Editor: Adam Zhang
A sudden government-ordered halt to magnesite mining in China’s main magnesia-producing province has triggered a rise in domestic prices, with exporters planning to raise export prices if the restriction continues.
Market participants are concerned over a new squeeze in the supply of China-origin magnesia after authorities prohibited all magnesite mining in Liaoning province, the country’s leading producing region for the mineral, we have learnt.
Several producers in contact with us have confirmed that they stopped magnesite mining at the end of last week, following a government order that was announced unexpectedly.
"The Liaoning environmental inspection team started another round of inspections by visiting magnesia companies, supervising the environmental protection which is one of the key reason for the restriction. There is no confirmed news about when the restriction will come to an end," a producer in Haicheng said.
"All magnesia companies have been forced to stop magnesite mining from April 12 following government requirements," a second local producer said.
A Western distributor of China-origin magnesia confirmed the stoppage in Liaoning, adding that none of its suppliers in the country could operate at the moment.
The news comes after several months of restricted mining activity in Liaoning. Miners were forbidden to use dynamite blasting and could only mine through the use of pneumatic drilling or by hand.
Local sources pointed to the government’s environmental policy as the leading reason for the latest stoppage, as a continuation of the series of inspections and shutdowns that characterized the second half of last year. This view was echoed by European importers handling Chinese magnesia.
"If there was one takeaway I had from [the] Ceramitec [conference in Germany] last week, it is that there isn’t [enough] material around. And now this, from China. It’s not looking good for magnesia supply," a Europe-based refractories producer said.
Local sellers in China were reported to have increased their domestic prices by RMB100-200 ($16-32) per tonne. Exporters kept prices unchanged this week but added that they planned to increase their own export offer prices by at least $15 per tonne if the mining restriction were to persist.
"I think magnesia prices will go up on supply shortages if the restriction on magnesite continues. We haven’t started to increase export prices because the restriction happened so quickly," a second producer in Haicheng said.
Because most exporters have not yet adjusted their export prices following the mine closures, no deals have been concluded at higher price levels. This means that our price assessments for caustic calcined magnesia (CCM), dead burned magnesia (DBM) and fused magnesia (FM) remain unchanged this week.
We assessed the price of China-origin CCM 96% at $335-355 per tonne fob China on April 17. The price of DBM 97.5% was assessed at $1,100-1,400 per tonne fob China, while the price of FM 97% Ca:Si 2.1 was assessed at $1,250-1,400 per tonne fob China.
Outside China, we assessed the price of Europe-origin CCM, agricultural grade, at €250-350 ($309-433) per tonne cif Europe on April 17. The price for high-grade FM was $1,500-1,700 per tonne fob Europe. And the price of raw magnesite remained at €65-80 per tonne fob East Mediterranean. All three prices were unchanged week-on-week.