Magnesium Market Update (June 6, 2013)

Magnesium prices are flat in all three primary markets, China, Europe and the US, as demand for the metal stays soft amid an overall reduced demand for metals worldwide combined with a supply overhang, particularly in China.

In China, prices of magnesium min 99.9 percent drifted down slightly from 15,600 to 16,000 renminbi per metric ton (MT) to 15,500 to 15,900 renminbi MT, while European magnesium was trading in the range of $2,850 to $2,950 per MT, unchanged from the previous period.

In the United States, delivered magnesium was priced at $1.92 to $2.10 a pound, just 2 cents lower from the previous range, while secondary 90/10 magnesium was being delivered at $1.70 to $1.80 a pound.

“There’s obviously not much interest on the spot at the moment but everyone in the US is taking what they ordered. Demand in Europe is poor and even in China we’re starting to see some weakness and overproduction,” said a trader source quoted by Metal-Pages.

In Europe, delivered prices are about $50 off of January prices, when magnesium was at around $3,325 per MT, due to the fact that China, which heavily supplies the European market, abolished export duties, allowing more metal onto the market, said Metal-Pages.

Company news

Calgary-based West High Yield Resources (TSXV:WHY) published a preliminary economic assessment( PEA) on its Record Ridge magnesium project in British Columbia, Canada.

The PEA presumes a conventional open-pit mine that would throughput 3,000 MT a day for a mine life of 42 years. The project has a pre-tax net present value of US$1.339 billion with a 21-percent internal rate of return.  The deposit hosts 43 million MT of measured and indicated resources averaging 24.6-percent magnesium, or 10.6 million MT of contained magnesium.

WHY said the conventional open-pit mine would feature a novel hydrometallurgical processing plant, a calcined magnesia intermediate product plant along with a fused magnesia production plant.

Securities Disclosure: I, Andrew Topf, hold no direct investment interest in any company mentioned in this article.