The Impact of power Rationing on the Magnesium Industry Chain.
Policy of power rationing
The government of Fugu County in Shaanxi Province has issued the “Power Suspension Request Letter for the First Group of Fugu County power Consumption Key Enterprises Under Dual Control”. . On September 19, he asked the Yulin Power Supply Bureau to stop supplying power to local magnesium companies.
Supply Side Impact
According to expert statistics, more than 60% of China’s Magnesium- ingots are produced in Shaanxi Province. This round of production restrictions will upset the balance between supply and demand for magnesium ingots. China’s magnesium production is expected to fall to 55,000 tons in September.
Demand side Impact
Magnesium alloy end-users strongly resisted the sharp rise in magnesium prices, as the cost of magnesium alloys in some die-casting products for the automotive industry increased by 20%. Sales of magnesium alloys stagnated and some end users considered about substitutes.
At the same time, some manufacturers of titanium sponges have been hit hard. Semi-finished sponge titanium plants mainly use externally sourced magnesium ingots, and the rapid rise in magnesium prices led to a significant increase in production costs.
Meanwhile, weak demand has weighed down sponge titanium prices, resulting in heavy losses at semi-processed titanium facilities. The Impact on Magnesium Prices and Price Forecast the timing of the firing of the main plants at Fugu is uncertain.
However, the panic caused by the shutdown of production in the main manufacturing areas has been digested by the market, and the upstream and downstream industries have returned to waiting and waiting. see attitude near the resumption of production. The whole transaction is slow. Simultaneously, supply and demand are weakening in the market and magnesium prices are expected to stabilize amid lower dealer inventories.
Magnesium (Mg 99.90%) ingot prices are up 297% year-to-date in Fugu.