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12th Rare Earth Summit
May 27-28, 2021
Hangzhou, Zhejiang, China
11th Aluminum Raw Materials Summit
May 20-21, 2021
Hangzhou, Zhejiang, China
9th Magnesium Summit
April 15-16, 2021
Hangzhou, Zhejiang, China
13th World InBiGeGa Forum
March 25-26, 2021
Hangzhou, Zhejiang, China
7th World Antimony Forum
June 13-14, 2019
Changsha, Hunan, China
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May 23-24, 2019
Qingdao, Shandong, China
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May 16-17, 2019
Zhengzhou, Henan, China
11th Rare Earth Summit
May 9-10, 2019
Qingdao, Shandong, China
8th Magnesium Summit
April 11-12, 2019
Zhuhai, Guangdong, China
12th World InBiGeGa Forum
March 14-15, 2019
Zhuhai, Guangdong, China
6th World Manganese & Selenium Forum
May 21-22, 2018
Hainan Sanya, China
Interview with Mr. Bruce Xu, Marketing Manager of North and Southeast Asia, Queensland Magneiste Company
Queensland Magnesite Company is one of the largest and highest quality producers, and it has two cryptocrystalline magnesite ores with annual output of 600,000t. The current main products are caustic calcined magnesia with 300,000tpy, dead burned magnesia with 100,000tpy and fused magnesia with 30,000tpy, accounting for 10-15% of world high grade market. The main characters of the products are low-ferro, low-silicon and high calcium, with high reactivity for caustic calcined magnesia and high bulk density for dead burned magnesia.
Bruce Xu: Magnesia market to keep strong in 2011
----Interview with Mr. Bruce Xu, Marketing Manager of North and Southeast Asia, Queensland Magneiste Company
Asian Metal: Hi, Bruce, it is honored to share magnesia market information with you. Your magnesia products take a big portion among the high quality magnesia worldwide, so how about the current macro economy situation in Australia and what are the advantages and disadvantages towards magnesia market development?
Bruce: For the moment, Australia is one of the few Western countries with good economy environment, in line with the strong demand for minerals and raw materials from China and other developing countries in Asia. As mining is the pillar industry and most important source of finance in Australia, local government has not announced any policy to restrict minerals exports so far.
Qmag is the biggest magnesia producer in Australia, and it enjoys the local free trade policy. Compared with many other countries and districts, minerals prices remain at low levels in Australia, which is favorable for the high energy-consuming magnesia industry.
Asian Metal: International Monetary Fund (IMF) predicted that there is a big uncertainty for the Global economic growth in 2011, for inflationary expectations and economic recovery may lead to unbalanced global economic slowdown, the corresponding increase in crude steel production will decline. Crude steel production is expected to grow 6% next year to 1.484 billion tons, growth mainly from developing countries. What is your opinion about the steel industry in 2011 and its influence on magnesia market?
Bruce: In my opinion, steel output will increase in 2011, even though the increase rate will decline, and it will not affect magnesia market significantly. Demand for magnesia is likely to remain as strong as 2010, but it may reach a balance of demand and supply in 2012 in line with the utilization of new production capacity.
Asian Metal: In view of the strong demand for magnesia in 2011, European and Asian producers expand production capacity and intend to raise prices for the first half of 2011, do you think that magnesia prices will remain high in 2011?
Bruce: Magnesita from Brazil expands annual production capacity from 240,000t to 440,000t in 2010, however, the new capacity is likely to be fully utilized in 2012. Turkish magnesia production capacity increases 100,000t in 2011, but it will not affect worldwide magnesia market significantly. As for the production capacity increase in our company, we mainly increase caustic calcined magnesia production capacity by 50% to 300,000tpy, which will not hit refractories market sharply.
China plays the crucial role in the worldwide magnesia market. Chinese government releases 1.23millions tons of magnesia export licenses in 2011, the same as 2010, so the important factor is the smuggled magnesia quantity. I learned that smuggled magnesia quantity decreases sharply in Vietnam and Taiwan in December, and prices are similar as legally imported. Prices are only at a little higher than USD200/t for dead burned magnesia 0-10mm 90%Min in Taiwan last August and September, of course, these are smuggled materials, for quotations from mainland China are over USD300/t FOB Dalian at that time. Magnesia smuggling is also severe in Japan and South Korea. If Chinese government will crack down magnesia smuggling severely in 2011, magnesia exports will decline significantly and prices will remain high.
