2008-6-11 13:35:15 BEIJING (Asian Metal) 11 Jun 08 - The prices of magnesium ingot kept plummeting during the Dragon Boat Festival despite the quiet market. Market sources reported that a few smelters have lowered offers to a level below RMB33,500/t (USD4,841/t) ex works during the holiday. Meanwhile, although many smelters in Ningxia and Shaanxi still insist on offers above RMB34,000/t (USD4,913/t) ex works, few deals have been reported.

A Shanxi-based producer claimed that they sold about 100t of magnesium ingot at around RMB35,000/t (USD5,058/t) ex works late last week, but no other deals were concluded thereafter. According to the source, the market keeps silent with few buyers inquiring. "We heard that some small smelters have reduced offers to a level below RMB34,000/t (USD4,913/t) ex works to stimulate consumer demand, but few buyers show interest in purchasing," said the source.
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Running with a capacity of 10,000tpy, the smelter holds some stocks on hand.

A Hebei-based magnesium alloy producer bought about 30t of magnesium ingot without pickling at a price slightly higher than RMB34,000/t ex works last Friday, whereas the purchase price was at around RMB36,300/t (USD5,246/t) ex works ten days ago. According to the source, the market is still sliding down. "Most buyers are watching the market and waiting for lower prices. I think the market will not pick up in a short time, so smelters may be forced to keep lowering prices," said the source.

The source used to purchase 80-100tpm of magnesium ingot to satisfy the demand from magnesium alloy production. However, due to the sharp price increase in the past several months, the company's consumption of magnesium ingot shrank by half. "After the price decrease, we will buy small quantities of the material to maintain production in order to fulfill the signed contracts. However, considering that the price may drop further, we have no plan to make bulk purchase," said the source.

Other sources reported to Asian Metal that some small-sized smelters in Shanxi have begun to undersell magnesium ingot at prices lower than RMB33,500/t (USD4,841/t) ex works out of panic, which may impose negative influence on the market sentiments when the price is falling. Additionally, the price of ferrosilicon, one of the most important raw materials for magnesium production, lacks momentum of rising further. If the ferrosilicon price starts to go down, the magnesium price is bound to drop further.