Henan province in central China has launched a new round of
output cuts for the refractories and steel industries to run
from November 15, 2018, to March 15, 2019.
Over the period, Henan will impose limits on both industries
to reduce emissions when pollution levels worsen during the
winter heating season - a move that will lead to a reduction in
demand for industrial raw materials.
Some 599 businesses have been affected by the latest round
of production cuts, including 384 refractory enterprises, 70
foundries, 53 brickworks, 13 cement producers, 12 ceramics
companies, five non-ferrous metals recycling firms, four steel
plants and three electrolytic aluminium manufacturers, among
Henan has imposed a 30% cut in refractory output, and while
raw materials prices are expected to remain firm until the end
of 2018, the curbs on downstream demand will make it difficult
for raw materials producers and suppliers to maintain or
Refractory raw materials, such as magnesia, have meant prices
remain firm on tight supplies, with more companies halting
production due to the environmental regulations. Quiet demand
has resulted in fewer deals being concluded on the spot
Export prices steady
Meanwhile, more local magnesia producers in
China’s Liaoning province have stopped production
because of the latest round of stricter inspections to monitor
compliance with environmental regulations.
China’s government imposed another round of
environmental inspections on heavy industries in several
provinces, including Liaoning, for the period October
Domestic magnesia prices in the East Asian country remained
firm on falling supply levels due to the regulations and
because of consolidation in the magnesia industry, while export
prices have been holding steady at current levels despite a
lack of buying activity.
The regional government in Liaoning, the production hub for
magnesia, has increased its efforts to consolidate the
provincial magnesia market and control environmental pollution
and has made progress on consolidation in 2018.
The city of Dashiqiao had closed all its dead-burned
magnesia (DBM) kilns by mid-October to meet the new emissions
standards. Some fused magnesia producers in the area have also
halted production due to environmental inspections.
Producers insisted on firm offer prices for domestic fused
magnesia, while export prices were unchanged on slow
"Supply has become tight with the new round of environmental
inspections from the central government, but we
haven’t adjusted export prices by much because
limited orders have come from overseas buyers," an exporter in
Dalian told Fastmarkets.
Fastmarkets’ assessment of the price of fused
magnesia, 97% MgO (Ca:Si 1:1), lump, was $1,000-1,100 per tonne
fob China on Tuesday December 11. While the price of 97% MgO
(Ca:Si 2:1), lump, was $1,250-1,350 per tonne fob China, also
assessed on Tuesday December 11.
DBM and caustic calcined magnesia (CCM) export prices held
steady on sluggish buying activity although domestic prices
Fastmarkets’ price assessment for DBM, 90% MgO,
lump, was $240-270 per tonne fob China, and the price of CCM,
90-92% MgO, was $180-220 per tonne fob China on December 11.