Editor: Adam Zhang
A roundup of the year’s main events in the global magnesia market.
At the beginning of 2017, the magnesia market was on shaky ground. Prices slipped lower due to the cancellation of the export quota system at the end of 2016, leaving some to be openly bearish about the year ahead.
This sentiment did not last long, however. As the year marched on it became apparent that the environmental legislation which was announced in 2016 was going to be more far reaching and stricter than previously thought.
China is the world’s biggest magnesia producer and production is focused in Liaoning province. China’s main magnesia-producing region is currently split between two places – Dashiqiao in Yingkou, and Haicheng in Anshan.
Dashiqiao has less magnesite resources but more processing companies, while Haicheng has larger magnesite resources and primary processing companies.
Inspections started in Liaoning province, Anshan city, in January. A total of 64 local companies were covered and four inspection teams from the Anshan municipal government announced a number of irregularities found at Youyan Wanyou Mining Company, Shuangli Mining Company and Wanning Mining Company.
The officials said similar issues related to environmental practices and pollution levels were found in several other companies that were inspected, leading to fines being issued on site and operations being immediately shut.
Haicheng city, under the municipal management of Anshan, completed inspections of all local magnesia companies, according to Anshan Bureau of Environmental Protection. There are 95 companies operating 1,700 magnesia kilns in Haicheng. Of these, 142 kilns were shut in January.
Then, in March, the Haicheng government announced that production would stop at all major magnesia companies, because their environmental objectives had not been met on time and they were now operating without permission, greatly damaging the environment.
The ban affected 527 kilns in 34 companies — including 383 caustic calcined magnesia (CCM) kilns, 42 dead burned magnesia (DBM) kilns, seven fused magnesia (FM) kilns, 52 middle-class magnesia kilns, 37 high-purity magnesia kilns and six tunnel kilns.
Mining restrictions
In a double blow, and adding to the problems resulting from the environmental inspections, Haicheng was also reportedly considering restrictions on magnesite mining activities, contacts in Haicheng told Industrial Minerals in March. Producers were understood to be facing restrictions on selling material outside their local area – even to nearby Dashiqiao city.
By May, almost all magnesia producers in Haicheng and Dashiqiao were shut amid ongoing environmental controls; and while European magnesia prices were stable market participants are wary of impact to the market should the situation in China persist.
As expected, magnesite mining was also severely restricted because no dynamite was being sold.
Fused magnesia (FM) was, by May, no longer available in China’s Liaoning.
In Deyang, three refractories manufacturers based in the city carried out an upgrading process of local operations to comply with the stricter environmental norms.
One refractory company was forced to shut down while 12 others were asked to rectify their operations in Deyang city in China’s Sichuan Province.
Elsewhere in the world
Brazil and the European Commission meanwhile approved the proposed acquisition of Brazilian refractory maker Magnesita Refratários by Austria’s RHI, but on condition that the latter divest its dolomite business, the authority said in June (See pp31-32).
In Europe, prices of European fused magnesia (FM) surged to exceed the $1,000 per tonne mark in June, following repeated upticks in Chinese prices and extremely tight availability of material reflecting on international demand flows.
While the European magnesia market as a whole somehow managed to stave off the rapid price uptrend that was seen in China since the second quarter, the widespread shortage of fused magnesia has now taken the price of the commodity up by over 50% against earlier levels.
By September and at the UNITECR conference held in Santiago, Chile, delegates heard that the supply tightness affecting magnesia markets is expected to persist for the foreseeable future.
Sources were adamant the issues of supply shortage and price volatility that have been seen in China over 2017 will continue to bite, they told Industrial Minerals at the event.
Smuggling ring
Customs officials at Huangpu Port in southern China announced the discovery of a magnesia smuggling case involving some 15,000 tonnes of material at the start of the year.
It is alleged that the material was smuggled through Huangpu port and Nansha port in Guangzhou, and Shanghai port, between June 2014 and October 2016.
The magnesia cargo was being exported under other product labels, including calcium carbonate, barite and flatting agent. In this way, the sellers bypassed the required export certificate for magnesia products, keeping prices lower than they would otherwise be.
R&D in Yingkou
Yingkou’s municipal government, in China’s Liaoning province, announced a wide-ranging plan to promote supplier-side structural reforms for seven local industries including magnesia, aiming to cut overcapacity, pollution and to foster R&D in new materials.
Yingkou plans to boost the new materials sector for magnesia with the aim of developing new refractory products based on the mineral.
Overcapacity
To deal with the overcapacity problem, Yingkou plans to speed up the process of closing backward capacities that have high pollution and high energy consumption levels.
Additionally, the city wants to impose output control on all magnesium production. As such, the annual mining volume of magnesite will be limited to 5 million tonnes.
The number of magnesite companies will be consolidated to 20 in 2017 and further reduced to 17 by 2020. The proportion of non-refractory use of magnesium products in China is expected to increase to over 20% by 2020.
New capacity will be strictly controlled, especially for steel, cement, flat glass and electrolytic aluminium.
Pollution control
As regards pollution controls, an online monitoring system will be installed to assess pollution levels and energy consumption of the local magnesia industry.
By 2020, the target is to reach a 60% recycling rate of industrial solid waste.