Extended business closures in China to delay magnesia shipments

By Davide Ghilotti
Published: Friday, 31 January 2020

Shipments of magnesia that were due to leave China’s Liaoning province next week will likely experience delays following an extension of the holiday period in the region, as authorities seek to contain the Wuhan coronavirus outbreak.

The northeastern Chinese province is a hub for magnesite mining and processing, with the ports of Dalian and Yingkou the two main harbors shipping the mineral overseas.

Authorities have extended the period for business closures in Liaoning to February 9, as similar measures have been taken in other areas of the country as a precaution to contain the spreading of the novel coronavirus epidemic, which originated in China’s Hubei province in January.

Market sources in contact with Fastmarkets today said the extension of the closures in Liaoning will cause delays for magnesia orders that were lined up for shipments next week.

"Land logistics are down so [local sellers] can’t move material to the port. Also cargo inspections are not possible; that means delays," one trader handling Chinese magnesia said.

A second Europe-based distributor said that he was expecting interruptions of scheduled shipments for "at least the next 10 days".

The local ports of Dalian and Yinkgou remain open for the time being but, with land logistics unavailable to deliver the sea bound cargo to the terminals, few volumes are expected to be shipped out in the immediate term.

"Usually the material is not [kept] at port; it’s in the warehouse and is shipped to the container terminal once the vessel is nominated," one source said.

Some stock may be held at the Bayuquan bulk terminal at Yingkou port, although availability of that remains unclear at present.

Prices of magnesia products have been falling throughout 2019 due to slumping demand from refractories end markets, triggering oversupply.

Fastmarkets' price assessment of magnesia, dead burned, 97.5% MgO, lump, fob China was $400-450 per tonne on January 21, down from $1,100-1,300 per tonne at the start of 2019.

Fastmarkets' price assessment of magnesia, fused, 97% MgO, Ca:Si 2:1, lump, fob China was $520-620 on January 21, down by more than 50% from $1,250-1,350 per tonne at the start of 2019.

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