China’s Dashiqiao magnesia hub closes companies that fail to meet environmental standards

By Carrie Shi
Published: Wednesday, 05 September 2018

Authorities in China’s magnesia production hub of Dashiqiao have shut down 87 local companies that did not meet new environmental standards. But despite this, China’s magnesia export prices stood still on thin buying.

Local authorities in Dashiqiao city, in China’s Liaoning province, have introduced stricter regulations on local companies to make them comply with Beijing’s environmental targets, and have already closed several producers that did not meet the new standards.

The Bureau for Environmental Protection of Dashiqiao set out the new rules on August 31, with the intention of improving the quality of the local environment, in line with the central government’s targets.

The authority has since started new inspections of local companies, and has closed a number of companies that failed to reach the environmental standard now required.

Dashiqiao said that so far 87 companies in various sectors have been closed, which has been achieved by cutting off their power supplies.

Because Dashiqiao is the country’s second production hub for magnesia minerals after Haicheng, especially for fused magnesia, the new regulations are bound to affect local magnesia output.

The number of magnesia companies that have been shut down, among the total of 87 closures, has not been revealed, but Industrial Minerals understands that a large number of them would be involved in magnesia production.

Meeting the standards required by the governmental regulations would require costly upgrades to equipment. For this reason, many small and medium-sized producers are unlikely to have the financial ability, or the will, to carry out such improvements.

Consequently, Industrial Minerals understands that smaller enterprises are likely to be the hardest hit by the latest government move.

Despite this, however, and with demand remaining weak while there are still sufficient stocks, magnesia prices held stable this week.

Industrial Minerals’ latest assessment on Tuesday September 4 showed that the price of magnesia, fused, 97% MgO (Ca:Si 2:1), fob China, was unchanged at $1,250-1,350 per tonne, flat from the previous week.

"Magnesia prices increased in a large range last year amid a lack of raw materials, which made buyers turn to other global producers for supplies. With demand being extremely weak this year, magnesia prices have fallen because producers are eager to boost their sales in a flat market," an exporter in Dalian told Industrial Minerals.

"Though the price of magnesia has shown signs of softening recently, I think it will not fall by much this year because production costs have risen due to the raised standard of the environmental requirements," the exporter added.

Prices for dead burned magnesia (DBM) were unchanged on thin trading. The price of DBM 97.5% MgO, lump, fob China, was steady week-on-week at $1,100-1,300 per tonne on September 4, while the price of DBM 90% MgO, lump, fob China, stayed at $220-260 per tonne.

More like this