[+/-] : China Direct fired up by magnesium deal

Even as its chairman prepares to ring the opening bell on Wall Street on Tuesday, investment company China Direct has seen its shares surge 128% in the ten days since it made its debut on the American Stock Exchange through a backdoor listing. The latest stimulus to the company's fortunes, which drove up the stock by more than 35% Friday, was merely a small magnesium project with estimated annual sales of $50 million.

China Direct seems to have swung a good deal, at least on paper. Just four days after it had made its initial investment of some $2 million in CDI Pan Magnesium, China Direct's market value had shot up by $50.6 million to $193.5 million. The stock leapt 35.43%, or $3.10, to $11.85, with more than 7.3 million shares changing hands.

CDI Pan Magnesium is a joint venture 51% held by China Direct; its Chinese partner, Shanxi Jinyang Coal and Coke Group, owns the remaining 49% stake in the project. China Direct said last Monday it would contribute 51 million yuan ($6.8 million) as registered capital, which will be infused in stages over the course of 2 years. The first installment of $2.035 million was provided by China Direct on October 1.

The joint venture currently has a production capacity of about 6,000 tons of magnesium per year and is completing the construction of two new facilities that will add another 12,000 tons annually in 2008.

Based on the current magnesium price of approximately $2,800 per ton, China Direct predicted that the new production capacity, when fully operational, will be able to generate approximately $50 million in annualized sales, with an anticipated net profit margin of 15% to 20% for the fiscal year 2008.

Dr. James Wang, CEO of China Direct, commented, "We are committed to our current plan of reaching manufacturing capacity of 40,000 to 50,000 tons of pure magnesium while distributing an additional 40,000 to 50,000 tons of magnesium in 2008. Our management team expects global demand for magnesium to increase substantially for the foreseeable future and we will continue to grow our magnesium operations to be a leading worldwide force in this industry."

Operated as an investment and consultancy firm, China Direct has interest in several zinc and magnesium projects in China and has helped a few small-sized Chinese firms to tap the U.S. capital markets. In August 2006, China Direct arranged to be acquired by Evolve One, a money-losing over-the-counter-listed company that developed Internet and direct retail marketing companies, in an all-stock deal. Upon completion of the deal, Evolve One changed its name to China Direct and moved up from the OTC Bulletin Board to the Amex on September 24 this year, after which its share price doubled in just ten days.

China Direct said its turnover skyrocketed 223 times to $40,452,970 in the second quarter ended June from $180,417 in the comparable quarter the previous year. The increase in revenues was primarily attributable to Chang Magnesium, Lang Chemical and CDI Wanda, the three Chinese entities acquired after October 2006.

Net income for the second quarter also increased, to $2,267,742, or $0.16 per share, compared with a net loss of $362,697, or $0.04 per share, for the second quarter of 2006. – Forbes

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[+/-] : LME considers new metals contracts

The London Metal Exchange, the world's largest metals bourse, may introduce new contracts for a variety of steel products and is also considering metals like magnesium and cobalt.

The LME announced plans last month to start handling steel contracts via electronic and telephone trading, starting Feb. 25. Trading on the LME dealing floor will begin April 28. The contracts are for steel billet, a semi-finished product made from scrap. One will be deliverable in Turkey and the other in South Korea.

"One steel contract for the entire steel industry is akin to saying the one base-metals contract can meet the needs of all those in the aluminium, copper, nickel, lead, zinc and tin industries," the LME chief executive, Martin Abbott, said at a seminar to mark the beginning of LME Week in London on Monday. "Our steel billet contracts are therefore a start of what could be several LME steel contracts."

The 130-year-old bourse is competing with rivals including the New York Mercantile Exchange to expand its share of commodities trading after metals and energy prices climbed to record levels last year. The LME handled commodities trades valued at $8.1 trillion in 2006, 80 percent higher than a year earlier.

The LME has received a study on magnesium trading and will begin to assess it Tuesday, Abbott said. ...
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[+/-] : US-listed China Direct raises 2007 guidance on magnesium, chemical ops

Florida-based China Direct Inc said it is raising its 2007 forecasts on strong magnesium prices, and strong performances from its consulting and chemical operations.

Management now sees 2007 revenue exceeding 175 mln usd with net profit of over 9.5 mln, compared to previous guidance of 150 mln and 8.25 mln, respectively.

