Chinese fused magnesia exports decline in June

By Davide Ghilotti
Published: Friday, 08 September 2017

FM shipments marked a first turning point after months of record-high increases, while DBM exports are starting also to edge downward and CCM continues to grow.

Chinese exports of fused magnesia (FM) fell in June both versus the previous month and last year, as the data starts to reflect the supply tightness that has been affecting magnesia production operations in the country in recent months.

Shipments of Chinese FM dropped 18% in June year-on-year (y-o-y) to 31,178 tonnes, also down 7% on a month-on-month (m-o-m) basis, according to China Customs.

The June data marks a turning point for magnesia exports, which had been increasing to record highs in early 2017 up to April, following the scrapping of export quotas and duties late last year.

In the case of FM, exports had been increasing at a pace of over 60% y-o-y in March and April, following a 20% rise in May, before the sharp drop the following month.

The upward trend in exports, as shown in the customs data, likely portrayed the increased buying activity seen in the market in the first month of the year when prices dropped as buyers capitalistic on the duty-free environment.

Since then FM supply has been the first to be seriously curtailed in Chinese production areas since Q1 this year, following the widespread shutdown of facilities during anti-pollution inspections, and the shortage of high-quality source materials, due to limitations to magnesite mining.

As availability slumped, prices of the commodity have surged.

Dead burned magnesia (DBM) exports meanwhile continued to show a y-o-y increase in June, but fell 9% m-o-m to 72,028 tonnes. Against year-ago levels, the material continued to mark double-digit increases, rising 14% against June 2016.

While availability and stock levels of DBM were higher than in FM, the extensive production shutdown has come to affect also DBM grades, which have appreciated over the last few weeks.

In the case of caustic calcined magnesia (CCM) the latest statistics continued to show growth in volume traded.

June exports of Chinese CCM, at 35,974 tonnes, were 5% up y-o-y and 9% higher m-o-m.

Orbite eligible for new financing

Davide Ghilotti

Canadian high-purity alumina (HPA) producer Orbite Technologies Inc. has completed the process of debt in possession (DIP) financing, it announced in late July.

The company submitted a proposal to the Superior Court of Québec (CCAA Court) to be granted $6.8m in additional funding, with a view to use it to increase working capital and as means towards the restructuring strategy.

Following the completion of the process, the company has now received an initial tranche of  Canadian dollar C$4.6m ($3.6m*). The remaining C$2.2m were transferred to be held in trust by PricewaterhouseCoopers, in its capacity as court-appointed monitor of the company’s progress.

The second tranche will be released to Orbite upon approval of the CCAA Court, the company said.

The DIP originated in part from the holders of Convertible Secured Debentures (these are company-issued loans convertible into stocks), and in part from a super-priority charge over the company’s assets.

"There can be no guarantees that company will otherwise be successful in its restructuring efforts and will emerge from CCAA protection," Orbite said.

Orbite is also seeking to extend the creditor protection status currently in place until 30 November.

In its second-quarter results, the company recorded a deepening of losses to C$ 2.2m, adding to a previous multi-million dollar loss suffered in Q1.