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China Magnesia backing to the market with high logistics cost

The Magnesia market remained stagnant, although most companies returned to work in Dashiqiao after the new wave of Covid-19 infections, magnesia prices are in a downtrend, while logistics in Haicheng remained under strict control over local logistics in Yingkou city Liaoning province.

Dashiqiao centre for disease control and prevention decided to lift the city's traffic control measures from April 5, 2022, which allows most magnesia companies back to work.

Because of the new wave of COVID-19 infections, logistics in Haicheng and Dashiqiao were under strict control and it was difficult to transfer between cities. Although the strict control over local logistics in Dashiqiao, Yingkou city Liaoning province has been eased, the supplies of raw material/ore and fuel are still disrupted by the COVID-19 outbreak, which may lead to delays and higher prices.

The situation of magnesia supply has been improved in Dashiqiao, but Haicheng city, near Yingkou, is still under control. A market source told us that some lorry drivers are not willing to deliver the goods to Yingkou, because they have to follow the rules and take nucleic acid tests within 48 hours.

Meanwhile, the local manufacturer told us that the delayed delivery is not the only problem, they are also affected by the increasingly high fossil fuel prices, which caused the logistic cost to soar up again, double the previous price and still rising.

Although magnesia supply remains under tight COVID-19 measures and logistics costs put pressure on raw materials, Chinese magnesia prices were mostly stable since March 2022. The price of some grades of magnesia in China drifted lower during the beginning of April.

China Magnesia pricing from Northeast Asia Magnesia Exchange (updated on 15/04/2022)

The Liaoning government (Liaoning Province, the production hub for magnesia), together with authorities in different cities in the province, continued to push for the consolidation of the domestic magnesia industry by implementing quotas on magnesite production to curb overall output.

In addition to the uncertainty about continuous environmental restrictions on magnesite mining activities. Many CCM producers in China have been ordered to shut down operations since November 2021. As of February 2022, there are 57 factories that have been ordered to shut down. The firms include 54 CCM producers from Liaoning province and 3 in Qinghai. The suspended capacities reached 9,797,800.00 metric tons, with an average of 171,891.23 metric tons per factory.

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