Chinese Mg Offer Price Slightly Rebounds in December

International magnesium market price shows a sign to stop decreasing, though which continued lowering since September 2008. Chinese producers are currently offering C&F $2,850-2,950 per tonne against Japanese trading houses. China represents about 80% of global magnesium supply. The offer price became below C&F $2,800 in mid November and leveled off for a while. The price slightly rebounded in December.

Chinese magnesium suppliers and the consumers in Japan and Europe started the latest price negotiation for January-March 2009 at the end of November. The consumers seem to reduce magnesium procurement widely when automobile and housing markets maintain severely stagnant.

Chinese magnesium output volume is decreasing after summer. The recent market price is lower than the refineries’ breakeven level. Chinese refineries seem to have implemented output reduction or operation halt. Chinese magnesium production totaled 72,000 tonnes per month at the peak in June 2008 but the volume appears to have declined to 30,000 tonnes in October and around 20,000 tonnes in November.

A source of Japanese trading house said Chinese magnesium refineries seemed to raise the offer price when they were seriously suffered from worse profitability. The market price temporarily rebounded but is likely to keep the low level with little expectation for demand recovery in a short term.