The market sentiment was mixed among producers and traders in China. Some said prolonged rising raw material prices amid strong domestic demand drove prices up further while others expected prices to retreat soon due to a lack of fundamental support.
One Chinese producer said he heard spot deals in China recently being concluded as high as $6,000-6,100/mt FOB China. "Despite the small export quantity, some spot material was sold at much higher prices," he said. "I believe what is driving prices higher is stronger domestic demand especially from those domestic magnesium powder and alloy producers." He added that his company was now more focused on doing domestic sales. "We favor selling our material domestically as costs on export are higher with the 10% export tariff," he said.
Another producer said spot deals were being concluded at around $5,800/mt FOB China. "Ferrosilicon prices in particular have been strong on concern about the material delivery after the Sichuan earthquake, which in turn triggers higher magnesium prices," he said. Ferrosilicon is a key material used in magnesium production. Local traders said current ferrosilicon prices were quoted at around Yuan 9,000 ($1,290)/mt ex-plant.
A source close to Chinese producers, however, said that major producers in China had expansion plans this year. "With more expected output in the near future, prices should stabilise soon or begin to go down... Some producers raise their offer prices to about $5,800-5,900/mt FOB China to make better profits," he said.
According to industry sources, domestic magnesium prices were quoted at Yuan 35,000-36,000/mt, up from Yuan 34,000-34,500/mt ex-plant quoted a week ago.
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