Magnesium Prices Nearly Doubled on Higher Costs, Output to Recover

SHANGHAI, Sep 2 (SMM) – Magnesium prices have soared since the beginning of the year as costs rose nearly 10,000 yuan/mt. Take spot prices in Wenxi county of Shanxi province for example,​magnesium prices rose from 15,700 yuan/mt early this year to the current 30,250 yuan/mt, a surge of 93%. With the rise in prices of coal and ferrosilicon raw materials, the production cost of magnesium metal has risen nearly 10,000 yuan/mt. 

China's magnesium ingot output declined 15% to 720,000 mt in 2020 amid the impact of the COVID-19 pandemic. But output is expected to recover this year to the levels seen in years past. Domestic transportation issues in the early stage of the pandemic hampered raw material procurement and products sales by companies, disrupting production. Meanwhile, the shutdown of overseas ports amid the pandemic caused cancellation of export orders and this depressed demand significantly. In this scenario, magnesium plants cut output.   

China's salt lake resources are extremely rich and magnesium salts from domestic salt lakes are mainly distributed in the northern part of Tibet Autonomous Region and the Qaidam Basin in Qinghai Province.

Magnesium salt reserves in the Qaidam Basin account for 99% of the total domestic proven magnesium salts, ranking first in China. Among them, the total proven reserves of magnesium chloride are 4.28 billion mt. The total proven reserves of magnesium sulphate are 1.72 billion mt, of which the basic reserves are 1.23 billion mt.

Fugu County in Shaanxi Province has become an important magnesium smelting base in China. At present, there are more than 40 magnesium ingot production enterprises in the region, and the regional output ranks first in China.

At present, the downstream products of magnesium ingots in China include magnesium alloys, aluminium alloys, sponge titanium reducing agents and steel desulfurisers. In 2020, magnesium alloys topped the list of magnesium ingots consumption, accounting for 36%.