Stainless Espresso: Chinese magnesium prices pick up sharply
Stainless Espresso: Chinese magnesium prices pick up sharply

February 8, 2022 – Chinese magnesium prices have rebounded sharply from their November 2021 low. LME aluminum prices at historic high. Alumina production in China cut by 15 million tons. Nickel, NPI and stainless steel prices continue to pick up. And the steel processing European downstream industry is badmouthed by European steel association.

Chinese magnesium prices pick up

In the fall of 2021, Chinese magnesium prices had shot up to a historic all-time high and increased more than fivefold compared with previous years. This was due to energy shortages and the resulting cutbacks in energy and CO2-rich magnesium production in China.

Magnesium prices up again since November 2021

After Chinese magnesium prices fell significantly in November 2021, they have picked up again since the end of the year and are still more than three times higher than at the beginning of 2020 or 2021.

Magnesium is particularly important in aluminum production. European aluminum producers, who have become 95% dependent on cheap Chinese magnesium imports in recent years, are struggling with the price increase, but also with scarce availability. Alternatives are hard to find. The production of magnesium is undesirable and too expensive in Europe, among other things because of the high environmental impact (1 to magnesium = approx. 27 to CO2).

LME aluminum prices at historic high

Aluminum prices are currently unstoppable and on SHFE and LME the light metal is up by more than 2.3% each. Scarce availability in the largest producing country China, high energy prices in Europe and India, tensions between NATO and Russia.

Alumina production cuts

In addition, it is reported from China that alumina production has been cut by around 15 million tons per year due to environmental protection measures. The production capacity in the Chinese aluminum smelters is reported to be only 7 to 10 days.

Nickel and stainless steel prices

As we had already expected, NPI prices in China picked up by about 2% today. Spot nickel briquette premiums have also jumped up by more than 20%. On the SHFE, nickel is up about 1%. LME nickel is off to a start, up about 1.23%.

Stainless steel futures and spot pick up too

Stainless steel futures on the SHFE are up with another gain of over 2%. Spot prices for key grades, such as 304 and 430, are also up.

EU Safeguard Review: Eurofer badmouths EU downstream industry

The annual EU Safeguard Review on steel imports is in full swing and, as was to be expected, the outlook for EU steelmakers is once again disastrously bad, according to Eurofer and media reports.

Battle for steel import quotas is being fought on the backs of the downstream industry

After the record year 2021, which was even significantly better than 2019 under pandemic conditions, the upturn in the downstream industry is now being ruined by Eurofer in order to further shield the European market against steel imports. The challenges of supply bottlenecks and the high energy and CO2 costs of the EU steel producers are being pushed onto the downstream industry as a proxy, which cannot or does not want to supply it sufficiently itself.

Downstream industry needs planning security

Since the beginning of the pandemic, the processing steel industry in the European Union has achieved an incredible feat and single-handedly mastered its way out of the crisis. This continuing success must not now be destroyed. It needs planning security and must not become a pawn in short-sighted political maneuvers aimed at creating unfair conditions on the world market.

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