China's domestic magnesium price jumped by around 21% last week after producers in the country were forced to raise their offers due to increased production costs owing to a rapid rise in coal prices.
Fastmarkets' weekly price assessment for
magnesium 99.9%, exw China was 20,000-22,000 yuan ($3,105-3,416) per tonne on Friday May 14, an increase of 2,700-4,600 yuan per tonne from 17,300-17,400 yuan per tonne a week earlier.
The latest assessment is the highest since October 29, 2008, when the price was assessed at 22,000-22,500 yuan per tonne.
Price driving force
Sources told Fastmarkets that it was the recent rapid increase in coal prices in China that was underpinning the domestic magnesium market.
Magnesium producers in China, particularly those in the city of Yulin in Shaanxi province - a major magnesium production hub - use coal to produce semi-coke and coal gas. Semi-coke is used in the production of ferro-silicon, which is a reducing agent for producing magnesium. Coal gas is also used as fuel for smelting magnesium.
"Due to the strict environmental inspection, around...