Shortage Concern for World Magnesium in April-June

International magnesium supply is expected to get shortage in spring. If the buyers in Japan and Europe would increase the purchase in and after April, the supply could be short when magnesium makers operate at 10-20% of peak level in China, which represents 80% of the world supply. The market price could surge while the offer level is US$ 2,880-2,780 per tonne C&F Japan.

Japanese trading firm source said Japanese buyers buy no magnesium in January-March when the buyers try to reduce the inventory. Light metal rerollers operate at 50-60% of capacity and the consumption pace could result in certain volume of purchase in and after April, which would be more than current Chinese supply ability.

World magnesium demand is estimated to decrease by 30% to 300,000-320,000 tonnes including primary metal, alloy and powder in 2009 from 2008. Chinese production is 10,000-12,000 tonnes per month while the country produced 72,000 tonnes in peak of June 2008.

Japanese and European buyers are expected to purchase 70,000 tonnes of the metal from China in April-June. With current operation rate in China, the supply could be 30,000-40,000 tonnes short for the demand.

However, some Japanese industry sources expect the supply couldn’t be short when Chinese makers can increase the operation and Japanese buyers still have high level inventory.