Aluminium scrap scarcity raises the price of European magnesium

European magnesium prices rose on Friday August 30, on substitution buying due to the lack of availability of aluminium scrap, market sources said.

“Magnesium consumption grows on substitution in Europe when the market lacks aluminium scrap,” a trader said. “We’ve been doing more [deals], and prices have risen.”

Metal Bulletin’s European magnesium price rose to $2,800-2,900 per tonne from $2,700-2,800 previously, returning to the level last traded in June.

“Prices have risen by $100 [per tonne] over the past two or three weeks,” a second trader said.

Chinese market prices sit at 15,900-16,500 yuan ($2,575-2,675) per tonne, following a slow August.

“August was bad, and it’s hard going in China – prices have fallen to an unsustainable level,” the trader said.

But demand is healthier in Europe as alloy producers have been unable to secure their magnesium needs through aluminium scrap deliveries. Scrap has remained tight throughout the summer despite softer demand and the closure of some export markets due to currency weakness – which is hitting India particularly hard.

Many scrap dealers have also been holding on to material throughout the summer, and are unwilling to sell until prices improve.

“A lot of scrap dealers are sitting on their scrap. Prices are bad and people expect them to go higher, so they’re taking that position,” the first trader said.

“They are sitting on material that is difficult to get. It’s a major challenge at the moment,” he added.