Chinese magnesium hub's Jan-Oct output slips, national inventories drop

The output in China's magnesium hub Yulin city fell 2.4% year-on-year to 442,400 mt between January and October, data from the Yulin branch of National Statistics Bureau showed Nov. 26, while the country grapples with low inventories amid the mandated carbon emissions and power consumption curbs.

Yulin in the Shaanxi province accounts for almost all the region's magnesium output, while contributing about 60% of China's output.

China's domestic magnesium supply is expected to remain tight over the near term as the curbs require output caps in the sector during September-December, and as producers take time to upgrade to new environment-friendly technology, China Nonferrous Metals Industry Association, or CNIA, has said.

Offers steady from some suppliers

The offers from some Chinese magnesium suppliers were, however, steady, even as some cash-strapped suppliers cut prices to boost year-end sales, industry sources said Nov. 25.

Fugu Xintian Magnesium's 9.9 magnesium ingot was firm at Yuan 39,000/mt ($6,105) during the week started Nov. 22, while Shanxi Jiuling Jiamei Metal's ingot price with similar specifications was pegged at Yuan 35,000/mt, the latest data from the two producers showed.

As China's magnesium inventories remain low in November, some producers were offering ingot at tax-inclusive prices of Yuan 33,000/mt, or below to boost sales, according to data from producer MGTU Magnesium Journey.

November prices were much lower than the all-time highs of Yuan 71,000/mt in September, as per CNIA.

Supply tightens

Some Chinese producers were left without spot cargoes following several deals involving ingot deliveries mid-November amid depleting stocks, while some others had halted price quotations due to low stock volumes, MUTU Magnesium said.

That has led to China's domestic magnesium trade slowing mid-November after the downstream sector and middle-level traders replenished ingot stocks, MUTU Magnesium said, adding that market players were cautious about purchases because of volatile prices.

Meanwhile, in Fugu, Jujinbang Magnesium, with 20,000 mt/year capacity, resumed magnesium ingot smelting Nov. 15, after it shut down its operations in April because fund shortages, local media reported. Jujinbang officials could not be reached for a comment.

Prices mostly stable

Market players do not see a downward pressure on prices, as spot magnesium stocks are low and some producers were still delivering cargoes, according to MUTU Magnesium. But the price trimming by some cash-strapped producers was a concern, MUTU Magnesium said.

There was still room for small price increases in 2022, despite Chinese magnesium prices hitting a record in September, industry experts said.

CNIA in October said that domestic magnesium prices could rise only marginally in 2022, as higher prices would pressure downstream applications, forcing market players to replace magnesium.