Magnesium market is quiet in Europe because of the summer holiday, and sources said nothing absolutely is going on. However, some participants anticipated lower prices after the holiday, looking at the market from the side of demand, which will keep low till end of August.
Not like when demand is weak, price has kept stable at around USD4,500-4,600/t in Rotterdam warehouse as business started on Monday.
A western trader who said he is negotiating deals this weak at USD4,300/t CIF Rotterdam port, said they are expecting the price to go down after the holiday because demand in China can not hold the price hanging at this level for over a month.
“Foreign buyers are the back bone of magnesium and if we are out of the market it will put pressure on the price,” said the source. “ Chinese suppliers must be sitting on hot iron now, and most of them have started calling making offers which tells you how they are pressured to sell.”
“Not big tonnages of magnesium deals are going on in Europe as consumers are on holidays,” said another trader. “We are expecting consumers back in the market by early September to cover for 4th quarter, but the price is stable right now.”
Although the price keeps stable at the moment, many people have a lot of magnesium in stock and they must sell it before oxidation. Therefore, many dealers are trying their best to sell. The source will sell 20t today and the deal could be concluded at around USD4,400/t in Rotterdam warehouse.

Magnesium market is in a bad mood after price reached around USD6,000-6,100/t in warehouse Rotterdam at the middle of June and suddenly started to slide, and this week sources in Europe told Asian Metal that they can buy material at around USD4,400-4,500/t in warehouse Rotterdam while offers from Chinese suppliers are at around USD4,200/t FOB China.

Prediction in the market now is that price will continue to go down as demand of magnesium all over the world remains scanty and bearishness in the market will last since many consumers confirmed plenty material in their possession.

According to a European trader who told Asian Metal that he sold material last week at USD4,420/t in warehouse Rotterdam, all signs show that price will still go down further because there are some Chinese suppliers holding plenty material and will likely to get rid of them because of the decreasing price.

“Chinese suppliers will find it difficult to increase the price again in a short time,” said the source. “I am not saying they can not do it, but it will take sometime.”

Another European trader agreed that it may take up to end of the year to see the price of magnesium going up again because plenty material in the market will not allow a sudden price increase.“None of my customers want to buy now,” said the source. “All of them are saying they have material and will buy again probably at the end of the year.” The source predicted that price may go below USD4,000/t FOB China before end of the this quarter.

According to market sources in Russia, consumers lack buying interest and few deals are concluded as some local consumers insist on purchasing at a low price. However, the suppliers are reluctant to sell material at lower prices after they had reduced their offer slightly at the end of last week. Sources said that currently the mainstream price of magnesium is around RUB165-170/kg (USD7,033-7,249/t) in the spot market, unchanged from last week.

A trader in Russia revealed that due to lack of orders, they have no plan to supplement stocks in the short term. The source offers magnesium ingot to the domestic end-users at RUB170/kg (USD7,249/t), but they have not concluded any deals in the recent two weeks.

The source believes that the magnesium price is unlikely to drop further as some traders have purchased the material at high prices before. The price of magnesium may keep stable at RUB165-170/kg (USD7,033-7,249/t) in the short term.

Another trader in Russia said that consumers lack interest of purchasing with most participants watching the market. “We hold 15 tons of magnesium ingots on hand, but we are not eager to sell it, because the price may be dragged down further when we rush to the market,” said the source.

The source believes that the concluded price of magnesium is in the range of RUB168-170/kg (USD7,161-7,249/t) in the spot market, unchanged from last week. “Business of magnesium ingot has been thin since early July with most participants watching the market. On the one hand, some consumers lack interest of purchasing. On the other hand, the traders lack enthusiasm about dealing with the material due to the volatile market, leading to the supply decrease in the market. Therefore, I believe that the price of magnesium may keep stable at RUB168-170/kg (USD7,161-7,249/t) in the short term,” said the source.

