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Consumption of magnesium reached a new peak in 2012, a new analysis suggests, with demand having grown by 5.5 percent per year over the last decade.

That is the thumbs-up news from a comprehensive report titled Magnesium Metal: Global Industry Markets and Outlook, authored Roskill Information Services, a London-based research leader in international metals and minerals.

That is the thumbs-up news from a comprehensive report titled Magnesium Metal: Global Industry Markets and Outlook, authored Roskill Information Services, a London-based research leader in international metals and minerals.

In the 388-page study, Roskill confirms that magnesium consumption tallied 1.1Mt worldwide and that the largest end-uses for magnesium are die-cast magnesium and aluminum alloys, each accounting for a third of total consumption.

The transportation industry is the largest consumer of die-cast magnesium and the second largest consumer of aluminum-magnesium alloys behind packaging, surveyors say.

CHINA LEADING THE WAY
The magnesium industry, according to the study, has benefited from a rise in automotive output, led by China.

Another boost has been increases in specific consumption of magnesium per vehicle as manufacturers seek to comply with government-imposed emission reduction targets and the rising cost of fuel affecting consumer-buying trends.

Likewise, continued lightweighting efforts mean growth in magnesium consumption is set to continue, at 5 percent per year through to 2017. Die-cast magnesium use is likely to rise faster, at 6.5 percent annually, but the market will be tempered by lower rates of growth in steel desulphurisation and iron nodularisation, officials say.

Growth in Chinese consumption has more than offset a slight fall in the rest-of-world in consumption since 2007, the report explains. Asia now accounts for 43 percent of the global total, up from 35 percent.

North America, meanwhile, represents a further 20 percent of consumption, and Europe 15 percent. India and South Korea show strong growth over the last five years, but from a low base in volume terms.

Meanwhile, Russian consumption has almost doubled, owing to increased titanium production. Asia, more specifically China, will continue to exhibit the highest growth in demand for magnesium on a regional basis through to 2017.

INTERNAL COMPETITION
Production of primary magnesium continues to be dominated by China, which Roskill estimates accounted for 75 percent of global output in 2012.

Russia and the U.S. together represent a further 16 percent, followed by smaller contributions from Israel, Kazakhstan, Brazil, Serbia, and the Ukraine.

Malaysia and South Korea have entered the market in recent years, albeit on a small scale, but these and some limited expansions at existing operations have done little to dampen China’s growing share.

Secondary magnesium, output of which totaled 211kt, is sourced mainly from die-cast scrap. For secondary material, North America is the main contributor to secondary supply, followed by Europe, as these regions remain large magnesium-based product users.

China’s leading position in primary magnesium output reflects the domestic availability and low cost of ferrosilicon and energy – in the form of coal, coke and electricity – which are the main inputs to the energy-intensive, thermal Pidgeon process favored in China.

Nevertheless, faced with rising energy prices and government pressures to lower emissions, Chinese magnesium companies have invested in process optimization to lower costs. Although China is often viewed as one entity when considering magnesium supply, internally the industry is also highly competitive, with recent increases in coke-gas availability resulting in a shift in domestic output to Shaanxi, thus limiting growth in Shanxi and Ningxia and resulting in the loss of output elsewhere.

The low CAPEX of Pidgeon process plants means a shift in domestic output from province to province is relatively straightforward, organization officials say. It has resulted in significant overcapacity.

Roskill estimates Chinese primary capacity at 1.3Mt, but of that only 0.8-0.9Mt is utilized; the remainder is mothballed or uneconomic. This trend caused at least one major producer in China to shutter output in 2012. Likewise, it is a factor driving industry consolidation.

Despite cost competitiveness and overcapacity in China, a new 100ktpy electrolytic plant in Qinghai is due to open during 2013, which could further alter the domestic landscape. Several companies using new processes, or variations on existing electrolytic and thermal methods, also continue to investigate primary magnesium production in other countries, especially Australia and Canada.

However, unless these projects can compete with Chinese Pidgeon process costs and be economic at current and forecast near-term pricing levels of US$2,500-3,000/t, China looks set to increase its share of the market as demand grows.

About Roskill
Roskill has been a leader in international metals and minerals research since starting life as one of the UK’s first management consultancies in 1930. Since the first Roskill Reports were published in 1970, its list of publications has grown to over 75 market reports, databooks, and newsletters.

Volume:
7
Issue:
22
Year:
2013


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