"The third quarter and remainder of 2007 have been positively impacted by the overall prices for pure magnesium in the global marketplace as well as strong performances from the consulting division and chemical operations," China Direct said in a statement. ...
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[+/-] : Magnesium offering prices up in India but domestic price keeps stable

Magnesium price in Indian domestic market remains stable at around INR130-135/kg, while CIF price went up to around USD3,050-3,100/t CIF Mumbai port, from USD2,950-3,000/kg sold last week and sources believe the price will continue to go up.

According to participants, most deals this week were concluded at the higher side of the price level of around USD3,100/t CIF Mumbai port and the stable price of around INR130-135/kg in the local market was attributed to the fact that some traders still have old stocks.

A source who concluded a deal of USD3, 070/t CIF Mumbai port, up from USD3, 050/t CIF Mumbai port sold last week, agreed that price will continue to go up as tight supply will continue to drive the price to the sky.

"I think Chinese suppliers are trying to achieve around USD3,500/t CIF Mumbai port by the end of the year but I do not think they will reach that level because consumers are fed up of week-on-week price increase," said the source. "I do not foresee much price increase before end of the year.

Another source reported a deal at USD3,100/t CIF Mumbai port, USD70 higher than his last deal, believing that price will not go down in a short time because material is still in short supply and Chinese suppliers are not eager to sell at this moment which will continue to help to push the price higher. ...
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[+/-] : Chinese bismuth participants watch the market

Facing the dropping price in bismuth market, many Chinese participants are cautious to take much new action, planning to watch the market.

"We quote USD13/lb for bismuth 99.99%min these two weeks, but customers do not have any interest to purchase, nor do they send the counter bid," said a trader, whose last conclusion was traced back to late September, when an Indian consumer bought five tons of bismuth 99.99%min at USD13/lb.

The source usually deals with about 100 tons of bismuth per month, but it does not contract any deal so far this month. "Receiving few inquires from consumers, we are almost out of the bismuth business this month," added the source, believing it can not see any sign of rebound, but remain stable in the near future.

"Smelters quoted RMB190,000/t for bismuth 99.99%min last week, and we purchased five tons at the price of RMB187,000/t, " stated a manufacturer of bismuth oxide, emphasizing that they do not want to purchase in large volume due to volatile bismuth price.

With the only purchase mentioned above in October, the consumer expressed its worry about the price decrease. If the consumer buys large volumes of the material, it will lose money in case the price of bismuth metal drops when selling bismuth oxide, elaborated the source.

Under the pressure of turnover, smelters may have to undersell their stockpile if demand remains low, forecasted the consumer.

Participants hold that the bismuth market may remain stable in the coming weeks, or slide after a period of stability if demand continues to be low. ...
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[+/-] : Zinc oxide market stable

Although spot zinc ingot price decreases continuously and reached to the low level of RMB25,400-25,500/t (USD3,382-3,395/t) this Tuesday, zinc oxide market keeps relatively stable.

A source from a Jiangsu-based producer with a monthly output of 100tpm offered its zinc oxide 99.7%min at around RMB25,000 (RMB3,329/t) ex works. "Spot zinc ingot price has slid by about RMB1,000/t (USD133/t) in recent two weeks, but zinc oxide price remains at the level of around RMB25,000/t (RMB3,329/t) ex works, the same level as that the previous two weeks," said the source.

"As our plant is carrying out long-term contracts, we could not adjust zinc oxide price in such a short time. In addition, the direction of zinc ingot market is still unclear, so we prefer to keep watching the market," said the source.

The source believes that spot zinc ingot price would drop further, pressed down by the downward movement of 3-month zinc on LME. Zinc oxide price may follow suit in the coming days.

The source said that the plant purchased some stocks of zinc ingot at around RMB26,000/t (USD3,462/t) delivered to its warehouse, when the mainstream price was at around RMB25,900/t (RMB3,449/t).

Another producer in Tianjin offered zinc oxide 99.7%min at around RMB24,800/t (USD3,302/t) processed from zinc scraps, almost unchanged with that half a month ago.

The source revealed that most producers mainly sell zinc oxide to regular customers and received few inquiries from new buyers. "As zinc consumption would not change greatly in the near future, zinc oxide market would keep stable in the following weeks," said the source. The plant is running with an output of 350tpm. ...
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