24 Jul 08 – With the magnesium price decreasing rapidly in Chinese domestic market, the export price has also been in decline during the past few weeks. According to market sources, export offers drop to USD4,500-4,600/t FOB from USD4,600-4,700/t FOB a week ago. However, little activity is seen in the market.

A Shanxi-based trader reported that the export market is extremely quiet. “We only received sporadic inquiries from some of our Indian customers, but buyers in Japan, Korea and European countries all keep silent,” said the source.

For fear that the market may decrease further in the rest of July, the source lowered the export offer to USD4,500/t FOB Tianjin, a little lower than offers made by other suppliers. However, foreign buyers have no interest in the decreased price.

The source used to export over 500t of magnesium ingot per month but has concluded no deal since early July. “We concluded a few deals at USD4,400-4,500/t FOB China in March, but our suppliers postpone the delivery of those contracted materials as the market shot up in the following two months. However, now that the current price is almost at the same level as our old contracted price, suppliers resumed fulfilling those contracts,” said the source.

A Shanxi-based producer confirmed the quiet export market, predicting that foreign buyers will not come back to purchase until early September. According to the source, many major consumers such as Alcoa and Alcan have been well covered till the end of the year, so they will not make bulk purchase any more, while those small to medium-sized consumers will just make hand-to-mouth purchase if the market runs at a low level when they return from holiday.

The source also reduced the export offer to USD4,550-4,600/t FOB early this week from USD4,600-4,650/t FOB last week, but no deal has been concluded. “One of our consumers claimed that they would not consider buying before the price goes down to USD4,200-4,300/t FOB. I’m afraid that the price may drop to such a low level before the end of July,” said the source.

24 Jul 08 - To many producers' disappointment, the magnesium market has not improved at all early this week. On the contrary, the price plummets again with participants losing confidence in the future market. The dramatic price decrease inevitably leads to panic sales. More producers, who start to abandon the unrealistic fancies about a better market soon, gradually surrender to the fact that they will have a hard time for a long period from now on.

A Shanxi-based magnesium ingot producer, with an output of 1,600tpm, reported that the domestic market has been in chaos during the past two days. Smelters lowered offers one after another to promote sales for fear that the price may decline further. According to the source, huge stocks can be seen in Shanxi's Taiyuan and Shaanxi's Fugu, the two main production bases for magnesium ingot. Other than the weak demand, the source thinks that another reason for the high stockpiles is that some producers were over-confident about the future market, so they held back from selling after the price started to drop in May and June.

The source had expected the market might continue worsening since the price started to go lower. Therefore, he is active in selling and under no pressure of stocks for the time being. According to the source, although many smelters have lowered offers to RMB26,000-26,500/t (USD3,812-3,886/t) ex works from RMB27,500-28,000/t (USD4,032-4,106/t) ex works seen last week, the market sees little business being done as buyers would not like to place orders in the slipping market. The price is expected to move down further.

A Shanxi-based trader confirmed the drastic price decrease in the past two days, adding that more producers fell into panic sales. "Although the price retreat is within our expectations, we has not expected that the price plummeted to RMB26,000/t (USD3,812/t) ex works within such a short period," said the source. "To some smelters in South Shanxi, the price of RMB26,000/t (USD3,812/t) ex works is lower than their production cost." However, all domestic consumers or overseas buyers have no plan to purchase, so bulk orders are seldom seen in the market. With more materials being piled up, smelters have to cut down offers to attract buyers. "We're seeing a buyer's market now," said the source.

The source predicts that the market will keep slipping on high stockpiles. "According to our conservative estimate, the quantity of stocks in Taiyuan is 15,000t at least for now, and the number may be 6,000-7,000t in Shaanxi's Fugu," said the source. "Under such a situation, producers should get themselves ready for a tough time."

The source received many unsolicited offers which decrease to RMB26,000-26,500/t (USD3,812-3,886/t) ex works from RMB27,000-27,500/t (USD3,959-4,032/t) ex works last week. However, he has no plan to buy for lack of orders.