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Magnesium spot prices tick upwards

Keywords: Tags  magnesium, magnesium prices, spot market, michael cowden


CHICAGO — Magnesium prices have inched up slightly in a thinly traded U.S. spot market, but sources disagree about whether the market, traditionally largely under contract, is healthy or whether a lack of spot activity might be a worrisome signal.

AMM’s spot magnesium price range strengthened to $1.90 to $2.25 per pound from $1.88 to $2.22 previously.

One producer source said his company had recently booked one truckload of spot business, or roughly 20 tons, at $2.25 per pound, a number he said was roughly flat compared with previous spot transactions.

"The fundamental reason behind the (price) stability is that more than 95 percent of volume is under contract," he said. "And even if a contract customer needs more volume, all he does is move forward on his contract until he runs out." That generally doesn’t happen until November or December, which is when the magnesium market could see an increase in spot market activity and prices.

Other than the annual contract "mating season," which runs from roughly September through October, "it’s pretty boring," he said. "The spot market in the United States is only a few loads a month. There is no liquidity. There may be a month that goes by and I won’t have a request for a spot load."

Despite the lack of liquidity on the spot market, the producer source said the U.S. market was strong thanks in large part to demand from the aluminum alloying sector, which has been bolstered by an uptick in demand from the beverage can market and, increasingly, from the construction sector. Demand from the aerospace and automotive sectors also is good, he said, although he noted that his company had not yet seen an expected surge in automotive aluminum demand.

But the producer source said his company had seen increased demand for magnesium alloys in the automotive sector for a range of parts, including instrument panels, support beams and steering wheels. He also noted that the Ford F150, one of the most popular pickups in the United States, sports an average of 35 pounds of magnesium per vehicle compared with about 8 pounds in most cars and trucks. "Our dumb luck is the (F150) just happens to be a magnesium-intensive vehicle," he said.

Also strong is the metal reduction industry, the biggest component of which is titanium for the aerospace sector but which also includes other metals such as zirconium and beryllium, the producer source said. Lagging other major magnesium markets is the chemical sector, he said.

Other market sources agreed that the spot market for magnesium in the United States is quiet but questioned whether $2.25 per pound was representative of the market, pegging prices instead in a range of $1.90 to $2 per pound.

"The occasional load at $2.25 is possible, I suppose," said one trader, arguing that prices instead were around $2 per pound. But he said his company had not conducted any recent spot sales and instead was focusing on fulfilling previously contracted business.

A second trader expressed surprise and doubt that $2.25 per pound might be available in the market, estimating prices at $1.90 and pointing out that he had transacted no recent spot deals. "There are no exciting tenders out there that I’ve heard of, so it’s rather dull, frankly," he said.

The spot market for magnesium, while generally slim, is slower this year than at the same time in previous years, the second trader said. "It’s a bit worrying. ... Even calling it a market is an exaggeration."

He also questioned to what extent a magnesium producer in the United States might be benefiting from automotive demand, especially if automakers and suppliers could source parts from Canada that might be made from magnesium produced in China.


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