Asian Metal News
Haotian Magnesium smelter at Fugu Shaanxi curbed daily operations by 40% to 55 t on 25th August and expects 2.45 kt of production for the month, down from 2.7 kt from July.
According to an inside source, rising COVID numbers and more stringent pandemic control policies have forced suspension of several coal mines in Shenmu and Fugu, propping coal prices to RMB 1,500/t. In addition, slowing logistics and low levels of coal stocks forced the smelter to cut semi-coke and magnesium production on 25th August. The timing for resumption is uncertain and is dependent on coal supply and control policies.
Designed with 35 ktpy magnesium capacity, the smelter produced 33.5 kt of magnesium in 2021 and 20.5 kt in the year to date.
Magnesium production costs rose rapidly following tightening coal supply and increased prices. Most magnesium smelters in Shaanxi are running low of coal stocks and have had to cut operations, consequently boosting prices by RMB 5,000/t from last Monday to RMB 24,500~25,000/t this week. Industry commentators forecast domestic magnesium prices to trend up slightly next week given tightening coal supply and smelters’ strong will to prop prices.