The association of refractory producers in the city of Yingkou has called on local companies to adjust their prices on the back of market tightness and production shutdowns.
The Refractory Industry Association of Yingkou, in China’s Liaoning province, announced last week it is recommending an increase in sale prices of magnesium-based refractory products due to rising production costs.
The local industry is facing a number of contingencies, the association stated, citing domestic magnesia prices – especially fused magnesia (FM) – increasing since May, coupled with reduced material availability.
As a result, refractory producers were forced to temporarily stop production, refused to take new orders or to participate in bid contracts.
The association encouraged all companies to take swift measures to achieve the required environmental upgrades and technical modifications to be able to resume production, in order to guarantee output to market and ease the current imbalance between supply and demand.
According to the association, market prices of Chinese magnesia remained stable between January and November 2016 before beginning to change since December, when supply became tight due to environmental inspections. Furnaces stopped operating, even cash couldn’t get the goods.
Compared with November 2016, domestic magnesia prices as of end of May 2017 have increased by a range of Chinese renminbi (Rmb) 900-3,100/tonne ($132-456) depending on product type, for both DBM and FM.
Additionally, the price of other source materials also increased, such as bauxite in Shanxi and alumina in Henan and Shandong.
The association announced the guidance prices for magnesium refractory products on the domestic market should increase as a consequence.
The guidance domestic price of burned magnesite bricks is up by Rmb 1,800/tonne against November 2016. Standard magnesia carbon brick prices are up by Rmb 1,700/tonne; high class magnesia carbon bricks increased Rmb 2,800/tonne, while unshaped refractory product prices rose Rmb 1,500/tonne.
The authority added that other refractory products will need to appreciate based on increases in source material prices, and that the price for steel refractories in overall contracts should rise accordingly.
The association expressed concerns around the announcement that the environmental inspection may continue until October before all companies will be able to resume normal production, citing very tight magnesia supply currently and prices on the up.
To date, only a handful of magnesia producers have resumed production operations.
