Hong Kong — China's magnesium ingot prices averaged Yuan 17,600/mt ($2,570/mt) in August, up 5.98% year on year on tighter spot supply, as most producers had run out of stocks, China Nonferrous Metals Industry Association said in its magnesium report Thursday.
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The daily average of ingot prices in August moved in a range of Yuan 17,100-17,900/mt, CNIA data showed.
CNIA predicts that the Chinese daily average magnesium price would move in the range of Yuan 16,500-17,500/mt in September.
Prices in January-August averaged Yuan 15,800/mt, up 6.15% year on year, its data showed.
CNIA said magnesium prices hit the Yuan 18,000/mt mark once in mid- August -- a new high for this year. But the swift rise in price spurred buyers to wait and see, pushing down prices later in August, it added.
Prices had also faced some downward pressure late August, compared to early August, as Chinese producers had gradually resumed production, easing supply tightness.
As of the end of August, main stream cash, tax-inclusive, ex-plant prices for 99.9% magnesium ingot in Shanxi province were at Yuan 17,600-17,700/mt, up from 16,900-17,000/mt end-July, while prices in Ningxia Hui Autonomous Region were at Yuan 17,400-17,500/mt, up from Yuan 16,700-16,800/mt end-July, and prices in Shaanxi province were at Yuan 17,400-17,500/mt, up from Yuan 16,600-16,700/mt end-July, CNIA data showed.
"Looking ahead, the association predicted that the gradual restart of Chinese [plants], after their shutdown over summer for annual overhauls, would hike spot supply in September. This, plus continuously weak ferrosilicon prices, could cap magnesium prices in the coming weeks, it said.
Guangzhou-based brokerage GF Securities in its monthly metal report said strict domestic environment protection control, and the Chinese magnesium sector's shutdown in summer for annual overhauls have supported magnesium prices recently. It noted that the government's extent of the emphasis on domestic environment control would affect Chinese producers' upcoming magnesium output and that would be a key factor in deciding near term prices, while in the long run, China's light weight car trend and its resultant stronger demand for magnesium would impact future prices.
China produced 436,600 mt of magnesium ingot in the first seven months of this year, down 21.89% year on year due to reduced output in the key production zones, CNIA data showed.
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--Edited by Geetha Narayanasamy, email@example.com