Home / Metal News / Minor Metals / Annual Review and Prospect of magnesium City: the rise of Raw Materials promotes the bottom rebound of magnesium Price
Annual Review and Prospect of magnesium City: the rise of Raw Materials promotes the bottom rebound of magnesium Price
Jan 13,2021 10:04CST
translation
The content below was translated by Tencent automatically for reference.

Review and Forecast of Market Price trend

In 2020, under the influence of the global epidemic, magnesium prices dropped sharply compared with 2019, exports dropped sharply, domestic demand was relatively stable, and the market as a whole weakened. Magnesium prices rose at the end of 2020 due to the rise in raw material prices.

Review of domestic Price trend

In 2020, the average annual price of raw magnesium in China was 13556.45 yuan / ton, down 15% from the same period last year. The average daily price for the whole year ranges from 13950 yuan / ton to 17650 yuan / ton, with the highest price of 15900 yuan / ton in December and the lowest price of 12200 yuan / ton in October.

In 2019, due to the disorderly increase in production in the industry and the sharp fluctuations in the exchange rate, the overall magnesium price showed a concussive downward trend. Judging from the export and consumption data, magnesium consumption at home and abroad is increasing, the export volume is also increasing compared with the same period last year, and the fundamentals of the good development of the market have not changed. It was expected that the magnesium market would have a good development in 2020, and magnesium prices continued to fluctuate and decline in 2020. During this period, magnesium prices fell to 12500 yuan / ton in October, a low in recent years. At the end of the year, the magnesium market rebounded strongly under the influence of the sharp rise in raw material prices. During this period, coal production was limited by environmental protection policies, coupled with strong downstream demand, and coal prices opened a continuous rising mode. at the end of 2020, the price of mainstream coal in the port around the Bohai Sea rose to 740 yuan to 750 yuan per ton, rising by 100 yuan per ton in a single month. due to the strong demand for steel, ferrosilicon prices rose by about 1000 yuan per ton for the whole year, an increase of 20%.

In 2020, the continuous decline of magnesium price is mainly affected by the global epidemic, the manufacturing industry in many developed countries is stagnant, the demand for magnesium in overseas markets is greatly reduced, and the demand of domestic magnesium processing enterprises is general. In the first 11 months of 2020, domestic supply declined slightly compared with the same period last year. According to customs export data, export data fell by nearly 14% year on year in the same period. Although the overall demand for magnesium in the market was poor, magnesium prices rose rapidly at the end of 2020 due to the rising prices of raw materials such as coal and ferrosilicon. In 2020, the domestic iron and steel production increased compared with the same period last year, and the electrolytic aluminum production also increased greatly, which played a certain support to the magnesium market. Therefore, it is predicted that the magnesium market still has some room to rise.

In 2020, the trend of domestic magnesium price is similar to that of ferrosilicon, the overall price of ferrosilicon is mainly weak and stable, showing a large increase at the end of the year, magnesium price continues to decline, and the price rebounds strongly at the end of the year.

By the end of 2020, the mainstream quotations of manufacturers in Shanxi, Ningxia and Shaanxi are 15800 ~ 15900 yuan / ton, 15600 ~ 15700 yuan / ton and 15600 ~ 15700 yuan / ton respectively.

In terms of exports, the average annual price of FOB magnesium was 2057.90 US dollars per ton in 2020, down 14.38 per cent from the same period last year. The average daily price for the whole year ranges from $1920 to $2510 / ton, with an annual high of $2510 / ton in December and a lowest point of $1920 / ton in October. In 2020, the FOB magnesium price followed the domestic price out of the shock callback trend, and the FOB magnesium price correction was less than the domestic price, mainly due to the accelerated depreciation of the US dollar index and the impact of the epidemic, the global economy suffered a sharp setback, China was strong in fighting the epidemic, and the economy took the lead in recovering, leading the United States and Europe as a whole, and the RMB exchange rate showed a concussive upward trend throughout the year.

By the end of 2020, the export quotations of some manufacturers and traders ranged from US $2500 to US $2510 per ton of FOB.

Review of the Price trend of International magnesium Market

American market

The price of magnesium in the US market in 2020 is significantly lower than that in 2019.

According to the report of American Metal Weekly, by the end of December 2020, the western spot price of American magnesium ingots has been reduced from $2.70 ~ $2.90 / lb to $2.30 ~ $2.35 / lb. the import price of American magnesium ingot traders has been reduced from $2.45 ~ $2.65 / lb to $2.00 ~ 2.15 / lb. On the other hand, the price of die-casting alloy (trader) in the United States has increased from $1.90 to $2.20 / lb to $1.70 ~ $1.85 / lb.

European market

Affected by the sharp rise in magnesium prices in China, European market closing prices rose sharply in 2020 compared with the same period in 2019.

By the end of 2020, British Metal Guide (MB) magnesium ingot prices closed at $2400 ~ $2600 / tonne, compared with $2060 ~ $2090 / tonne for the same period in 2019; European free market prices for American Metal Weekly (MW) closed at $2550 ~ $2700 / tonne, and $2100 ~ $2175 / tonne for the same period in 2019; and European strategic small metals Rotterdam warehouse quotations closed at $2025 / tonne, compared with $2335 / tonne for the same period in 2019.