Industry players agreed that Chinese fused magnesia prices will remain firm in 2011, even go up slightly. Reasons are as follows:
1. Beside China, most magnesia smelters in other countries produce dead burned magnesia, and the few fused magnesia producers do not increase capacity. Qmag maintains the current production capacity of 30,000tpy of fused magnesia in 2011, and Kumas produces fused magnesia for its own usage. America has a small quantity of fused magnesia, but it does not increase capacity in 2011.
2. After decades of years of mining, Chinese magnesite is only available deep in the earth, and it will become more difficult to mine in the future and production cost will increase accordingly. Moreover, labor fee will also go up, which will also increase magnesia production cost. Power charge is unlikely to go down in 2011, and magnesia is a high energy-consuming industry, so production cost will remain high on this point.
Asian Metal: After the economy recession of 2009, most European and American refractories producers replenish large quantities of raw materials in 2010, so how about the current inventories held by them?
Bruce: Most European refractories producers consume raw materials normally. Early this year, most refractories producers had depleted inventories to low levels, and they purchased large quantity of raw materials, but consumption increase in line with demand ascending from end-users. From July and August, economy recovers slightly and steel output goes up, and demand for raw materials rebounds. Most refractories do not have many inventories. In October and November, they need build inventories for the holiday, but Chinese magnesia prices rise sharply. Therefore, they hardly import magnesia from China in December, expecting to see lower prices in 2011 when the new export quotas are released.
In my viewpoint, European and American refractories producers do not have large quantity of inventories on hand now, and they will purchase raw materials normally in 2011.
Asian Metal: How about the current production situation and orders you got? Do you have any plan for 2011?
Bruce: Influenced by the worldwide economic downturn, our magnesia production kept bad in the whole year of 2009, and the production capacity was only 50%. It turned a little better in the first half of 2010, and we received more orders. In the second half of this year, we keep producing at full capacity, but our products still could not meet demand. For the moment, we have made many deals for the first half of 2011, even some deals for the second half of 2011.
We believe that magnesia market will continue strong in 2011, so we plan to increase production capacity of dead burned magnesia by 30% to 130,000tpy through technical transformation.
Asian Metal: I learned that European smelters announce to raise magnesia prices for 2011, e.g., Nedmag to raise prices by EUR25/t to EUR525/t for dead burned magnesia 99%Min, Kumas to raise prices by USD30/t to USD400/t for dead burned magnesia 90%Min, and a smelter from Spain to raise prices by 10%, so how about your company? Will you also raise prices and what is the range?
Bruce: Considering the demand ascending in the second half of 2010, we continue raising prices in line with prices increase in China, and the new prices in the first half of 2011 will remain at the current levels. Our current prices are USD100/t higher than early July.
Asian Metal: Minerals will dry up in the future, how will magnesia producers solve this problem?
Bruce: It is a big problem for all magnesia producers in the world. China is still the biggest magnesia supplier at present, however, in line with the lessening of natural minerals, foreign refractories producers may turn to other countries for the raw materials, such as North Korea, or they will make full use of the former production capacity.
Minerals resources are limited and it will be used out someday, and production cost will become higher and higher in line with the minerals decreasing. When the production cost of natural magnesite approaches to seawater magnesia or brine magnesia, and natural magnesite is drying up, more smelters will transfer to produce seawater magnesia. Seawater is a renewable resource, and it may become the trend of magnesia in the future.
For the time being, prices of seawater or brine magnesia from Nedmag and Ireland are in the range of USD600-650/t, and the highest prices are from UBE Japan. It is said that the company has more than 20 kilns to produce seawater magnesia with annual production capacity of 300,000t, but it is running at one thirds of its full capacity now. Local government fosters magnesia industry and forces refractories producers to purchase a certain quantity of seawater magnesia per month from UBE. Prices are above USD800/t in Japan and over USD700/t in other districts. Japanese government fears that China will restrict magnesia exports someday or does not provide magnesia for them in the future, and then they will resume production soon to avoid depending on Chinese supply excessively.
