Magnesium production and demand will continue to grow

On August 24th, Alan Clark from CM Consulting in Australia delivered a special report on the progress of the Global Magnesium Industry at the 78th World Magnesium Industry Conference of International Magnesium Association.

In the report, Alan reviewed the global magnesium supply and consumption in 2020 and gave an outlook on the global magnesium market for the next 10 years.

COVID-19 affects pure magnesium metal sales

In 2020, global magnesium consumption declined by 2% for the first time since 2015 due to the COVID-19 pandemic.Aluminum alloys grew by 1 percent, steel by 3 percent and magnesium for automobiles by 10 percent.Global magnesium supply increased 1.7 percent to 1.088 million tons.China's magnesium production fell 2.6 percent to 886,000 tons, accounting for 82 percent of the world's total.Of the 212,000 tonnes of raw magnesium produced outside China in 2020, the US and Russia each accounted for 31 per cent.Most of the growth in magnesium production came from Magnesium plants in Russia, including JSC Avisma and Solkmask.Between 2016 and 2020, the growth rate of raw magnesium production in China was 4.9%, while the growth rate of production outside China was 9.1%.

Entering 2021, the magnesium market recovered significantly and prices rebounded.Global magnesium consumption is expected to grow by 8% this year, with a significant increase of 11% expected in China.The cost of producing raw magnesium, which has risen by 19% due to higher prices for ferrosilicon and coal in China, has also helped push prices up.Raw magnesium production is expected to grow 6.9 per cent this year, boosted by higher prices.

Under the background that the Chinese government promotes the goal of carbon peak and carbon neutrality and firmly takes the path of sustainable development, the production cost of raw magnesium in China is gradually rising.But the cost of magnesium plants using semi-coke gas in Shaanxi province is still the lowest in the industry.

What needs more attention is that environmental protection inspections and inspections are more and more frequent, and the requirements are more and more strict. Some magnesium plants in Shaanxi province have been required to stop production, and may be required to close down in the future. Magnesium plants are increasingly investing in environmental protection, increasing operating costs.The situation is similar for other energy-intensive industries in China.

Changes in magnesium prices in the past ten years

A review of international magnesium prices over the past 10 years (2011-2021) shows that since China became a major producer in the market, the price of magnesium has fluctuated within the same range as other metals, and slightly less than other major metals traded on the London Metal Exchange.In 2020, due to the impact of the global COVID-19 pandemic, magnesium prices fell significantly, and in 2021, they rebounded significantly.Over the past 20 years (2001-2021), global raw magnesium consumption has grown at an average annual rate of 5.1%, thanks to growth in construction, automotive, aluminum, steel and other industries.The global use of magnesium in aluminum alloys and automotive magnesium alloy parts accounts for more than 62% of total consumption.

Looking ahead, CM believes global magnesium demand will continue to grow over the next 10 years, with an average annual growth rate of 5.2% over the 10-year period, slightly higher than in the previous 10 years.The main driver of the continued growth in magnesium demand is the growth of magnesium alloy in the automotive sector, where the development of electric vehicles is a key driver of automotive magnesium consumption, which is expected to grow at an average annual rate of 7.6% between 2021 and 2030.The use of magnesium in the field of metallurgy will also continue to grow, and the growth is driven by changes in the variety structure, such as the growth of aerospace aluminum, titanium.

CM expects global magnesium production to grow at an average annual rate of 5.1% from 2020 to 2030, reaching about 1.4 million tons in 2025 and 1.8 million tons in 2030.Driven by demand and prices, new and expansion projects of raw magnesium will be completed and put into operation in China and other countries in the next 10 years, with an average annual growth rate of 4.3% in China and 7.8% in other countries.Although there will be some changes in the global magnesium supply pattern in the future and the supply will be diversified, China is still the world's most important producer of raw magnesium, and the production proportion will still be more than 75%.CM listed five magnesium smelting projects under construction and proposed abroad, in Canada, the United States, Australia and Norway.