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
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
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
doesnt 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, "its 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
wont 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 Ive heard
of, so its 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.
"Its a bit worrying. ... Even calling it a market is an
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.