Rising U.S. Magnesium Prices Behind Boost In Metal Production Costs
With U.S. magnesium prices continuing to rise as well as speculation that the possibility of duties against Russian and Chinese magnesium being imposed by the International Trade Commission (ITC) may push prices as high as $1.75 per pound, many industries that rely on metal manufacturing have been forced to raise production costs.
Magnesium, used primarily in aluminum alloying as well as in many die-casting applications plus iron and steel production, has seen a fragile supply and demand balance in recent years, due in some part to Chinese attempts to corner the market. The ITC's recent moves to attempt to tighten restrictions of Chinese and Russian magnesium is seen by many in the industry as part of a plan to protect U.S. magnesium producers.
Since U.S. Magnesium purchased Magnesium Corporation of America (MagCorp) in 2002, only one plant in the United States – U.S. Magnesium's 43,000 mtpy plant in Utah – produces primary magnesium. Many in the industry believe that if the duties are imposed, the United States' soul primary magnesium producer having complete monopoly on the prices.
However, according to Greg Raleigh, Group Sales Manager for
AFT's ThixoForming®, the long-term effects of such a move may prove detrimental.
"The long-term impact of imposing duties will be negative, I think," Mr. Raleigh said. "If you artificially drive the price up, it's going to drive a lot of business offshore. I think what you'll see is more of a shift to Canadian, Australian and Israeli magnesium."
In theory, Canada, Israel and Australia could increase magnesium imports to the U.S. Furthermore, many metal market analysts believe that U.S. companies, in the long run, would simply pay the duty on Russian or Chinese magnesium because even with the margins on duty, the prices would be lower than those being charged by U.S. Magnesium.
While AFT increased its prices in late February of this year as a result of the rising costs of magnesium, Mr. Raleigh points out that the company has taken several measures to both keep prices in check and find less expensive alternatives to obtaining magnesium.
"Because of our hedge buying tactics and aggressive purchasing over the past few months, we can hold our prices through July of this year," Mr. Raleigh said. "Also, we've been exploring new conversion methods to chip magnesium."
In the meantime, according to Mr. Raleigh, the industry is holding its breath regarding further price increases in magnesium.
For further information regarding magnesium prices, please visit the following Web site:
http://www.magnesium.com.
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