Asian Metal: The fast development of steel market is bound to require higher quality of refractories products in long run, so what are your advices on the refractories market development?
Bruce: It consumes 8kg of refractories products to produce one ton steel in Europe, America, Japan and other developed countries, while it needs at least 25kg in China, India and other developing countries. The lining life in developed countries is 2-3 times of that in developing countries, therefore, it will become a crucial factor for refractories producers to improve quality through creating or introducing advanced technology. And it will affect the survival of refractories producers, in line with the production cost increase in China, especially for labor cost rise.
Asian Metal: Thanks for sharing your opinion with us on the current situation and development trend in magnesia market, and we will pay more attention to the magnesia market development in the future. Merry Christmas Day and Happy New Year!
Bruce: Happy New Year!
Bruce: For the moment, Australia is one of the few Western countries with good economy environment, in line with the strong demand for minerals and raw materials from China and other developing countries in Asia. As mining is the pillar industry and most important source of finance in Australia, local government has not announced any policy to restrict minerals exports so far.
Qmag is the biggest magnesia producer in Australia, and it enjoys the local free trade policy. Compared with many other countries and districts, minerals prices remain at low levels in Australia, which is favorable for the high energy-consuming magnesia industry.
Asian Metal: International Monetary Fund (IMF) predicted that there is a big uncertainty for the Global economic growth in 2011, for inflationary expectations and economic recovery may lead to unbalanced global economic slowdown, the corresponding increase in crude steel production will decline. Crude steel production is expected to grow 6% next year to 1.484 billion tons, growth mainly from developing countries. What is your opinion about the steel industry in 2011 and its influence on magnesia market?
Bruce: In my opinion, steel output will increase in 2011, even though the increase rate will decline, and it will not affect magnesia market significantly. Demand for magnesia is likely to remain as strong as 2010, but it may reach a balance of demand and supply in 2012 in line with the utilization of new production capacity.
Asian Metal: In view of the strong demand for magnesia in 2011, European and Asian producers expand production capacity and intend to raise prices for the first half of 2011, do you think that magnesia prices will remain high in 2011?
Bruce: Magnesita from Brazil expands annual production capacity from 240,000t to 440,000t in 2010, however, the new capacity is likely to be fully utilized in 2012. Turkish magnesia production capacity increases 100,000t in 2011, but it will not affect worldwide magnesia market significantly. As for the production capacity increase in our company, we mainly increase caustic calcined magnesia production capacity by 50% to 300,000tpy, which will not hit refractories market sharply.
China plays the crucial role in the worldwide magnesia market. Chinese government releases 1.23millions tons of magnesia export licenses in 2011, the same as 2010, so the important factor is the smuggled magnesia quantity. I learned that smuggled magnesia quantity decreases sharply in Vietnam and Taiwan in December, and prices are similar as legally imported. Prices are only at a little higher than USD200/t for dead burned magnesia 0-10mm 90%Min in Taiwan last August and September, of course, these are smuggled materials, for quotations from mainland China are over USD300/t FOB Dalian at that time. Magnesia smuggling is also severe in Japan and South Korea. If Chinese government will crack down magnesia smuggling severely in 2011, magnesia exports will decline significantly and prices will remain high.
Industry players agreed that Chinese fused magnesia prices will remain firm in 2011, even go up slightly. Reasons are as follows:
1. Beside China, most magnesia smelters in other countries produce dead burned magnesia, and the few fused magnesia producers do not increase capacity. Qmag maintains the current production capacity of 30,000tpy of fused magnesia in 2011, and Kumas produces fused magnesia for its own usage. America has a small quantity of fused magnesia, but it does not increase capacity in 2011.
2. After decades of years of mining, Chinese magnesite is only available deep in the earth, and it will become more difficult to mine in the future and production cost will increase accordingly. Moreover, labor fee will also go up, which will also increase magnesia production cost. Power charge is unlikely to go down in 2011, and magnesia is a high energy-consuming industry, so production cost will remain high on this point.
