With 65% of Western World demand being supplied by the Chinese and CIS producers who do not report domestic consumption, it will be difficult, if not impossible to accurately predict the future supply/demand for magnesium. Understatedly, western magnesium supply has been negatively impacted by Chinese exports into historical western markets. Additionally, many of the end uses such as titanium, aluminum, lead and steel production are similarly impacted as historical western producers of those products lose market share to Chinese suppliers. Given the recent trend of slower growth in diecasting, it seems reasonable to question whether or not this slowdown is a result of less development effort being expended by the Western producers as lower prices reduce their profitability. Despite these facts, primary magnesium consumption continues to grow at 3.5% per year with diecasting growing over 11% per year. Add to this the implicit "scrap and recycle error" and magnesium is seeing net growth of 4.0% to 4.5% per year. The supply side is the wild card. Historically, the Chinese are inclined to invest ahead of demand. Only recently have they paused due to infrastructure factors such as power availability, shipping constraints and raw material prices. Western magnesium projects will optimistically view this pause in Chinese expansion with hope of projects to be realized. This may be false hope as Chinese infrastructure issues are addressed and incremental capacity, rumored to be vast, comes on line. The best way for Western projects to succeed is to face the reality that costs must be in the range of $US 0.60 to $US 0.65 per pound to compete on a world scale. Without these types economics more projects will make the "highlights".
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