Critical Metals

Magnesium Investing

Interested in the magnesium space? In this overview, experts share their thoughts on the magnesium outlook for 2018 and beyond.

It hasn’t been a particularly interesting year for magnesium, with stability characterizing the market in 2017.
To learn what happened in the space this year and what’s ahead in 2018, the Investing News Network reached out to E. Lee Bray, acting US Geological Survey mineral commodity specialist for magnesium.
While Bray doesn’t provide investment advice or make formal quantitative forecasts about the market, he was able to provide some valuable insight into the magnesium space. Read on to hear his thoughts on supply and demand in the market.

Magnesium trends 2017: Supply, demand and news

Magnesium is a key industrial metal with a wide range of applications. Demand for the metal has grown steadily in recent years, driven largely by the car parts industry, where it is used for die-casting. Specifically, magnesium can be found in car steering wheels and support brackets.
In fact, according to the US Geological Survey, the leading use for primary magnesium metal is as a reducing agent for the production of titanium and other metals. The second most important magnesium use is in aluminum-based alloys that are used for packaging, transportation and other applications.
“In 2017, there was less use of magnesium for titanium in the US because of the shutdown late last year of a titanium sponge plant in Utah,” Bray said. The plant, operated by Allegheny Technologies, idled operations due to weakness in the global industrial-grade titanium market.
However, Bray said there was “a bit more consumption from the aluminum industry, as the situation in the space stabilized.” Originally he had anticipated that the aluminum industry would level off in 2017.
When speaking about the biggest development in the magnesium market, Bray pointed to China’s Qinghai Salt Lake smelter plant, which “appears they are ramping up to commercial-scale production.”
Another important piece of news that impacted the magnesium market this year was China’s fight against pollution, which may continue to impact the space. “The government emissions regulations may affect production during the winter months in a way we haven’t seen in the past,” Bray commented.

Magnesium outlook 2018: Strong supply/demand dynamics

Looking ahead at what may be in store for the magnesium space, Bray shared his thoughts on what he anticipates in terms of supply and demand dynamics.
“Supply will be strong. There might be shutdowns of some capacity in China of the pidgeon processing plants, but this will be offset by production at the Qinghai Salt Lake plant,” he said. Overall, he doesn’t predict any major net change in output, as long as Qinghai Salt Lake is able to maintain production.
“In terms of demand, I expect further increases in the magnesium for die-casting uses by the automotive industry,” Bray said.
He expects worldwide aluminum production to go up gradually, causing an increase in magnesium consumption, since much of the metal goes into aluminum alloys. “Consumption by the aluminum industry will be somewhat towards what it has been in the past couple of years,” he said.
Meanwhile, titanium consumption will be focused mostly in Russia, Kazakhstan and Ukraine. “Most magnesium will be consumed by the titanium industry from those three countries, as they have a lot of titanium capacity,” he added. Bray also noted that he doesn’t expect titanium sponge capacity in the US to restart any time next year.
According to research firm Roskill, global growth in the magnesium market is expected to average 3.4 percent per year, reaching almost 1.2 million tonnes per year by 2020. The firm expects aluminum alloys and die-casting to be the fastest-growing markets at about 4 percent per year each.
There are four companies aiming to bring magnesium mines online before 2020, Roskill says. Those are: Qinghai Salt Lake (China), Alliance Magnesium (Canada), Latrobe Magnesium (ASX:LMG) (Australia) and SilMag (Norway).
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Securities Disclosure: I, Priscila Barrera, hold no direct investment interest in any company mentioned in this article.
Editorial Disclosure: The Investing News Network does not guarantee the accuracy or thoroughness of the information reported in the interviews it conducts. The opinions expressed in these interviews do not reflect the opinions of the Investing News Network and do not constitute investment advice. All readers are encouraged to perform their own due diligence.



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