The continuous rise of magnesium Price and the tight spot Market-- Review and Prospect of magnesium Market in July

Review and Forecast of Market Price trend

Review of domestic Price trend

In July, the daily average price of magnesium in China fluctuated between 19000 yuan and 21200 yuan per ton, with an average monthly price of 20061.11 yuan per ton, up 52.81 percent from the same period last year. In early July, the demand of downstream users was weak, the market supply exceeded demand, the factory began to sell goods at a concessionary price, the market had no upward power, and the whole was dominated by weak consolidation and stable operation. In the first ten days of July, the supply in the coal market became increasingly tight, and procurement difficulties intensified. At the same time, affected by high temperature weather, workers' work intensity was high, and labor costs further increased. Enterprises in the main producing areas successively opened summer maintenance and production limit plans. Although downstream users have a strong wait-and-see mood, enterprises in the main producing areas have no willingness to ship goods at low prices, the quotations are firm, the mainstream prices have rebounded, and the market operates stably. In mid-July, affected by the production reduction of enterprises in the main production areas, the spot market was low, and the enterprise shipment was relatively smooth. At this time, the coal price rose again, the market appeared the phenomenon of coal grabbing, and affected by the steel price, the ferrosilicon price continued to run at a high level. Under the support of the high level of the raw material end, the factory continuously raised the quotation, and the downstream users stopped waiting under the influence of buying up, not buying or falling, and entered the market to purchase, rigid demand for stock, along with the improvement of demand. The trading volume expands, the magnesium price rises, and the high position of the magnesium market runs strongly. In late July, the magnesium market still maintained a high operating trend, with quotations in the main producing areas ranging from 20400 yuan / ton to 20600 yuan / ton. as downstream users gradually completed stock and entered the wait-and-see situation again, acceptance of high-priced magnesium began to weaken. the quotations of enterprises in the main producing areas were slightly loosened, and magnesium prices fluctuated slightly, but under the influence of high cost, low inventory and less spot, the price downward space was limited, and both supply and demand entered the game situation. The market consolidates slightly. At the end of July, the "coal shortage" intensified, the spot magnesium market was tight again, some factories were out of stock, downstream users also began to accept quotations and concentrated purchases in the market, and magnesium prices rose sharply. By the end of July, magnesium prices rushed to 21000 yuan / ton, the highest price in July.

By the end of July, the mainstream quotations of manufacturers in Shanxi, Ningxia and Shaanxi were 21100-21200 yuan / ton, 20900-21000 yuan / ton and 20900-21000 yuan / ton respectively.

On the export side, FOB prices rose sharply in July compared with the previous period, with an average monthly FOB price of 3199.44 US dollars per ton in July, an increase of 62.82 per cent over the same period last year. The average price from January to July was 2768.66 US dollars per ton, an increase of 35.47 percent over the same period last year.

By the end of July, some manufacturers and traders quoted FOB export prices ranging from US $3350 to US $3370 per ton.

Review of the Price trend of International magnesium Market

American market

The price of magnesium rose slightly in the US market in July.

According to the report of American Metal Weekly, the western spot price of American magnesium ingot remained stable in the range of $2.10 ~ $2.30 / lb, and the import price of US magnesium ingot trader increased slightly from $2.02 ~ $2.10 / lb to $2.05 ~ $2.15 / lb. the price of die-casting alloy (trader) in the United States increased from $1.85 ~ $1.95 / lb to $1.87 ~ 2.00 / lb.

European market

Prices related to the European market fluctuated and rose in July.

In July, the British Metal Guide reported that the price of (MB) magnesium ingots rose slightly, rising from $3500 ~ $3560 / ton at the beginning of the month to $3500 ~ $3600 / ton, and to $3600 ~ $3700 / ton at the end of July. The European free market price of American Metal Weekly (MW) fell to $3450 ~ $3650 / ton in July from $3500 ~ $3700 / ton at the beginning of the month, and rose to $3550 ~ $3700 / ton at the end of July. European strategic small metal Rotterdam warehouse quotation rose from 3375 US dollars / ton to 3550 US dollars / ton.

