magnesium spot prices have inched up thanks to strong
automotive demand and a tight nonferrous scrap market, which
has bolstered secondary aluminum producers demand for
As some secondary
aluminum producers run through 2013 magnesium supplies faster
than expected, several contracts for 2014 have been negotiated
earlier than usual, market sources said.
spot magnesium price range has widened to $1.85 to $2.25 per
pound from $1.84 to $2.22 previously.
signed a couple of arrangements for next year," one producer
source said. "I would think that based on that the rest of the
contract season will start earlier than it usually does."
Customers to date have paid the same or more for 2014 material
compared with this year, he said.
In most years,
contracts are concluded in September or October but this year
has seen some deals signed a month ahead of schedule, with some
negotiations underway in the latter half of August, the
producer source said. Those early contracts were for thousands
of tons per year, small compared with big markets such as steel
but significant to the U.S. primary magnesium market, he
"You have a situation
where people see they are going to need more material in the
fourth quarter. Then they have to decide whether they want to
go out and bid that separately or as part of their negotiation
for next year as well," the producer source said, noting that
several had opted for the latter. "And if Im selling
additional material into my contract business, then the next
time I get a quote for spot Ill raise the price a little
trend in prices comes as supplies of nonferrous scrap, such as
used beverage cans (UBCs), which contain magnesium used to
alloy aluminum, remain tight and expensive compared with
primary aluminum, market sources said.
"We never got that
summer slowdown that we typically do. And demand has remained
strong," the producer source said. "For the aluminum guys,
theyre needing more mag because they are using less scrap
and more primary aluminumso theyre more quickly
running though the magnesium they thought they would need for
the year." And while aluminum prices may be low, demand remains
stable or better than last year, he said.
Outside of aluminum,
magnesium is seeing solid demand from the automotive sector for
instrument panels, steering wheels and die-cast parts, the
producer source said. "The more vehicles you sell, the more raw
materials you need."
Still, a source at one
big aluminum producer warned against reading too much into some
contracts being negotiated early. He said his company was still
putting together its magnesium requirements forecast for 2014
and was in no rush to enter negotiations.
A trader also
cautioned against being overly bullish. He said he hadnt
seen the U.S. market, always thin in terms of spot
transactions, experience a jump in activity. While some market
sources fretted that that could indicate a possible slowdown in
the automotive sector, the trader contended it might be more
reflective of typical seasonality, perhaps exacerbated by Labor
Day and the Jewish high holidays falling so close to each other