China has exported as much magnesia in the first seven months
of this year as it normally does in a whole year, but
shipments have stalled and are now falling by the
The pattern of Chinese trade of magnesia products in
2017-to-date has been characterised by a surge in exports in
the first few months of the year.
The increase was of such magnitude that Chinese trade in the
seven months to July 2017 was equivalent to what the country
exports in 12 months during an average year.
Chinese exports of all magnesia products – fused
magnesia (FM), caustic calcined magnesia (CCM) and dead burned
magnesia (DBM) – in the January to July period of this
year reached 1.18m tonnes.
This included 254,319 tonnes of FM, 336,379 tonnes of CCM and
584,861 tonnes of DBM.
For comparison, last year Chinese exports stood at 1.21m
tonnes. Between 2012 and 2016, Chinese annual exports totalled
between 1.09m tonnes and 1.35m tonnes.
Notably, the first four months of the year recorded the
largest share of activity. In the period between January and
April, exports reached more than 735,000 tonnes. This is 63% of
the 2017-to-date total.
Conversely, in May to July, exports stood at a lower 440,479
tonnes. Monthly trade peaked in April and then gradually
reduced in the subsequent months.
"Looking at the first half of the year, you would expect
China to export 2m tonnes this year," a magnesia supplier
told IM. "But this is not going to
happen: as you can see, the latter months showed a substantial
decline [in consignments]."
The pattern of trade seen this year was brought about by a
number of factors that shaped selling activity, including
export duties and quotas, prices and availability.
In December, the Chinese government opted to scrap the
existing duty regime and quota system for exports of magnesia
products from 1 January. Prior to that, export tariffs were set
at 5% for CCM and 10% for both DBM and FM.
This led prices to decline in the first few months of this
year, fostering buying activity on the part of consumers.
The price downtrend was short-lived, however. As Chinese
authorities tightened the controls over industrial pollution,
many magnesia operations were affected and had to shut. Unable
to produce, producers resorted to selling from stockpiles,
which rapidly decreased.
Short supply became evident in a matter of months, and
prices moved upwards again.
By early May, virtually all magnesia production facilities
had stopped and fused magnesia had become unavailable in
Liaoning province. Prices of all three products surged during
the summer months, exceeding pre-quota scrapping
Customs data confirms the reduction in availability, with a
remarkable decline in volumes exported in May-July after the
heights of the previous months.
As the issues surrounding production flows in China continue
unresolved – with inspectors now back in Liaoning for
a second round of inspections – further disruptions in
production are to be expected. This will reflect on export
volumes in the second half of the year.
Another European magnesia seller added to
IM: "My take is that monthly exports will
continue to reduce in the following months, as the statistics
catch up with the production issues."