China's Liaoning magnesia markets extend ops suspensions on coronavirus fears

By Carrie Shi
Published: Wednesday, 05 February 2020

China’s magnesia enterprises in Liaoning province, a major production hub, have suspended operations on government instructions in a bid to stop the spread of the coronavirus outbreak that was first detected in Wuhan city.

The businesses in Liaoning were acting on government instructions to delay the reopening of businesses in the most of the country to February 10 at the earliest in response to the coronavirus outbreak which has infected over 20,000 people.

The Chinese magnesia market has been stagnant since before the Lunar New Year holiday that began on January 24. Most market participants have not returned to work and and China’s domestic transportation network has ground to a halt. 

As a result, Fastmarkets' spot price for magnesia, dead burned, 90% MgO, lump, fob China was stable week on week at $170-200 per tonne on Tuesday February 4, unchanged since November 5, 2019. The magnesia, dead burned, 97.5% MgO, lump, fob China price was unchanged at $400-450 per tonne on February 4, a level it has maintained since December 17.

Most market sources said they are awaiting clearer direction on price after February 10, when operations are currently expected to resume. 

"We haven’t resumed production for the moment, and our customers currently have no specific requirements on booking materials as well. China’s government is taking measures to control the coronavirus, and I believe it will all return to normal soon," a producer in Haicheng told Fastmarkets.

"Our customers currently haven’t placed new orders and all waiting for clear direction. They haven’t noticed any specific requirements on exporting materials, and we will see that the market is after February 10," a second producer said.

Meanwhile, a trader source was bearish on the effect of the coronavirus on an already weak magnesia market.

"I think the coronavirus will have a negative impact on the short-term magnesia market as it makes the weak market worse with most downstream sectors slowing down purchasing," a trader said.

The magnesia market has had a sluggish year with prices falling sharply due to oversupply and reducing demand from downstream buyers. The 90% dead burned magnesia price was $240-270 per tonne at the start of 2019, while the 97.5% assessment was at $1,100-1,300 per tonne at the same time. China’s producers have continued lowering prices to boost sales and cash flow, bringing spot prices down.

Adding to this, magnesia orders after the Lunar New Year have not met forecasts due to the suspension of business.

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