Outlook for the future

In July, the magnesium market first slightly consolidated, stable operation, and then under the influence of raw materials, production, demand and other aspects, magnesium prices continued to rise sharply. Magnesium prices will remain high and strong in August, supported by high costs and low inventories. In August, the prevention and control of the domestic epidemic has been intensified, factories have reduced production or stopped production, and transportation has also been restricted to a certain extent, which will aggravate the spot tension in the market. Downstream users are more cautious in purchasing, mainly for rigid demand, but the factory has ordered production, opened the futures pre-sale mode, and the quotation is firm. Magnesium prices still have room to rise in a short period of time, and the magnesium market is expected to further strengthen.

Supply side

According to the preliminary statistics of China Nonferrous Metals Industry Association, from January to June, China produced 434000 tons of raw magnesium, an increase of 8.13% over the same period last year. Of this total, Shaanxi produced 302500 tons, up 16.92 percent over the same period last year; Shanxi produced 59500 tons, up 0.95 percent over the same period last year; and Ningxia produced 12200 tons, down 46.47 percent from the same period last year.

On the export side

According to statistics from the General Administration of Customs, from January to June, China exported a total of 232200 tons of magnesium products, an increase of 11.63 percent over the same period last year, with a cumulative amount of US $645 million, an increase of 31.14 percent over the same period last year. Among them, magnesium ingots exported 128200 tons, up 12.06 percent over the same period last year; magnesium alloy exports totaled 60600 tons, up 19.53 percent over the same period last year; and magnesium powder exports totaled 37600 tons, up 6.52 percent over the same period last year.

Related industries

Ferrosilicon market

In terms of the ferrosilicon market, in July, the ferrosilicon market continued to rise strongly, the double control policy and power restriction measures in the main producing areas of Inner Mongolia and Ningxia became more and more stringent, the spot market approached, and the prices of cost raw materials such as blue carbon remained high. to support the strong operation of the ferrosilicon market, steel recruitment prices rose as a whole in August, magnesium prices also rose steadily, under the influence of multiple favorable conditions, ferrosilicon market sentiment is good, the future is expected to continue strong operation.

Downstream market

In terms of the iron and steel market, according to the latest report released by the Zhongwu Iron and Steel Logistics Professional Committee, in July, the PMI index of the domestic iron and steel industry was 43.3%, an increase of 2.3% from the previous month, and a decrease of 1.0% from the previous month. From a sub-index point of view, ex-factory prices, new orders, backlog orders index rebounded significantly, output, finished material inventory, raw material purchases, new export orders index fell slightly, indicating that the fundamentals of supply and demand in the domestic iron and steel industry picked up in July. Domestic steel prices rebounded in shock, especially driven by a sharp rise in black, the bottom of the price continues to rise. In August, some steel mills announced the news of overhaul and production reduction, steel production may decline, in terms of demand, downstream customers have more stock preparation plans, purchase orders are increased, and the market trading atmosphere is gradually strong. It is expected that the domestic steel price shock will be strong in August, and the domestic iron and steel industry PMI may pick up slightly.

In terms of the sponge titanium market, in July, China produced 12461 tons of sponge titanium, an increase of 45.57% over the same period last year and 1.05% month-on-month growth. From January to July, the output of titanium sponge totaled 84848 tons, an increase of 41.57 percent over the same period last year, and an increase of about 24913 tons from January to July 2020. In July, the overall market of sponge titanium is stable, the supply of raw material titanium tetrachloride is relatively stable, the price of magnesium ingots continues to rise, the cost of raw materials is high, the actual transaction price of sponge titanium is still at a certain low, and sponge titanium enterprises are under pressure. The downstream military market demand is gradually increasing, the civilian market demand remains stable, and the demand side of sponge titanium is gradually improving.

In the aluminum market, according to SMM data, China's electrolytic aluminum production in July was 3.279 million tons, an increase of 5.06 percent over the same period last year, with an average daily output of 106000 tons, down 2000 tons from the previous month. At present, electrolytic aluminum enterprises are facing great pressure on electric power. On the one hand, the output of electrolytic aluminum enterprises is limited to a certain extent due to the influence of power shortage; on the other hand, the production cost of electrolytic aluminum increases due to the rise of electricity price. In addition to the rise in electricity prices, the rise in alumina and anode prices Synchronize has further raised the cost center of gravity. It is expected that the three major costs are expected to continue to rise in the later stage, which will promote the cost of electrolytic aluminum to maintain an upward trend.