The European magnesia industry is holding its breath as it
waits to feel the full force of China’s quota-free
export system and lower prices, while quotes for EU material
have remained stable and demand is reportedly holding
Local suppliers have been bracing themselves for further
price pressure and potential supply disruptions since the
Chinese government cancelled the export quota before
But while some European buyers have reported difficulties
sourcing Chinese material in recent weeks prices of western
magnesia products have held stable.
The cancellation of the export
duty on magnesia – dead burned (DBM), caustic
calcined (CCM) and fused (FM) material – last
year triggered a swift downturn in Chinese FOB prices,
which could be seen already in mid-January.
At the same time, the downtrend in China appears not to have
had the knock-on impact on the rest of the world markets that
many had feared, creating sudden oversupply and falling prices
across the board.
"So far, nothing has happened that came to affect directly
our business," a European magnesia producer
The market remains cautious however and has not discounted
that there could still be repercussions for the ex-China
"We are prepared to face an impact. There will be one
– that goes without saying, but it’s
taking longer than we first thought. We could see it from Q2 or
in the second half."
The source added that he had not received pressure from his
customers to move his prices downward on the back of
China’s lower offers.
Magnesia carbon bricks. (
Source: Dalmia Bharat)
Another European-based supplier held a similar view: "We
expected a more sudden impact on the market, but we
haven’t felt that as of yet. There was no pressure
on our price levels."
According to IM’s assessment
on 9 March, European-origin magnesia prices have remained
stable against previous weeks.
magnesia is currently priced at a range of $480-650/tonne
FOB Europe, while calcined
agricultural magnesia stands at €240-300/tonne CIF EU
fused magnesia is priced at a range of $1,500-2,450/tonne
max 3.5% SiO2 content, is also stable at €65-80/tonne FOB
As regards North American product, electrical grade
fused magnesia is trading at $1,700-2,500/tonne ex-works
US, while refractory grade
fused magnesia stands at $900-1,400/tonne FOB US.
A third supplier with operations in Europe spoke of "some
pressure from some of our customers" who pushed for a price
adjustment, but added: "So far, we don’t see a
need to do so."
In terms of demand flows, European producers reported a
growing amount of enquiries in 2017 so far compared with last
"Enquiries are on the rise from customers in Europe," one of
the producers said. "We see a clear positive trend in number of
orders this year so far."
The other producer reported a similar scenario.
This may be connected to what a number of sources in
conversation with IM referred to as a lack of
availability of Chinese material reaching Europe at the
One central European trader told IM: "In
the case of some products – such as large crystal FM
– there is less going around."
The first producer added said that Chinese CCM and FM were
thin on the ground as of late. He added that customers have
come to him to ask for the material (especially fused magnesia)
as they could not get enough from China.
The second supplier added: "We see a lack of material coming
in from China, and this is leading to higher demand from our
customers. The Chinese are selling cheap, it’s
true, but product is hard to find.
"No one has asked us to reduce our prices until now," he
Despite China being one of the largest suppliers of
magnesia, the first producer stated that Europe is "not so
dependent" on Chinese material, as it can rely on local
production as well as solid import channels from other
producing areas such as Turkey, Russia, central and Latin
Still, as IM reported last month, official
Chinese customs data showed magnesia exports from China
surged in January. Official data does not however identify
where the material was exported to.
Chinese prices 'won’t
The bearish price scenario within China may not last,
One view that is being held by a number of market
participants, both within China and elsewhere, is that prices
of Chinese magnesia may be pressured upwards once again in the
near future, owing to decreasing production capacity.
In a bid to reduce the escalating pollution levels in the
country, Chinese environmental regulators have kick-started a widespread check-up of the
local magnesia industry to ensure that operations stay
within the prescribed pollution thresholds, and that
environmental norms are followed.
As reported in February, Anshan and Haicheng
– two cities in Liaoning province, the main magnesia
producing area in the north of the country – have been
running inspections of over 100 local companies. The controls
resulted in shutdowns and fines being issued to those
facilities whose operations did not respect pollution
"We are keeping a close eye on what is happening in China.
[The closures] will result in lower, or intermittent, supply,
which in turn could push prices upwards again," the first
producer told IM.
"The low prices won’t last for long," the
second supplier said. "Just wait until the shutdowns dent into
stockpiles and local supply is meaningfully reduced."
A number of Chinese producers in touch with
IM this week stated they expect prices to
increase due to tight supply.
For information on magnesia prices please go to
Industrial Mineral's Pricing