23 Jul 08 – Magnesium ingot prices plummet again this week in China with mainstream prices decreasing to a level below RMB27,000/t (USD3,959/t) ex works. In view of high stockpiles and low demand, industry insiders hold that the price may move down further in the near term.

A Shanxi-based magnesium producer reported that the price saw a dramatic decrease yesterday. “We would not like to sell at prices below RMB27,000/t (USD3,959/t) ex works, which is lower than our production cost. However, we have to decrease our price to RMB26,700-26,800/t (USD3,915-3,930/t) ex works to attract buyers as some others have already accepted even lower prices,” said the source, adding that they sold about 30t of magnesium ingot at around RMB27,600/t (USD4,047/t) ex works last Friday.

A major magnesium powder producer, with a capacity of 30,000tpy, has just signed a purchase contract with a Shanxi-based magnesium ingot smelter. “As our purchase volume is relatively large, we settled the deal at RMB26,500/t (USD3,886/t) ex works while some other smelters insist on selling at higher prices,” said the source.

A Henan-based trader, who purchases about 1,000tpm of magnesium ingot to supply domestic end users, confirmed the significant price decrease. The source bought 100t of magnesium ingot last Friday at RMB27,300/t (USD4,003/t) ex works, which seemed to be a favorable then. However, the source received a few unsolicited offers slightly below RMB27,000/t (USD3,959/t) ex works yesterday. “We’re afraid that the market will continue to drop, so we do not plan to make bulk purchase in a short time,” said the source.

Meanwhile, the source learnt that more smelters in Shanxi’s Wenxi county, one of the most important magnesium production bases were forced to halt production for environmental problems. However, the source does not think the closures will do great help to prevent the market from decreasing further given the fact that most smelters in other production bases including Taiyuan, Fugu as well as Ningxia hold large stocks at the moment.