European Car Market Could Drive Magnesium Growth

admin-ajaxHigher forecasted sales of European automobiles, all requiring inputs like magnesium, titanium, chrome and cadmium, could help grow the market for magnesium in 2014, according to recent media reports.

Automotive News Europe reports that after a six-year slump, Europe’s battered car market is finally coming around, with vehicle sales expected to increase by up to 3 percent this year, although with deep price discounts.

“The rebound will bolster the industry’s bottom line, particularly for automakers such as Fiat and PSA/Peugeot-Citroen that are most exposed to the deep recession in southern Europe,” the publication writes.

“With economic conditions showing a tepid recovery in most European countries by the end of 2013, buyers are finally starting to feel confident enough to make a long-delayed purchase of a new car – albeit at discounts of up to 24 percent.”

Across the Channel in the United Kingdom, 2013 was the best year for car sales since 2007, with 2.26 million vehicles registered. That number is 10.8 percent greater than in 2012, and was boosted by a whopping 23.7 percent rise in sales in December — the 22nd straight month of increases — according to data from the Society of Motor Manufacturers and Traders (SMMT) quoted by the BBC.

“Industry analysts say that attractive financing deals have tempted buyers, with three-quarters of sales to private buyers now involving some kind of financing package,” the BBC writes.

Compare the UK numbers to Europe, where flagging growth in the Eurozone has pushed car purchases to the bottom of consumers’ priority lists. Sales across Europe fell 2.8 percent for the first 11 months of 2013 according to the BBC, quoting numbers from the European Automobile Manufacturers’ Association.

The strength in both the European and UK car markets is good news for magnesium, whose lightness and strength make it ideal for use in automobile manufacturing. Theoretically, more vehicle sales should translate into higher demand for the metal.

Chinese magnesium exports up

As the world’s dominant magnesium producer, Chinese production is watched closely by car manufacturers and other end-users to signal which way the magnesium price could move. Metal-Pages reported that Chinese magnesium production for the first 11 months of 2013 was up 8.02 percent compared with the same period in 2012, to 713,300 tonnes. The increase was due in part to the cancellation of a 10 percent export tax on January 1 of last year. Exports of unwrought magnesium (99.8% grade) from January to November were up 20.4 percent, according to Metal-Pages, with the lion’s share heading to the Netherlands, Canada, Japan and India.

Prices update

After falling about RMB200 (US$33) a tonne in December, price stability has returned to the Chinese magnesium market, reports Metal-Pages, with 99.9 percent magnesium selling for between RMB14,900/t ($2,462) and RMB15,400/t. ($2,544)

“Export prices are supported by tight supply and higher production costs caused by stronger ferro-silicon and coal prices in winter, and prices may hold firm in the coming weeks. So overseas buyers may take advantage of this and enter the market next week,” said a trader from Gansu quoted by Metal-Pages.

Prices of European magnesium were unchanged, at between $2,730 and $2,780 a tonne.

 

Related reading:

Lighter Vehicles, Chinese Auto Sales Driving Magnesium Demand