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Fused magnesia prices increase in China

By Albert Li, Davide Ghilotti
Published: Wednesday, 12 April 2017

Intermittent production issues are starting to have an effect on Chinese export prices for fused magnesia, while caustic calcined and dead-burned magnesia are holding for the moment. Meanwhile demand for European material is on the rise, according to market participants.

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 destination.

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 thresholds.

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:

Fused Magnesia Spt Prices

New Price
(11 April 2017)

Previous price 

(4 April 2017)

FM, 98% MgO          

 750-910

650-810

FM, 97% MgO,  Ca:Si 2:1

 495-550

440-455

FM, 97% MgO,  Ca:Si 1:1

 455-480

405-420

FM, 96% MgO

 360-390

310-330

  Prices listed are $/tonne basis FOB China

Higher demand in Europe

Meanwhile in Europe, customers and local suppliers alike are keeping a close eye on the developments taking place in China.

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."



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