The price of magnesium is soaring, how many families are happy and how many are sad? Both upstream and downstream complain, who is the winner?

After the Mid-Autumn Festival, the magnesium market once again became the focus of heated discussion. The price of magnesium ingots rose from 45000 yuan / ton before the Mid-Autumn Festival to 70,000 yuan / ton, a daily increase of more than 30%. Such an increase is eye-popping. The reporter learned in Fugu area of Shaanxi Province, the largest magnesium industry agglomeration and price formation center in Shaanxi Province, that the superposition of multiple factors, such as soaring raw material prices and double control of energy consumption, led to the imbalance between supply and demand of magnesium ingots, and prices rose in a straight line, which had an impact on production enterprises, processing enterprises, and application enterprises in varying degrees.

Magnesium ingot price "rising tide lifts all boats"

Fugu County is the world's largest agglomeration of raw magnesium production, where there are more than 35 original magnesium production enterprises, with a production capacity of more than 700,000 tons, accounting for more than half of the country's output. The reporter learned from the region that there are three main reasons for the rise in magnesium ingot prices:

First, there is a supply gap in raw materials and prices rise. The magnesium industry in Shaanxi is mostly a recycling industry of blue carbon, ferrosilicon and magnesium. The production of raw magnesium and coke powder (blue carbon and clean carbon) is greatly affected by the price of raw coal. Since the beginning of this year, the price of ferrosilicon, the raw material for the production of magnesium ingots, has risen from 5600 yuan / ton at the beginning of the year to 22000 yuan / ton. The price of coal has risen from 350 yuan / ton to 1500 yuan / ton, and ferrosilicon and coal prices have repeatedly reached new highs. The high production cost brings a lot of pressure to the production and operation of enterprises. for a period of time, coal even has a price but no market, and it is extremely difficult to procure. some magnesium smelting enterprises are forced to reduce production or even stop production, resulting in rising costs and pushing up the price of magnesium.

Second, magnesium production decreased due to environmental protection factors. In 2019, Yulin City launched a three-year action plan for the upgrading and transformation of the orchid carbon industry, which clearly proposed to force the industrial transformation by protecting the ecological environment, optimize the layout of the orchid carbon industry, and promote large-scale agglomeration. to achieve the overall requirements of high-quality development of orchid carbon production. According to the requirements of the industrial guidance catalogue of the National Development and Reform Commission, the blue carbon production plant with a capacity of less than 75000 tons per furnace has been upgraded. Due to the intersection of the smelting gas distribution section and the blue carbon production plant, the original magnesium production enterprises have begun to raise the bid and upgrade one after another. increasing capital investment and increasing production costs is one of the reasons for the rise in magnesium prices.

Third, the double control of energy consumption has been strengthened. On September 13, the Development and Reform Commission of Yulin City issued a notice on ensuring the completion of the target of double control of energy consumption in 2021, requiring some key energy-using enterprises to implement regulation and control measures such as production limit and suspension from September to the end of the year. more than 40 magnesium smelting enterprises are involved. On September 20, Fugu County, the first batch of energy consumption double control key regulation and control enterprises to stop the production of power supply measures, including Lanchan, magnesium industry enterprises. The reporter learned that the shutdown and production restrictions have involved the Fugu County magnesium plant, Fugu County's main magnesium plants have stopped production in accordance with the requirements. The output of magnesium in Fugu County accounts for more than half of the national total, and the suspension of production in this area is bound to affect the total domestic output, which is an important factor affecting the price of magnesium ingots.

The chain reaction of rising prices appears.

Most original magnesium manufacturers have felt the strong rise in magnesium ingot prices this year. "after so many years of producing magnesium ingots, this year is the highest price in history." A person from a magnesium factory in Fugu said that although the price is rising, it is not profitable at all. Under the influence of the price of raw materials, the cost of magnesium ingot production enterprises is increasing. "Coal prices are extremely high this year, pushing up costs all the way. In the face of historically high coal prices, we have no choice but to passively accept the purchase of raw materials to smelt magnesium." The person in charge of the enterprise said that he did not make money last year and this year, and at the same time, he also paid a lot of fees for upgrading and upgrading environmental protection. What is more difficult is that under the influence of the policy of double control of energy consumption, all factories in Fugu area have stopped production since September 22, and enterprises are also a little confused when asked about the time of resumption of production.

In the face of the rising price trend, the response measure taken by magnesium deep processing enterprises in Hebi, Henan Province is to suspend the closure of all enterprises in order to reduce operational risks. "as prices rise and costs rise, we not only have no profits, but also have more serious losses." A magnesium deep processing company said that most companies are in a wait-and-see state and have some concerns about rising prices.

The rapid rise in magnesium ingot prices will also bring cost-rising pressure to related industries in the short term, especially aggravating the operational difficulties of downstream small and micro enterprises.

For another big user of magnesium sponge titanium, the price of magnesium ingots rises too fast is fatal. As of press time, the price of magnesium ingots has reached 70, 000 yuan / ton, while the price of sponge titanium is only 68000 yuan / ton. due to excessive cost growth, sponge titanium enterprises have suspended quotation. "the whole process of sponge titanium production needs 10% 15% magnesium ingots to supplement. According to the current higher magnesium ingot prices, the procurement cost has increased by about 10 million yuan. "Sponge titanium production enterprises frankly said that the cost of semi-process production enterprises is greater, only the purchase of magnesium ingots need 70, 000 yuan / ton, the price of sponge titanium needs to 100000 yuan / ton will not lose money. For 100000 yuan / ton sponge titanium, whether the downstream customers can accept it or whether the order can be signed normally is unknown.

The problems behind the chain reaction are worth paying attention to.

Industry insiders believe that the rise in magnesium ingot prices has a certain risk and impact, causing a series of chain reactions, hoping that magnesium ingot prices can operate smoothly and develop healthily. The unusual increase in the price of magnesium ingots has also brought some problems of concern.

A person in charge of magnesium ingot production enterprises said that ferrosilicon and coal prices have a great impact on magnesium prices, and it is hoped that the state will properly handle the relationship between capacity removal, supply and price stability while controlling high energy consumption.

Downstream deep processing enterprises said that in order to avoid the impact of price fluctuations in a special period, on the one hand, magnesium ingots should be stored, purchased at low prices to increase inventory, and sold at high prices to balance prices. On the other hand, it is necessary to establish a trading market, balance the contradiction between supply and demand in the magnesium market, and accelerate the development of the magnesium industry.

The high price of domestic magnesium ingots has also attracted the attention of the International magnesium Association. Rick McQueary, president of the International magnesium Association, said that the International magnesium Association is very concerned about the short-term impact of capacity cuts and price increases on industry growth, and despite the current tense situation, it still hopes and encourages magnesium users to continue to consider the application of magnesium materials in the long run. He believes that the magnesium market will gradually return to normal.

Although no one can accurately predict the price trend in the coming months, looking back at history, it is found that large changes in magnesium ingot prices have always been accompanied by price cuts and tend to calm down. "magnesium prices are likely to continue to rise in the coming months, but will return to more normal levels by the end of the first half of 2022." This is what Rick McQueary hopes for, and also what we magnesium industry people look forward to.