Roskill recently attended the 2020 International Magnesium Association annual conference, which was held virtually for the first time because of the COVID-19 pandemic. There were interesting overviews on the world, Chinese and Japanese markets from the CM Group, China Magnesium Association (CMA) and Japan Magnesium Association, along with updates on R&D.
There is broad agreement between Roskill, CM and the CMA on the level of world production of primary magnesium in 2019 (1-1.16Mt) and on the level of demand (1-2Mt). In the absence of any truly comprehensive data, differences are always going to occur because of varying methods of calculation. The outlook for 2020 remains far from clear. Roskill’s mid-2020 forecast of global primary magnesium demand for the year now looks bullish, with CM predicting less than 1Mt. An interesting twist is that Roskill anticipated a large fall in Chinese production based on export figures for the first half of the year. Chinese exports have indeed fallen a lot, by at least 20% from 2019, but the CMA predicts that the country’s production in 2020 will be about 0.9Mt, which is almost identical to 2019. Only about half of that can be absorbed by the domestic market. Chinese producers are being supported by the local government in Shaanxi Province, which has been buying surplus magnesium to keep the plants going. Roskill has previously reported that the industry has a history of periods when large surpluses build up and both CM and the CMA indicated that it is happening again. The surpluses were reduced from 2016-2018 because environmental inspections in China resulted in production cuts.
For a long time, there has been a close correlation between magnesium prices and those of ferrosilicon, the largest cost component of magnesium production via the Pidgeon Process, which accounts for almost all output in China. That correlation has broken down in line with increased integration of magnesium and ferrosilicon producers in China. This, in turn, is reducing the production cost of Chinese magnesium, which is already much lower than in other countries. With prices at historical lows, much of the non-Chinese industry is suffering; the US industry only survives because high anti-dumping tariffs (142% on imports from China) allow domestic market prices to be maintained at an artificially high level.
Chinese producers are also making great efforts to reduce the environmental impact of their industry, closing old/inefficient plants and cutting emissions wherever possible. The Chinese industry is not going to lose its dominant position any time soon.
There are several exciting new applications that are moving quickly to full commercialisation. One is hydrogen storage, where batteries using a magnesium-nickel electrode could compete with lithium batteries in automobiles and are considered to be safer. Another is wide magnesium alloy sheet. POSCO, in South Korea, dropped its wide sheet production when it abandoned primary magnesium production, but that operation has been restarted by a new company, Pinetree, which is supplying sheet to the US military. Magnesium sheet is also being actively developed in China and is due to be commercialised in 2021. Considerable interest is being shown in magnesium alloys for 5G base stations. Lightweighting via extrusions continues to feature prominently in development activity, with a major focus being placed on high-speed rail. As usual, automobile lightweighting was in the spotlight, this time for forged magnesium wheels. Tellingly, the target market for those wheels is high-end vehicles. In common with other magnesium components that have been introduced in recent years, the mass market is not the current target. Mainly because of this, Roskill’s view on the outlook for magnesium use in automobiles is rather more conservative than that of other industry commentators.
Roskill’s Magnesium Metal: Outlook to 2030, 13th Edition report was published in July 2020 and details trends in production, consumption, trade and prices, as well as profiling the major industry players. Click here to download the brochure and sample pages for the report, or to access further information.