New report analysis on magnesium metal supply and demand worldwide.
The Economics of Magnesium Metal (9th Edition, 2004) explains that the structure of the global primary magnesium industry has changed significantly in the last decade and Chinese Companies are now the dominant producers. North American continues to be the largest consuming region although growth in demand at an average of 7.7% pay during the past decade has been lower than that in both Western Europe (11.2%py) and Asia (12.2%py).
Increasing use of thermal processes
There are two process technologies currently used commercially to produce primary metal: electrolysis of magnesium chloride and thermal reduction of magnesium carbonate ores with ferrosilicon. Conventional wisdom has been that thermal processes would gradually be replaced with new electrolytic technology, and in the early 1990s; some 76% of world capacity used this process, However, by 2003 the preparation of magnesium produced by the thermal process had increased to 45%.
In recent years there has been less incentive to invest in new electrolytic projects, and several existing units have been closed oridled. Thermaltechnology is particularly well-suited to developing economies, as the plant sizes are small, capital investment required is low, the process is relatively labour intensive and the problems of quantities of waste produced are not necessarily seen as an important issue in the short term. This is reflected in the remarkable increase in Chinese capacity that has taken place, rising from around 5% of world total production 1994 to almost 65% in 2003.
Magnesium can be used in a number of structural applications in the place of aluminium. This substitution is only likely when the magnesium: aluminium price ratio is at or below 1.5:1. In 1993 this price ratio was around 2.70:1, but it began to fall in the late 1990s. By 2003 the ratio had declined to its lowest level since 1988, 1.64:1, though it is now starting to rise again. At higher price ratios, the use of magnesium tends to be restricted to applications where other properties such as lighter weight, offset its higher cost.
Outlook for end-uses
The largest end-use sector for magnesium is as an alloying element with aluminium. The major application for these alloys is in sheet for use in beverage cans. Although the expanding population ensure that this market will continue to grow, the rate of growth for magnesium itself will be tempered by increasing levels of container recycling. Overall demand for magnesium in aluminium alloys is expected to grow at pay and to reach some 290,000t in 2010.
The application for magnesium that has shown the largest growth in consumption over the last decade is in diecasting, with an average annual increase of around 11%py. Most of this growth was in the manufacture of automobiles where magnesium components are increasingly used to reduce weight and improve fuel economy. Growth in demand in this sector is likely to continue at a slightly lower rate of 5% pay and is expected to reach 68,000t in 2010.
Following the idling of the Mangola (Canada) plant in April 2003, world capacity for primary metal was of the order of 570,000t. Substantial capacity expansions have been announced for 2004; if they are realized, world capacity for primary metal will be around 670,000 pay by the year-end.
Adding to this figure is some 230,000 pay of secondary metal capacity. Thus, in theory at least, world capacity is already sufficient at around 230,000 pay to meet projected demand in 2010. It is therefore easy to understand why investors are cautions about advancing new projects at this time. Whether the situation is realized in practice depends largely on how the Chinese magnesium industry performs.
The Economics of Magnesium Metal (9th addition, 2004) is available at US $3900 from Roskill Information Services Ltd., 27 a Leopold Road, London SW19 7BB, England. Tel: +44 2-8944 0066. Fax: +44 20 8947 9568. E-mail: firstname.lastname@example.org
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|Date:||Nov 1, 2004|
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