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High-grade DBM prices start to leap on lack of raw material

March 14,2018      views

Editor: Adam Zhang

There is a diverging trend between rising high-grade dead burned magnesia and falling low-grade material quotes, with raw material supply shortages putting pressure on DBM producers.

Chinese high-grade dead burned magnesia (DBM) prices edged up after the Lunar New Year holiday due to tight supply of high-quality magnesite ore while low-grade DBM prices drifted lower amid sporadic buying.

Following a series of state-mandated mining limitations in magnesia-producing areas across China such as Liaoning and Heilongjiang, local producers continue to face challenges to secure sufficient raw magnesite ore for processing.

Spot prices reflect those challenges, with low availability pushing Industrial Minerals’ high-grade DBM prices up by as much as $300-500 per tonne. Still, weaker demand pressured low-grade prices lower.

The price of DBM 97.5% MgO lump increased to $1,100-1,400 per tonne fob China on Tuesday March 9 from $630/740 per tonne a week earlier while 94-95% MgO material rose to $680-700 per tonne fob China from $385/470 per tonne.

Strict controls on magnesite, the raw material in the production of magnesia, is directly affecting plants’ ability to produce sufficient high-grade dead burned DBM, producers told us.

"The government has maintained strict control over exploring magnesite this year and producers remain unable to use explosives to get high-quality raw materials," a producer in Haicheng said.

No dynamite blasting or pneumatic drilling is permitted at a large number of mines in Liaoning, a second source added.

Still, soft demand for low-grade DBM caused prices of 90% and 92% material to fall.

The price of DBM 90% MgO fell to $240-280 per tonne fob China on Tuesday from $330/350 a week earlier and 92% MgO fell to $280-00 from $350/390 per tonne.

Fuse magnesia (FM) prices also fell in China in thin buying. The spot price of FM 97% MgO (Ca:Si 1:1) dropped to $1,150-1,250 per tonne fob China on Tuesday from $1,400/1,600 per tonne on February 27 and 97% MgO (Ca:Si 2:1) fell to $1,250-1,400 per tonne from $1,600-1,800 per tonne.

Caustic calcined magnesia (CCM) prices remained stable: the 94% MgO fob China price held at $240-260 per tonne, 90-92% MgO at $205-230 per tonne and 96% MgO at $335-355 per tonne.

"China’s CCM market is quiet, with limited new deals concluded after the holiday. International consumers have started to seek magnesia suppliers outside of China since Chinese magnesia prices surged due to strict environment inspections last year. I heard buyers purchased large volumes of CCM from producers in Brazil last year," a trader in Dalian said.

On the European market, prices remained firm while non-Chinese producers continue to report high demand both from ordinary customers and from those buyers who switched sourcing after dialing to secure supply from China.

Several producers outside China claimed to have contracted almost all of their material for the first and second quarters of this year, leaving only small volumes for spot trading.

Northeast Asia Magnesia Materials Exchange assessed the price of European CCM, agricultural grade, at €250-350 per tonne cif Europe this week, unchanged from February 27, and the high-grade FM price at $1,500-1,700 per tonne fob Europe, also unchanged. The price of raw magnesite remained at €65-80 per tonne fob East Mediterranean.


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