NEW YORK Spot magnesium
prices remain firm due to strong automotive demand, but whether
that pricing strength will last into 2013 remains up for
magnesium prices are holding at between $2.05 and $2.25 per
pound, largely driven by solid automotive markets, a trend most
market participants said they expect to continue into next
Coupled with low consumer
inventories, that demand strength is expected to lead to strong
2013 bookings, a number of sources said.
"People are not sitting on
stocks. This means that the remaining 2012 contract volumes
will be taken, and possibly some customers will need a little
bit more next year because of automotive demand," one magnesium
supplier said. "Automotive has been driving everything."
"People have called in the last
few weeks to get together to start talking about next
years contracts. Were starting to set up meetings
for later in August and September," a second supplier added.
"Our customers are mostly optimistic. The auto industry has
been so strong for us."
Reports that Ford Motor
Co.s F-150 truck will be made with a predominately
aluminum body (
amm.com, July 27) means auto demand for aluminum
alloysand hence, magnesiummay continue to soar in
the future, sources said.
"There is the F-150 pickup
truck, which will use a lot more aluminum and as a result, more
magnesium," a consumer source said. "That is one demand area
that has been pretty high and is going higher, which bodes well
for the industry."
Still, this consumer said he
remains skeptical that automotive demand alone will keep
magnesium prices at current levels, contending that there will
be a mismatch between supply and demand as more global capacity
South Korean steelmaker Posco
Ltd. aims to bring a magnesium smelter online in the second
half of the year and hit 150,000 tonnes per year by 2015 (
amm.com, May 22), while U.S. Magnesium LLC has
completed an expansion at its Rowley, Utah, facility that has
boosted output to 63,500 tonnes per year (amm.com,
July 10). Last year, Dead Sea Magnesium Ltd. said it was also
planning to increase output at its primary magnesium smelter in
Sdom, Israel, by as much as 10 percent (
amm.com, Jan. 24, 2011).
"Weve seen a lot of
capacity go up in Korea and the United States. Demand outside
of contracts is pretty slim to nothing," the consumer said. "It
seems like more supply is outgrowing demand. That means prices
will go down."
A second consumer added that an
increase in U.S. imports could also depress prices.
Magnesium imports rose to 8,212
tonnes the first half of 2012, up 17 percent from 7,013 tonnes
in the first half of 2011, according to U.S. International
Trade Commission data.
"I think contracts will go below $2 (per pound) and spot
will probably be between $1.95 to $2.10 per pound (next year),"
the first consumer said.