Higher Magnesium Price with Supply Concern in China

International magnesium market price keeps increasing. The Chinese offer price reached US$ 5,300 per tonne under tight supply when China is completing the construction for Beijing Olympic game in August. Japanese trading firm source expects Chinese government could stop or limit the operation for magnesium refineries when the government stopped major steel making operation in Shanxi. Magnesium market could reach US$ 6,000. International magnesium market was expected to decrease in 2008 when Chinese suppliers, which represent around 80% of the world supply, expand the output capacity by 30%. However, Chinese government tries to improve the environmental condition toward Olympic game by controlling the industry operation. The government is expected to stop the operations including Steel making and magnesium within 500 kilometers from Beijing. With the supply concern, the market price increased to US$ 5,200 per tonne for April-June shipment, which represents 2.5 times of same period of 2007. The price could increase more with the supply concern. Taiyuan, Shanxi, which is within 500 km from Beijing, is major magnesium making area where the output represents 80% of Chinese total output. Japanese source said some makers with poor environmental facility could be stopped the operation by the government and major refineries would be ordered to reduce the output.