Magnesium Market Forecast in 2020

Analysis of domestic and Foreign Economic situation in 2020

Analysis of international economic situation

The global economy was hit hard by the epidemic in 2020, many countries entered a months-long blockade, economic activity slowed significantly, domestic demand and supply, trade and finance were seriously affected, and various views were cautious and worried about the expectations of the global economy.

The global economic outlook released by the International Monetary Fund ((IMF)) in October 2020 predicts that the global economy will contract by 4.4%, equivalent to seven times the decline in 2009, the worst recession since the Great Depression of the 1930s. However, the positive process of vaccine research and development brings hope for ending the novel coronavirus epidemic. IMF predicts that the global economy is expected to return to output levels of 2019 before the epidemic in 2021. WTO believes that trade volume in almost all regions of the world experienced double-digit declines in 2020, especially exports from North America and Asia, and the global electronics industry, automobile manufacturing industry and trade in services were hit even harder. Global trade is likely to recover in 2021, but there is uncertainty, and the final performance depends to a large extent on the duration of the epidemic and the effectiveness of national anti-epidemic policies.

Analysis of domestic economic situation

2020 is the "14th five-year Plan" period of "starting a new journey of building a modern socialist country in an all-round way", and it is also the first five-year plan for marching towards the second centenary goal. On January 2, 2020, the report "China's Macro-economy towards a New double-cycle Development pattern" released by the China Macroeconomic Forum (CMF) predicted that the gradual decline of the world epidemic, the normalization of China's supernormal policies, the transformation and adjustment of China's development strategy, and the gradual rise of endogenous new momentum will become the four core forces in China's macro-economic operation in 2021. It is expected that China's annual GDP growth rate will reach 8.1% in 2021, of which the first quarter will be as high as 11.4%.

Forecast of magnesium Market trend in 2021

In terms of the external environment, in 2020, the domestic economy quickly recovered from the downturn and continued a stable recovery.

On the domestic supply side, domestic demand is insufficient in 2020, resulting in a sharp drop in prices. Domestic demand is expected to increase in 2021, but the increase in domestic supply is expected to be limited, taking into account market capacity.

In terms of magnesium application, at present, the domestic magnesium deep processing application is on the rise, the application field is further expanded, and the application amount is gradually increasing. With the norms and support of relevant departments, magnesium application will maintain a healthy development in 2021. In the international market, the development of magnesium application has remained stable, or slightly increased.

In terms of exchange rate, according to the views of all parties, the trend of the US dollar fluctuated greatly in 2020, and by the end of May of that year, the spot exchange rate of RMB had depreciated by about 22.8%. As of December 25, 2020, the appreciation of the RMB during the period was as high as 9.4%. Judging from the fluctuation range, the fluctuation range between the highest and lowest value of the exchange rate during the year was 9.6%, an increase of 2.1 percentage points compared with 2019. The RMB exchange rate is expected to continue the trend of two-way wide fluctuations while maintaining high flexibility.

In terms of price, the magnesium price is low and weak in 2020, considering that the supply and consumption of the magnesium market is expected to increase in 2021, it is expected that the performance of magnesium price will return to a stable operation situation in 2020, with the annual price fluctuation range of 14000-16000 yuan / ton, and the price fluctuation range of FOB Tianjin Port is 1950-2550 US dollars / ton.

Supply and demand analysis

Domestic supply is basically stable

According to the preliminary statistics of the China Nonferrous Metals Industry Association, from January to November 2020, China produced a total of 770700 tons of raw magnesium, down 0.47 percent from the same period last year. Of this total, Shaanxi produced 514700 tons, up 10.57 percent over the same period last year; Shanxi produced 96500 tons, down 15.82 percent over the same period last year; and Ningxia produced 47400 tons, down 8.01 percent from the same period last year.

There is a marked decrease in the volume of exports.

Statistics from the General Administration of Customs show that from January to November 2020, China exported a total of 353100 tons of magnesium products, down 13.73 percent from the same period last year, with a cumulative amount of US $844 million, down 19.47 percent from the same period last year. Of this total, magnesium ingots exported 182000 tons, down 16.48 percent from the same period last year; magnesium alloy exports totaled 95700 tons, down 5.15 percent from the same period last year; and magnesium powder exports totaled 62300 tons, down 20.03 percent from the same period last year. Domestic consumption remains stable compared with the same period last year

In 2020, domestic magnesium consumption is expected to be about 485000 tons, which is basically the same as the same period last year.

From the perspective of downstream related industries, the output of steel, electrolytic aluminum, sponge titanium and other downstream industries mainly increased in 2020, so the consumption of magnesium in the metallurgical field is expected to maintain growth compared with the same period last year; the consumption in the processing field is still insufficient.

Analysis of apparent magnesium consumption data in China

According to the relevant statistical data and information, it is estimated that in 2021, the domestic output of raw magnesium is about 955000 tons, the export of all kinds of magnesium products is about 423700 tons, and the domestic consumption is 503500 tons. Consumption accounted for 52.72% of the total supply, while exports accounted for 44.36% of the total supply.

For queries, please contact Frank LIU at liuxiaolei@smm.cn

For more information on how to access our research reports, please email service.en@smm.cn