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Magnesium prices rise following higher offers from China

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Global magnesium prices rose in the past week even as demand remains weak after higher offer prices from Chinese sellers in March fed through to the European market. 

Metal Bulletin's European magnesium price climbed to $3,100-3,400 per tonne on April 27 from $3,100-3,200 previously, while the fob China price reached $3000-3,200 per tonne on Wednesday May 2 from $2,900-2,950.

Producers in China's Shanxi and Shaanxi provinces jointly raised their ex-works magnesium prices without acid pickling treatment to a minimum of 16,500 yuan ($2,614) per tonne on a cash payment basis, and to 17,000 yuan per tonne on money order basis, in mid-March.

It was a joint effort to curb losses which widened following higher taxes on surface coal and coke powders, but with little buying activity it is not yet certain if the higher prices will be sustained.

"A couple of suppliers pushed their prices up to new levels in the hope, with no one buying anyway, that when customers come back to market they will start negotiations at a higher level," a large magnesium buyer said. "I'm not sure if there'll be enough momentum or interest to sustain those prices. People will postpone purchases to wait and see."

But while many buyers are not in the market, there are those supplying consumers in Europe that have had to accept higher prices to maintain that supply.

For many consumers, such as European secondary aluminium ingot producers that add magnesium to their casting alloys, the volumes of magnesium purchased are so small compared with their total raw material feed that reliable supply is more important than fighting for every last dollar on the price. These buyers have been paying prices at the top of Metal Bulletin's new range.

"We've had to pay a lot more this week," an ingot producer said on Friday April 27, reporting deals at $3,400 per tonne after buying consistently at around $3,150 since early February.

But for companies that buy magnesium as their core business, the higher prices are much harder to stomach. In both Europe and China, many are holding out for lower prices.

"If you look hard enough, there is definitely cheaper metal out there," the buyer said, reporting bits of business at the bottom of the European range. "It very much depends on who you talk to and what stocks they have."

Buyers remain confident that lower prices will become more widely available as other markets are unattractive to sellers. Oversupply in the US market saw imports from certain regions fall in the first quarter, while anti-dumping duties in Brazil mean that little is diverted there from international markets.

"Europe is the place to sell," a trader said.

Jethro Wookey
jwookey@metalbulletin.com
Twitter: @jethrowookey_mb

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