China’s magnesia production begins to recover, prices unchanged

By Carrie Shi
Published: Wednesday, 12 February 2020

China’s magnesia producers began gradually to resume production this week, with magnesia export prices steady over the past seven days on a limited number of new deals.

Authorities in China delayed the reopening of businesses until Monday February 10 at the earliest in most provinces, as part of the measures to contain the outbreak of coronavirus infection. Now, however, magnesia availability has started to show an improvement with production being restarted.

Most producers resumed all or part of their production early this week, but there were others which will return to work next week or at the end of February.

"We resumed 70-80% of our production this week, and we started running our caustic calcined magnesia and fused magnesia production lines," one producer told Fastmarkets, "but high-purity magnesia production is still halted for the moment."

Magnesia export prices have not shown any fluctuations this week. Some producers received more inquiries, but no new deals were concluded because most overseas buyers were watching the development of the coronavirus situation in China and considering what further risks there might be to materials supply and transport availability.

"Magnesia prices were unchanged compared with the level before the lunar new year holiday," a second producer said. "Some other products with lower stock levels might show an increase but, for magnesia, which has sufficient stocks, I think it will be hard to increase prices at the moment."

Fastmarkets’ price assessment for magnesia, dead burned, 97.5% MgO, lump, fob China, was $400-450 per tonne on February 11, and the corresponding assessment of the price for magnesia, calcined, 90-92% MgO, fob China, was $140-180 per tonne on the same day. Both prices have been rangebound so far in 2020.

The logistics situation has improved a little this week, but the numbers of qualified healthy drivers and available freight cars remained low, and some logistics operators have increased domestic freight fees by 20% or more.

Moreover, with some key international shipping lines returning to work no earlier than February 17, international deliveries might be subject to delays if buyers want materials delivered in February.

"I think shipping to Japan and South Korea will be minimally affected because of the short distances involved," an exporter said. "But some deliveries to Europe or the United States might be delayed because we are not sure whether there will be a pile-up of goods at port because of the delay to businesses reopening. We will continue to monitor this."

China’s domestic downstream buying for magnesia remained slow this week, with most refractory enterprises only just back to work or still at a halt. There was only limited activity seen in the market so far this week.

"I haven’t started purchasing magnesia this week," a buyer said, "because our domestic refractory plants in Tianjin and Guangdong provinces are still waiting for a notice of resumption."

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