China magnesia exports increase in H1 2014

By Siobhan Lismore-Scott
Published: Wednesday, 03 September 2014

More magnesia exported at lower value; traders arrested for smuggling

China exported an average of 23% more magnesia in H1 2014 when compared to the previous year, ringing a bell of positivity through the market.

Figures obtained by IM show that exports of fused magnesia (FM) increased by 10%, to 164,217 tonnes in H1 2014. Top importing countries in order were the US, Japan, South Korea, Belgium and Holland. However, lower H1 FM prices, at Chinese renimbi (Rmb) 5,000/tonne ($810/tonne*), meant that the average export value increased by just 0.7% year-on-year (y-o-y), according to China’s Ministry of Information and Technology (MIIT).

For caustic calcined magnesia (CCM), exports from China rose a significant 33% in H1 2014 when compared to the same time last year, with 38,813 tonnes exported. Again, lower prices meant the value of the exports only increased by 26.4%. According to MIIT, CCM prices averaged Rmb 660/tonne ($107/tonne).

Top importing countries of CCM were Holland, US, Japan, Taiwan and New Zealand.

Dead burned magnesia (DBM) exports were 27.9% higher than those recorded in H1 2013, with 281,981 tonnes exported to the US, Holland, Japan, South Korea and Iran. Average DBM prices were at an average of Rmb 750/tonne ($121.5/tonne), down 5% y-o-y in H1 2014. In terms of value, revenue derived from the exports were up 23%.

Traders arrested

News that China is cracking down on the smuggling of magnesia is filtering though the popular press, with reports in Japan detailing the arrest of 30 Chinese traders suspected of smuggling magnesia in July.

The traders were apprehended after customs officials found that false documents were being used to transport magnesia from Liaoning province by truck to Lianyungang port in Jiangsu province, according to Japan Metal Daily.

Liaoning province hosts the Chinese companies known to be among the largest refractory producers in the country including Haicheng Houying, Huayu, Yingkou Qinghua, Jinlong and Liaoning Zhongxing.

Last year the province’s Special Resource Protection Office said that it was working to eradicate smuggling.

And, in October last year IM reported on the customs officials which were clamping down on tax evasion by Chinese - and foreign -industrial minerals producers (See October 2013).

Customs documents shown to IM suggested that companies were under-declaring the value of shipments of bauxite, calcined kaolin, graphite and magnesia.

But while headlines suggest that the government is cracking down on smuggling, sources say that the anti-corruption drive has extended even further and has now placed a ban on all opening ceremonies or dinners related to any government departments.

Industrial minerals demand “slowing”

Statistics released by China’s Ministry of Land and Resources in late July suggested that domestic demand for industrial minerals was slowing.

According to a report submitted by the governmental organisation, Chinese mineral production showed a slight increase in H1 2014, when compared to the same period in 2013.

In graphite, which was highlighted in the report, production was down 15% when compared to the same period last year.

Chinese mining capacity is at 1.2m tonnes, but last year it had an output of 540,000 tonnes, accounting for 45% of capacity. Production in the first six months of the year, however, was at 180,000 tonnes.

There are a number of reasons for the reduced capacity. Certainly it points to a reduction in demand, but it also highlights the effect of the consolidation in the industry.

World Steel Association results show positive trend

Global crude steel production in July increased by 1.7% y-o-y, to 136.8m tonnes, with growth in the US, Asia and Middle East countries, according to figures released today by the World Steel Association (worldsteel).

Production in the US grew by 2.3% y-o-y in July 2014, at 7.6m tonnes, while the Asian crude steel industry posted a 1.7% growth compared with the same month in 2013, driven by China, up 1.5% y-o-y, India, up 1.7% y-o-y, and South Korea, up 6.2% y-o-y.

With a 68.3m tonne output, China remains the world’s largest steel producer.

Global capacity utilisation ratio in July was 75.4%, 2.9% lower compared with the previous month this year and 1.2% points lower compared with July 2013.

In the countries highlighted as being the heaviest importers of refractory magnesia (DBM and FM) average steel production shifted up by 1.2% year-on-year (y-o-y) in the US; by 11% in the Netherlands (but this is somewhat skewed by the fact March 2013 steel production was so low); by 9.2% in South Korea and by 1% in Japan.