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Magnesium prices hold as 2013 talks start

Keywords: Tags  US Magnesium, Posco, magnesium, US International Trade Commission, Ford, F-150, aluminum, Dead Sea Magnesium Suzy Waite


NEW YORK — Spot magnesium prices remain firm due to strong automotive demand, but whether that pricing strength will last into 2013 remains up for debate.

AMM’s spot 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 year.

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 year’s contracts. We’re 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 alloys—and hence, magnesium—may 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 comes online.

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).

"We’ve 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.


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