Fused magnesia (FM) export prices out of China rose 11
April, following a steady increases in domestic prices.
Several producers in Haicheng as well as European buyers
confirmed to IM an increase in FM prices
ranging between $30 and $100 per tonne, depending on grade and
China’s domestic FM prices have been on the
rise this year to date due to a number of reasons, including
the ongoing environmental inspections of local production
processes, limited use of dynamite for mining activities, lack
of magnesite ores out of Haicheng and government’s
requirement on higher stripping ratio, among others.
FM domestic prices have risen over 20% this year, according
to IM sources.
While producers believe that tight supply might continue
until H2, they also believe that prices will keep growing, both
for domestic sale and exports.
One producer in Haicheng told IM that
environmental-related equipment upgrade costs may be higher
than the cost of building a new kiln.
Specifically in FM, which requires first grade or special
high-grade magnesite ores, the small amount of output and
inventory may push FM prices further upwards.
One trading company based in Dalian told IM
that, since magnesite resources are concentrated in Liaoning
province, the provincial government can easily manage it
through policies limiting output or adding mandatory sale price
Caustic calcined (CCM) and dead-burned magnesia (DBM) prices
remain stable for the moment, against the increase seen in FM,
as shown in the table below:
FM, 97% MgO, Ca:Si 2:1
FM, 97% MgO, Ca:Si 1:1
Higher demand in Europe
Meanwhile in Europe, customers and local suppliers alike are
keeping a close eye on the developments taking place in
Multiple sources based in Europe, active in production and
trading, told IM that they have seen growing
demand for European-produced material in some grades, including
CCM and FM.
This, they claimed, was based on buyers not being able to
secure enough volumes in China to cover their needs, forcing
them to source elsewhere.
"Since production is intermittent, Chinese companies are
meeting orders through existing stocks. This means that not all
grades are readily available: FM seems thin on the ground at
the moment," one European trader told IM.
While European magnesia prices have remained unchanged as of
late, demand has reportedly increased. At least two suppliers
told IM that the number of orders have grown
this year to date compared with 2016.
"Business activity is growing," one supplier said.
The trader added: "The European market will get tighter.
It’s just a matter of time."