Chinese low-grade magnesia prices moved downward because of increasing stock levels amid thin buying activity among downstream refractory producers, while high-grade magnesia prices were unchanged on a lack of magnesite ore.

All prices for low grades of China-origin caustic calcined magnesia (CCM), dead burned magnesia (DBM) and fused magnesia (FM), assessed by Industrial Minerals, moved down this week because of continuously rising stock levels in a flat market.

The fob China prices for CCM 90-92% MgO were down to $180-220 per tonne on Tuesday March 27, from $205-230 per tonne last week.

The price for DBM 90% MgO lump was $220-280 per tonne, down from $240-280 per tonne a week earlier.
And the price of FM 97% MgO (Ca:Si 1:1) fell by $50 per tonne to $1,100-1,200 per tonne.

Demand from overseas buyers remained slow and they were in no hurry to replenish stockpiles while waiting for lower prices. Some traders in Dalian also confirmed there were no fewer ships delivering magnesia from Bayuquan port recently.

«Chinese domestic prices of low-grade magnesia fell on sporadic buying and higher stocks. We lowered export prices following the downtrend in the domestic market, but have concluded no new deals this week,» a Haicheng magnesia producer said.

Meanwhile, high-grade magnesia prices remained at their current levels this week with high-quality magnesite still in tight supply.

«The local government hasn’t released any news about relaxing control of explosives in mining, and most magnesia producers still face limitations on how to achieve high-quality magnesite ore to produce high-grade magnesia,» another Haicheng producer said.

The fob China prices for high-grade CCM materials held stable this week $240-260 per tonne for 94% MgO, and $335-355 per tonne for 96% MgO.

The price of DBM, 97.5% MgO, lump, was unchanged at $1,100-1,400 per tonne fob China on March 27, and the price of DBM, 94-95% MgO, lump, held firm at $680-700 per tonne fob China.

The price of 97% MgO (Ca:Si 2:1) was also stable at $1,250-1,400 per tonne.

Several producers told Industrial Minerals that «if the government permits the use of explosives, high-quality magnesia prices will also face downward pressure with more spot materials rushing into the market.»

Users of silicon carbide, brown-fused alumina and calcined alumina are having to wait longer to get their consignments amid limited availability and firm prices.

Market participants active in the distribution and consumption of refractory raw materials are reporting longer lead times for deliveries of minerals including silicon carbide, and fused and calcined alumina, which is thought to be related to the persistent tightness in the market.

While prices for refractory minerals have remained firm over the past two weeks, it is taking longer to deliver material after orders are placed, Industrial Minerals has heard.

Market participants listed silicon carbide as one commodity being affected. «It’s taking almost twice the time it normally takes to have material shipped,» one distributor to Western Europe said. «We have seen lead times for refractory grade SiC going from three to five weeks.»

Sellers active in the SiC market confirmed this situation, citing disruption to production in China as a principal factor.
«It has been harder to source from China, and more expensive in some cases [than to buy from Europe]. So demand has shifted to European suppliers, which are now swamped with orders,» one supplier said.

«It is true that prices are stable, but it is harder to find material,» a distributor added.

Industrial Minerals assessed the price of refractory-grade silicon carbide, min 95%, at €1,015-1,100 ($1,244-1,348) per tonne ddp Europe on Wednesday April 4, and the price of refractory-grade silicon carbide, min 98%, at €1,050-1,250 per tonne ddp Europe.

In brown-fused alumina (BFA), it is again the uncertain production situation in China that is contributing to longer lead times.

Henan province, the largest producing area for BFA, recently announced new rounds of environmental inspections that will take place at local facilities in the coming months.

This is making it harder for facilities to operate, and is helping to lengthen the supply times.

«It’s taking five to six weeks to have BFA ready for shipment [in China]. This is, of course, affecting schedules for deliveries to customers,» a trader said.

The price of refractory-grade brown fused alumina, min 95%, 0-6mm, rose to $800-820 per tonne fob China on March 22, against $780-800 per tonne in previous weeks.

Meanwhile, the price of abrasive-grade brown-fused alumina, min 95%, FEPA F8-220 grit, remained stable at $870-920 per tonne fob China, after an increase earlier in the year.

A similar situation with longer lead times is being seen in the calcined alumina market.

«So far, shipments have been for limited volumes, and have come late,» a trader said. «Customers are concerned that they won’t get as much [material] as they have ordered for the year.»

Another distributor to Europe has been receiving inquiries from calcined alumina buyers who could not get their original consignments, but said that he was unable to meet their requests for material due to limited supply.

As reported on March 1 during the 24th Bauxite & Alumina Conference in Montego Bay, Jamaica, calcined alumina producers told Industrial Minerals that they are oversold, due to a rebound in demand following previous years of weak markets. And they warned that there is not enough supply available to meet global demand.

Magnesia

In other refractory minerals, however, European traders and buyers reported fewer problems with sourcing, although opinions vary.

In magnesia, market participants said that they could find material and have it shipped within relatively normal time frames.

«My suppliers can still deliver a few thousand tonnes [of magnesia product], and can deliver right now. I don’t perceive that to be an issue at the moment,» a Europe-based trader said.

Industrial Minerals is also aware of a number of trades for high-grade dead burned magnesia (DBM) during the first quarter of this year with volumes between 2,000 and 6,000 tonnes.

A second western consumer told Industrial Minerals that he saw «continuing limited availability and firm prices» but was nevertheless able to place orders «for the volumes we require.»