Asian Metal: After the economy recession of 2009, most European and American refractories producers replenish large quantities of raw materials in 2010, so how about the current inventories held by them?
Bruce: Most European refractories producers consume raw materials normally. Early this year, most refractories producers had depleted inventories to low levels, and they purchased large quantity of raw materials, but consumption increase in line with demand ascending from end-users. From July and August, economy recovers slightly and steel output goes up, and demand for raw materials rebounds. Most refractories do not have many inventories. In October and November, they need build inventories for the holiday, but Chinese magnesia prices rise sharply. Therefore, they hardly import magnesia from China in December, expecting to see lower prices in 2011 when the new export quotas are released.
In my viewpoint, European and American refractories producers do not have large quantity of inventories on hand now, and they will purchase raw materials normally in 2011.
Asian Metal: How about the current production situation and orders you got? Do you have any plan for 2011?
Bruce: Influenced by the worldwide economic downturn, our magnesia production kept bad in the whole year of 2009, and the production capacity was only 50%. It turned a little better in the first half of 2010, and we received more orders. In the second half of this year, we keep producing at full capacity, but our products still could not meet demand. For the moment, we have made many deals for the first half of 2011, even some deals for the second half of 2011.
We believe that magnesia market will continue strong in 2011, so we plan to increase production capacity of dead burned magnesia by 30% to 130,000tpy through technical transformation.
Asian Metal: I learned that European smelters announce to raise magnesia prices for 2011, e.g., Nedmag to raise prices by EUR25/t to EUR525/t for dead burned magnesia 99%Min, Kumas to raise prices by USD30/t to USD400/t for dead burned magnesia 90%Min, and a smelter from Spain to raise prices by 10%, so how about your company? Will you also raise prices and what is the range?
Bruce: Considering the demand ascending in the second half of 2010, we continue raising prices in line with prices increase in China, and the new prices in the first half of 2011 will remain at the current levels. Our current prices are USD100/t higher than early July.
Asian Metal: Minerals will dry up in the future, how will magnesia producers solve this problem?
Bruce: It is a big problem for all magnesia producers in the world. China is still the biggest magnesia supplier at present, however, in line with the lessening of natural minerals, foreign refractories producers may turn to other countries for the raw materials, such as North Korea, or they will make full use of the former production capacity.
Minerals resources are limited and it will be used out someday, and production cost will become higher and higher in line with the minerals decreasing. When the production cost of natural magnesite approaches to seawater magnesia or brine magnesia, and natural magnesite is drying up, more smelters will transfer to produce seawater magnesia. Seawater is a renewable resource, and it may become the trend of magnesia in the future.
For the time being, prices of seawater or brine magnesia from Nedmag and Ireland are in the range of USD600-650/t, and the highest prices are from UBE Japan. It is said that the company has more than 20 kilns to produce seawater magnesia with annual production capacity of 300,000t, but it is running at one thirds of its full capacity now. Local government fosters magnesia industry and forces refractories producers to purchase a certain quantity of seawater magnesia per month from UBE. Prices are above USD800/t in Japan and over USD700/t in other districts. Japanese government fears that China will restrict magnesia exports someday or does not provide magnesia for them in the future, and then they will resume production soon to avoid depending on Chinese supply excessively.
Asian Metal: The fast development of steel market is bound to require higher quality of refractories products in long run, so what are your advices on the refractories market development?
Bruce: It consumes 8kg of refractories products to produce one ton steel in Europe, America, Japan and other developed countries, while it needs at least 25kg in China, India and other developing countries. The lining life in developed countries is 2-3 times of that in developing countries, therefore, it will become a crucial factor for refractories producers to improve quality through creating or introducing advanced technology. And it will affect the survival of refractories producers, in line with the production cost increase in China, especially for labor cost rise.
Asian Metal: Thanks for sharing your opinion with us on the current situation and development trend in magnesia market, and we will pay more attention to the magnesia market development in the future. Merry Christmas Day and Happy New Year!
Bruce: Happy New Year!