NEW YORK Mating season
has kicked off for magnesium producers and consumers looking to
lock up next years supply.
"This is the time we all live
for," one supplier told AMM. "Weve had a lot of
big people come out. They want to get things done and wrapped
One consumer source said his
company has already secured most of the material it requires
for 2013. "Weve done most of our business for next year,"
However, not all of 2013
material has been contracted, according to one trader.
"Were talking to a couple of intermediate players in the
aluminum market, but (mating season) really has just
commenced," he said.
Contract prices vary, although
the consumer said hes seen a slight dip so far.
"Contracts this year were mostly
between $2 and $2.10 (per pound). For next year, theyre
between $1.95 to $2.05," he said. "From what Ive seen,
theres a little bit of softening."
As discussions move forward for
2013 material, spot activity has virtually stopped, leaving
AMMs prices firmly between $2.05 and $2.25 per
Sluggish spot markets were a
trend this year, sources agreed.
"(Spot) markets have been very,
very quiet this year. Exceedingly quiet. In part, thats
because (more) consumers tied up their volumes in contracts
this year. ... In the past, you see some regular (spot)
business to get a sense of where the price is. But it
hasnt moved one iota," the trader said.
"We quoted one spot deal quite a
bit higher, but didnt win it. To me that says (spot)
prices arent going up as much as we anticipated," the
An increase in multiyear
contracts signed in 2011 also contributed to the lethargic spot
market in 2012, sources said.
Participants predict that the
spot market will remain dormant for the first half of 2013, but
could experience an uptick as these multiyear contracts expire
"You may see (those consumers)
back in the spot market sometime next year, but my guess is
its likely going to happen in the second half, at the
earliest," the trader said.
While uncertainty remains,
magnesium stands to benefit from the U.S. automotive
industrys continuing shift toward lightweight material to
meet stricter fuel emissions standards.
General Motors Co. is testing a
thermal-forming process and proprietary corrosion-resistance
treatment for magnesium sheet that would allow it to replace
some steel and aluminum in its vehicles (amm.com, Oct.
According to the Detroit-based
automaker, magnesium weighs 33 percent less than aluminum, 60
percent less than titanium and 75 percent less than steel,
making it an ideal material of choice for automakers aiming to
meet Corporate Average Fuel Economy (Cafe) regulations of 54.5
miles per gallon by 2025.
"We couldnt be more
thrilled that GM is spending money to actually make things
happen in lightweight metals," the supplier said.