Prices for China-origin caustic calcined magnesia (CCM), DBM and fused magnesia (FM) remained unchanged this week, following a previous downward adjustment for low-grade material.

China’s high-grade magnesia prices were steady this week on a lack of high-quality magnesite, the raw material for magnesia, while the local government in Haicheng has remained strict on the use of explosives in mining.

China-origin magnesia prices assessed by Industrial Minerals were stable this week, while Chinese producers maintained prices for high-grade magnesia due to tight raw material supply.

Industrial Minerals’ assessed the dead burned magnesia (DBM), 97.5% MgO lump, price at $1,100-1,400 per tonne fob China on Tuesday March 20, unchanged from last week. While the DBM, 94-95% MgO lump price was also unchanged at $680-700 per tonne fob China.

«Supply for high-grade DBM remains tight due to a lack of high-quality raw materials, and there is no further news from local government to allow the use of explosives in mining,» a Haicheng producer told Industrial Minerals.

«Because of the shortage in high-quality raw materials, we haven’t started to produce DBM 95% and 97% and only have DBM 90% on hand. I think the government will not allow the usage of explosives in mining until May or June this year,» another producer in Haicheng said.

Meanwhile, the low-grade magnesia market was under pressure after sufficient stocks and thin buying activities kept prices stable this week. The price of DBM 90% MgO lump was unchanged at $240-280 per tonne fob China on Tuesday, while 92% MgO material was priced $280-300 per tonne, also steady from last week.

«With sufficient stocks of low-grade DBM 90%, prices are hard to move up and have kept flat this week. Overseas demand hasn’t picked up, and I received no bids and deals this week,» a trader in Dalian said.

«After China’s magnesia prices increased sharply last year, we also bought DBM from Russian and Turkish producers with narrowing price gaps. Chinese magnesia producers are unwilling to sign long-term contacts on a lack of raw materials, while we can sign long-term contacts with producers in other countries if prices are reasonable,» a consumer from the refractory sector told Industrial Minerals.

Fused magnesia (FM) prices held stable this week while producers received limited deals. The spot price of FM 97% MgO (Ca:Si 1:1) was assessed at $1,150-1,250 per tonne fob China on March 20 and 97% MgO (Ca:Si 2:1) held stable at $1,250-1,400 per tonne on March 20.

Weak trading activity for caustic calcined magnesia (CCM) has meant prices did not move this week. The prices for 90-92% MgO CCM material held at $205-230 per tonne on March 20, as well as 94% MgO CCM at $240-260 per tonne and 96% MgO CCM material at $335-355 per tonne.

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Sales volumes to steel and industrial end-markets increased last year amid a scarcity of main refractories raw materials, such as dead-burned magnesia and fused magnesia.

Growth in steel output and strong performance in refractories markets drove revenues and earnings for refractory group RHI Magnesita in its adjusted financial results for 2017, although the company highlighted continuing issues in raw materials supply.

The group – which was formed through the merger of Austria-based RHI AG and Brazil’s Magnesita Refratarios SA, and was listed on London’s Stock Exchange in October last year – benefited from a rebound in demand for refractories arising from global growth in steel output.

Adjusted pro-forma revenue for the group reached €2.68 billion ($3.30 billion) in 2017, up by 11% from the previous year. The results incorporate 10 months’-worth of financial results for RHI but only two months from both RHI Magnesita and Magnesita Refratarios.

Adjusted pro-forma earnings before interest, taxes, depreciation and amortization (Ebitda) rose by 39% in 2017 to €304.1 million. The performance confirmed an uptrend seen in the company’s financial figures for JanuarySeptember 2017, released last November.

The company pointed to «a more favorable market environment» supporting «sales growth in both [its] steel and industrial divisions.» «The robust performance was largely driven by the 5.3% increase in world steel production in 2017,» RHI Magnesita said.

Sales by the steel division (refractories used in steelmaking) increased by 14% in 2017 year-on-year, while those in the industrial division grew by almost 3% in the same comparison. Growth in the latter division was led by cement, especially in the second half of the year.

«The raw material crisis in China also influenced the demand for refractories, because some customers anticipated orders to secure supply,» the company added. RHI Magnesita highlighted the difficult situation in raw materials supply, following the drastic slashing of production volumes of key refractory minerals by China during 2017.

The cutbacks more than doubled the prices of the two main magnesite-based raw materials in refractories – dead-burned magnesia (DBM) and fused magnesia (FM) – in 2017, the company said. But its vertical integration structure – the company operates its own magnesite and dolomite mines – helped it to secure supplies and «remain competitive in costs,» it added.

Tightness in magnesia supply pushed prices of high-grade DBM higher in early March 2018. The price of DBM 97.5% MgO lump increased to $1,100-1,400 per tonne fob China on March 6, from $630-740 per tonne a week earlier.

And the price of 94-95% MgO material rose on the same day to $680-700 per tonne fob China from $385-470 per tonne. FM prices adjusted downward in early March, but remained much higher than they had been for most of 2017.

FM 97% MgO (Ca:Si 1:1), lump, was trading at $1,150-1,250 per tonne fob China, while the price of FM 97% MgO (Ca:Si 2:1), lump, was $1,250-1,400 per tonne. RHI Magnesita brings together a pool of more than 50 facilities globally, with a strong presence in the Americas, Europe and Asia, as well as direct access to its own raw materials.