China Magnesium Producers Offer 40% Price Up for Jan-Mar 2008

Japanese trading houses and overseas magnesium producers started price negotiation for shipment during January-March 2008 this week. Chinese magnesium producers are offering US$ 4,100-4,200 per tonne, higher by 40% or US$ 1,200 from October-December 2007 and almost double from the corresponding period of 2007. China supplies 80% of global magnesium consumption.Chinese magnesium producers stopped new order receptions from overseas since late October. The suppliers explained domestic magnesium demand increased and their stocks became shorter. However, Japanese sources supposed Chinese producers aimed to raise the selling price by holding off. International magnesium spot price increased to US$ 3,500 per tonne in late November then.Japan imports 90% of domestic magnesium consumption from China. Japanese importers cannot disapprove the price hike by Chinese producers. In addition, Chinese government is supposed to put 10% tariff on the magnesium export in January 2008. Magnesium price may surge up more.Chinese magnesium production is expected to increase by 200,000 tonnes per annum after new factories and facilities start operations at domestic producers by February 2008. Chinese magnesium production is estimated to increase by 15% to 600,000 tonnes in 2007 from 2006 with output capacity at above 900,000 tonnes per year.