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Magnesium demand to grow at 3.4%/year, driven by auto use: Roskill

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Magnesium demand to grow at 3.4%/year, driven by auto use: Roskill

London — Global growth in the magnesium market is expected to average 3.4%/year, with consumption reaching almost 1.2 million mt/year by 2020, Roskill Information Services said Wednesday.

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"Globally aluminium alloys and die casting are predicted to be the fastest growing markets at about 4%/year each. The main factor affecting magnesium demand will probably be its use in automobiles, both because of greater unit consumption and increased vehicle production," the UK-based consultancy said in its "Magnesium Metal: Global Industry, Markets & Outlook" publication.

Global consumption of magnesium is estimated to have grown at an average annual rate of 1.6% from 2008 to 2015; this was after falling 7% in 2008 and 19% in 2009 and then recovering by 18% and 9% in the following two years, Roskill said.

Growth was low in 2012 and 2013 but rose to 8% in 2014 to a peak of almost 1 million mt, before falling by 2% in 2015.

Article Continues below...

PRODUCTION

World production of primary magnesium, reflecting that in China, rose by an average of 6%/year from 500,000 mt in 2002 to 940,000 mt in 2014; preliminary data indicates that production in 2015 fell by 4% to about 900,000 mt.

"In 2015, just seven countries reported production of primary magnesium metal. China's output was 702,000 mt and accounted for 78% of the global total; Russia and the USA with production of 69,000 mt and 59,000m t respectively accounted for a further 14%," Roskill said.

Secondary magnesium is an important component in global magnesium supply, with production estimated to be between 200,000 mt and 250,000 mt/year, 125,000 mt/year of which is in the US, it said.

In the first quarter of 2016 a six-year decline in magnesium prices appeared to have found a floor at $2,000/mt, underpinned by production costs in China, the report said.

"As prices moved below this level at the end of 2015, resistance from producers coupled with firming coal prices and better-than-expected performance in the Chinese economy pushed the price of magnesium up by 11% in April 2016," Roskill said.

The FOB export price for Chinese magnesium is likely to stay in the $2,000-$2,500/mt range for the remainder of 2016, while "looking further ahead, magnesium prices will probably remain the $2,000-$3,000/mt range, assuming continuation of stable supply from China," it said.

CHINA

Magnesium supply and the inputs required for its production "are overwhelmingly under Chinese control," so demand from Chinese consumers is therefore unlikely to outstrip supply, the company said.

The exceptions to Chinese control are the US -- where the market is protected by punitive antidumping duties and is supplied by domestic primary and secondary production and some small imports mainly from Israel -- and the former Soviet Union, where there is domestic output primarily for the in-house production of titanium sponge, it said.

There are more than 50 magnesium smelting operations in China, most of them in the provinces of Shaanxi and Shanxi, which accounted for 61% and 28% of production respectively in 2015. On a company basis, the largest productive capacity is held by Shanxi Yinguang Huasheng with 80,000 mt/year, followed by Ningxia Hui-Ye Magnesium with 60,000 mt/year.

US Magnesium in Utah, with capacity for 76,500 mt/year and plans to increase to 90,000 mt/year, "is probably the largest magnesium producer in the world," the report said.

VSMPO-Avisma in Russia, with capacity for 60,000 mt/year, ranks third or fourth, while Dead Sea Magnesium in Israel is a high-cost producer with capacity for 35,000 mt/year has announced plans to terminate operations in 2017, it said.

According to the report, there are four new projects aiming for production before 2020: Qinghai Salt Lake in China, which will probably be confined to its first phase of 100,000 mt/year, due onstream in 2017; Alliance Magnesium at Magnola, Canada, with 50,000 mt/year planned by 2018; Latrobe in Australia with 40,000 mt/year by mid-2019; and SilMag in Norway, with 65,000 mt/year in 2018.

In addition, Century Sunshine announced plans to expand its Baishan plant by 50,000 mt/year by the end of 2016; Posco in South Korea plans to double capacity at its Gangneung plant to 20,000 mt/year in 2016 and expand to 100,000 mt/year in 2018; and Esan Eczacibasi's plant at Ekisehir in Turkey is being ramped up to 15,000 mt/year in 2016, with plans to double capacity by 2018.

On the consumption side, the development of dense uniform dispersion of silicon carbide nanoparticles (14% by volume) in magnesium through nanoparticle self-stabilization in molten metal could have a significant long term impact on the demand for magnesium alloys, the report suggested.

The material is said to provide an enhancement of strength, stiffness, plasticity and high-temperature stability, which delivers a higher specific yield strength and specific modulus than nearly all structural metals.

Another potentially significant new use in the long term is in magnesium-ion rechargeable batteries that have twice the capacity and energy density of lithium ion batteries, Roskill noted, with the identification by Toyota of a compatible electrolyte being hailed as a major breakthrough in mid-2016.

--Andy Blamey, andy.blamey@spglobal.com
--Edited by Jonathan Fox, jonathan.fox@spglobal.com