Japan Magnesium Buyers Return to Market

Japanese magnesium buyers including light metal rerollers and die-casting makers restarted the purchase for the first time in 6 months. The buyers, however, minimize the purchase while they changed the purchase from quarterly base to spot base. Chinese offer is C&F US$ 2,630-2,600 per tonne to Japan, which is around US$ 250 or 10% lower than the level in 3 months earlier due to demand slump.

Japanese buyers didn’t purchase magnesium in January-March and April-June due to overstock under lower operation rate since late 2008. The buyers’ inventory adjustment progressed and the buyers improve the operation rate. Some buyers started to purchase for July and later since late May, according to trading firm source. However, the buyers’ appetite is limited due to slow demand. A trading firm source said the purchase volume is less than a third of a year earlier level.

The demand condition is still slow in the international market partly due to very slow demand in Europe. The international market price is weak and the level decreased by near 60% from a year earlier level, when the price hit record high.

Chinese suppliers’ operation rate is around 10-20% of the peak, according to Japanese sources. The primary magnesium ingot production volume is estimated to be monthly 10,000 tonnes level in China compared with 70,000 tonnes in the peak in last summer. The export volume from China decreased by around 60% to 1,321 tonnes to Japan in April from a year earlier, according to Chinese trade statistics.