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Magnesium Industry will Shift From “Passive” Growth to “Active” Growth

According to latest data from www.lightmetal.com.cn, in 2015 China’s primary magnesium output & consumption and magnesium product export volume all experienced decline, m agnesium m arket and magnesium industry entered a difficult time.

The year 2015 might signal an important turning point for the magnesium industry, in other words, after experiencing years of growth in production & sales, the industry will shift from “passive” growth to innovative growth and sustainable growth.

It has been learned that, in 2015 China’s primary magnesium output is 720,000 tonnes, down by 5.9% on Y-o-Y basis, marking the first tim e declin e sin ce the f inancial crisis.

Meanwhile, in 2015 China’s magnesium consumption is 295,000 tonnes, down by 3.28%, recording decrease for the first time in 7 years, which is a new situa tion totally contrary to expectation. In 2015 China’s export volume of m agnesium products is 408,000 tonnes, down by 4.17%. This means that in the past 10 years, the re is no significant gro wth in the magnesium market outside China. Against the market background of dwindling dem and and capacity su rplus, at the end of the year domestic magnesium price fell to the level only seen in 1999, m arking the lowest point in the past 16 y ears. Therefore, similar to the ove rall situation of China’s raw material industry, most magnesium m anufacturers are trapped in operation dilemma.

Nevertheless, upon closer scrutiny, at such a difficult tim e, in 2015 China’s magnesium alloy consum ption reached 87000 tonnes (referring to end product consumption, excluding scrap magnesium recycling part), up by 6.1%, m aking it the appl ication field with the biggest growth margin. Domestic magnesium alloy production and sales (including scrap magnesium recycling and export) is close to 300,000 tonnes. Meanwhile, magnesium alloy export volume is 114,600 tonnes, up by 7.7%. Looking back at the past 10 years, changes and developm ents are bigger still. These data more or less can bring positive signals to the magnesium industry, namely domestic and overseas consumptions of magnesium alloy are still growing, this will bring new prom ising light of dawn for the magnesium industry. What’s more important is not merely data, there are also enhancem ent of concept and recognition, plus experience accumulation.

Within the 10 years from 2004 to 2014, China’s output of primary magnesium grew by 315,000 tonnes, consumption grew by 234,000 tonnes, 74.3% of the increm ent comes from domestic consumption. Nevertheless, upon further analysis, during these 10 years, magnesium consumption of domestic aluminum alloy industry grew from 23,000 tonnes to 116,000 tones, m agnesium consum ption of titanium sponge industry grew from 5000 tonnes to 52000 tonnes, m agnesium de mand of iron & steel desulfurization field grew from 15000 tonnes to 27000 tonnes. In other words, in this decade th ese three traditional metallurgical usage field s increased usage of prim ary magnesium by 152,000 tonnes, accounting for 65% of domestic magnesium demand increment. Growth in magnesium production and sales in f act is a uxiliary ele ment of the above-mentioned metallurgical industries, namely the so-called “inflexible dem and” was pushed up forcefully. On the other hand, magnesium alloy consum ption to which we attached great expectation also fluctuated violently during these 10 years, between 2009 and 2011 after the financial crisis it even declined. Nonetheless, overall speaking it presents growth trend, growing from 18,000 tonnes in 2004 to 82,000 tonnes in 2014, followed by 87,000 tonnes in 2015.

In 2015, with the growth in dom estic economy and changes in relevant industries, m agnesium market situ ation also experienced stru ctural changes, magnesium usage of titaniu m spongeand iron & steel industry respectively dropped by 33% and 7%, though m agnesium usage of aluminum alloy industry grew by 5.2%, there are still nu merous special factors that defy simple description, and therefore not sustainable in the next few years. In 2015, the “inflexible demand” of these three m agnesium usages combined to decline by 6.2%, and it looks all the more contrasting and valuable that the consumption of magnesium alloy still maintained 6.1% growth. The cooling in China’s real estate investm ent and investm ent in relevant fields forced Chinese economy to enter a shift-changing period, and enabled Chinese economy to enter the New Nor mal of transition and upgrading, the golden age of fast development of relevant raw materials is already a thing of the past, sharp plunge in consumption strength is inevitable. Therefore, 2015 marks a crucial time node for m agnesium market. It can be expected th at in the next several years, traditional metallurgical application fields have obviously inadequate power and momentum to fuel magnesium consumption, there is even worry that the magnesium consum ption peak level of these several fields have already passed.

Therefore, when it com es to how to bring out magnesium’s resource advantage, property advantage, environm ent advantage, and cost advantage, and further develop industrial advantage and economic advantage, promoting development and application of magnesium alloy is th e best rou te, and also the m ost important target.

We hereby anticipate that, the magnesium industry will shift from “passive” growth to innovative growth and su stainable growth, and shift from sole domination of functional material to equal emphasis on functional material and structural material.