME warehouses, twice that at the end of 2008.

Copper prices were also lower in late afternoon trade in London, dropping $16 to $4,879 per tonne even though inventories fell 1.3 percent on the session to 258,575 tones as China's imports of the metal used in manufacturing and construction were up 53,333 tonnes from May's levels.

In New York, meanwhile, September copper dropped 3 cents to $2.21 per pound.

Aluminium, lead, zinc and nickel were all also lower in late London trade.

Among precious metals, August gold was down $3.90 to $912.30 per troy ounce in New York, while September silver was 29 cents lower to $12.65 per troy ounce and October platinum dropped $2.90 to $1,107.60 per troy ounce.

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Nonferrous metals price forecasts revised

LONDON: Several market analysts are now forced to eat their words nonferrous metals and revising their forecasts for 2009.

Several nonferrous metals analysts have already revised their predictions for spot nonferrous prices on the London Metals Exchange (LME).

Almost all of the revised forecasts are lower than 2008 averages and show slippage off actual midyear averages, which reflect a projected end of Chinese stockpiling and expectations of an anemic, if any, metalworking recovery late in the year.

According to purchasing.com website, Standard Chartered analysts now expect slight upward momentum in the world zinc price in 2010 as long as demand improves.

Besides that, Reuters News, Bloomberg News and Purchasing.com have tracked down these revisions and forecast price changes of base metals traded on the LME.

They include: Barclays Capital has raised its 2009 price forecasts for copper, lead, zinc, nickel and tin, and said signs of recovery in OECD demand looks set to underpin prices.

The emergence of some physical consumer buying in OECD markets is evidence that destocking has run it course. Although the short term outlook for copper market fundamentals is not very impressive, it expects downside pricing to be limited.

Barclays Capital raised its 2009 price forecast for copper to $1.96 from $1.83 projected earlier. LME copper prices at midyear were $2.27. Barclays Capital raised its 2009 lead metal price forecast to 67¢ from 63¢ and its zinc 2009 forecast to 64¢ from 61¢. The midyear average for LME lead was 75¢ with zinc at 70¢. On nickel prices, Barclays Capital raised its forecast for 2009 to $5.39/lb from $5.05 forecast earlier. It also lifted its 2009 forecast for tin to $5.71 from $5.53. At midyear, nickel averaged $6.70 with tin at $6.80.

Natixis forecasts copper prices to average $1.86/lb and aluminum prices to 61¢. The Natixis outlook sees the average price for lead at 63.5¢, nickel at $5.10, tin at $5.22 and zinc at 61¢. Numis Securities has changed its copper-price forecast for 2009 from $1.40/lb to $1.70.

Bank of America/Merrill Lynch Research analysts still expect copper prices to average $1.77, up from $1.54 projected earlier, while aluminum is forecast 20% higher at 68¢.However, "going forward, if government policies are successful in reigniting growth, physical commodity supply constraints could resurface, resulting in even more commodity price inflation," they write to clients.

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Indian participants hopes Antimony price will go down soon

Indian participants hopes Antimony price will go down soon

BEIJING (Asian Metal) 8 Jul 09 – Indian market participants reported that the hiking price of antimony ingot and trioxide is affecting the market buying. Many consumers start to watch the market without making purchases. Participants believe that the price of antimony ingot and trioxide will not hold high for long and may soon come down.

An Indian trader who usually imports three or four containers of antimony trioxide from China reported that the price of the material has been going up in last two weeks. "We bought one container of antimony trioxide 99.5%min at USD4,300/t CIF Indian main ports last week, but offers have gone up to USD4,350-4,400/t CIF Indian main ports this week," said the source.

The source felt that demand for antimony trioxide slows down because of the high price. Many of his customers are not making purchasing but watching the market instead. "The high price keeps buyers away from the market. If demand becomes slow, antimony trioxide price will soon fall down," said the source. Meanwhile, the source is selling at INR245-250/kg for antimony trioxide in the spot market.

Another Indian trader who mainly deals in antimony ingot predicts that the price of antimony products will go down at the end of July or early August.

The source confirmed that the high price of antimony ingot is hurting the market demand. Consumers cannot accept the price at as high as USD5,000-5,100/t CIF Indian main ports while the price was at USD4,200-4,300/t CIF Indian main ports three months ago. "Besides, we also sell antimony ingot to Europe. Many European buyers are going to take holidays, so the market will because quiet," said the source.

The source has not made purchases for antimony ingot recently due to the high price. He will keep a close eye on the market and will not rush into the market for the material. However, the source acknowledged that the supply is tight for now. As Chinese suppliers said, antimony concentrate is also in short. Therefore, the antimony ingot price may not drop dramatically even if it starts to move down.

Meanwhile, the source reported that antimony ingot is being offered at INR265-270/kg in the spot market.

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Micro-encapsulation Red Phosphorus Flame Retardant Masterbatch

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