Magnesium powder market sinking

Magnesium powder, used as desulfurizer for the steel-making industry, seems to be in face of a gloomy future given that steel mill are reducing output all over the world under the global economic and financial crisis. Participants reported that the magnesium powder price has also been diving in Chinese spot market in line with the slipping price of magnesium ingot.

A magnesium powder producer based in Wenxi, Shanxi province, with the capacity of 200tpm, halted production last weekend for environmental and safety checkup.4 According to the source, most the magnesium powder processors in the region were asked to stop production to improve anti-pollution facilities and safety treatment. "We accepted an order of about 50t of magnesium powder a week ago but only completed half of the order. We're afraid that we have to put off the fulfillment of the contract," said the source.

The source reported that the price of magnesium powder is in a wide range of RMB24,500-26,000/t (USD3,587-3,807/t) ex works depending on different payment term. "Our previous deal was concluded at RMB25,000/t (USD3,660/t) ex works with 3 months D/A payment while the price may be much lower if the buyer can make payment by cash," said the source.

The source confirmed that magnesium powder demand saw a significant decrease due to the sluggish steel market. As many steel mills have reduced output, the demand for magnesium power, one of the additive agents, declines accordingly. "Luckily, some of our long-term customers are from the pharmaceutical industry, so our sales pressure is not as heavy as others," said the source.

Meanwhile, the source disclosed that some magnesium ingot producers are anxious to sell for fear that the price may drop further. The source received many unsolicited offers and just purchased a small batch of magnesium ingot at around RMB22,000/t (USD3,221/t) ex works.

A dealer from Henan revealed that the magnesium powder market is in decline in accord with the magnesium ingot. The worsening situation of steel market is also casting shadows on the magnesium powder market.

"We could distributed more than 300tpm of magnesium powder to steel mills, but our sales volume has decreased sharply to 50-60tpm since September," said the source, revealing that many steel mills reduced the purchase quantity of magnesium powder.

The source confirmed that the price of magnesium powder ranges widely. Some large steel mills who usually purchase by D/A payment have to pay RMB25,500-26,000/t (USD3,734-3,807/t) ex works while the price to those who can make fresh payment is only at RMB24,000-24,600/t (USD3,514-3,602/t) ex works.

The source is also not optimistic about the future market for both magnesium powder and ingot, believing the prices of the materials are likely to continue slipping in the following several weeks.