Magnesium Prices Explained

Experts predict that magnesium prices will continue to go south throughout 2024 as it suffers from strong supply and weak demand. Both Chinese and European magnesium prices are at their lowest levels because of oversupply from China and low demand from domestic and international markets.

Why are magnesium prices fluctuating?

1. Electric Vehicle Industry

Electric vehicles are the primary price movers of their base metals, including magnesium prices. Magnesium is a key component in EV batteries as it is lightweight and has a high energy density. Additionally, it offers moderate and high-strength characteristics to metals, especially aluminum alloys.

The Organization Internationale des Constructeurs d’Automobiles (OICA) reported that the total number of new automobile sales and registrations in OICA member countries was close to 69 million units. Thus, the increasing demand for electric vehicles will highly fuel magnesium prices.

2. Production and Supply

China is the largest producer of magnesium, accounting for about 80% of total production. However, there is increasing interest in developing magnesium deposits in other countries such as Australia and Kazakhstan due to the growing demand for magnesium-based products, particularly in the automotive and aerospace industries.

Furthermore, overcapacity is one of the key challenges in the magnesium market which leads to falling prices and profit margins. This causes some companies to change operation strategies in the market. Overall, the shift in manufacturing plans from top magnesium country producers impacted magnesium prices.

3. Energy and Raw Materials

The high cost of energy and raw materials necessary for the production of magnesium is another factor influencing its price fluctuations. For example, the majority of magnesium plants in China use coal as fuel. The production of every 1 ton of magnesium consumes 8–12 tons of high-quality coal.

This energy-intensive process puts pressure on magnesium prices. Additionally, these costs will likely increase in a year or two as China continues to industrialize and reduce exports to meet domestic demand.

Furthermore, the war in Ukraine squeezes its capacity as some top raw materials such as magnesite and carnalits used in manufacturing magnesium come from Russia. Thus, these compounding factors contribute to fluctuating magnesium prices.

Which variables impact the price of magnesium?

• Electric Vehicle Industry
• Production and Supply
• Energy and Raw Materials
• Government Policies
• Technological Advancements

Where does magnesium come from?

Sir Humphry Davy, an English chemist discovered magnesium in 1808. He used electrolysis to isolate magnesium from magnesium oxide.

Magnesium is important in the medical field, electronics, automotive, and aerospace. Despite its abundance, magnesium is not free. As a result, several methods are used in its production:

1. Electrolytic Process – This process uses magnesium chloride produced from either magnesite, seawater, or brines rich in magnesium chloride. When dolomite is crushed, roasted, and mixed with seawater in large tanks, magnesium hydroxide settles to the bottom. Next, it is heated in a furnace, mixed with coke, and reacted with chlorine which produces molten magnesium chloride.

After electrolyzing, it releases magnesium which floats to the surface. Additionally, it is extracted from salt brines which contain about 10 percent magnesium chloride. The magnesium chloride at these sources still contains significant amounts of water and must be dried to make the magnesium chloride anhydrous before electrolyzing to produce magnesium metal.

2. Silicothermic Process – This method includes reducing magnesium oxide with silicon at a high temperature, typically around 1400°C. Magnesium oxide and silicon are mixed in a retort. The retort is heated to a high temperature in a furnace. At the high temperature, the silicon reduces the magnesium oxide to magnesium metal and silicon dioxide.

The magnesium metal vaporizes and rises to the top of the retort. The magnesium vapor condenses and solidifies in a condenser. The silicon dioxide remains in the retort as a slag. This process is the most common today as it is simple and efficient.

3. Pidgeon Process – One of the least efficient methods of magnesium production. The Pidgeon Process, developed by Dr. Lloyd Pidgeon, is both an energy and labor-intensive form of thermal reduction. In this process, closed-end, nickel-chromium-steel alloy retorts are filled with a mixture of calcined dolomite ore and ferrosilicon.

They are heated until magnesium crowns form. Each cycle takes about 11 hours and requires manual filling and emptying of the vacuum tubes. Additionally, it uses about 11 tons of raw materials for every ton of magnesium produced.

What are the uses of magnesium?

Magnesium is a lightweight and versatile metal with a wide range of applications:

1. Aerospace – Aircraft components such as engine casings, landing gear, and wings use magnesium as it is strong and lightweight.

2. Automotive – To reduce weight and improve fuel efficiency, this metal is important in car parts such as wheels, engine blocks, and transmission cases.

3. Construction – The durability and corrosion-resistance properties of roofing sheets, siding, and window frames are due to magnesium alloys’ improved efficiency.

4. Electronics – Magnesium is used in electronic devices, such as laptops, smartphones, and televisions because it is lightweight and electromagnetically compatible.

5. Consumer goods – Various consumer goods such as sporting equipment, power tools, and garden furniture use magnesium due to its strong and lightweight characteristics.

Furthermore, magnesium is a mineral that is crucial to the body’s function. Nowadays, this element largely comes from China, the US, Israel, Brazil, and Russia.

What is the future price of magnesium?

Magnesium’s price fluctuations largely come from the rising demand for batteries due to the increasing sales of electric vehicles. The race among top EV country makers such as the U.S., Germany, Japan, and China is gradually making waves across the automotive industry. This increased competition will certainly drive magnesium prices up.

Additionally, its lightweight properties make their way to the aerospace industry as they are ideal components for making aircraft structures that support fuel efficiency and emission reduction. On the other hand, Germany (the world’s largest aluminum casting user) has increased its magnesium usage in its automotive applications to reduce its carbon footprint.

Furthermore, the biomedical field is another emerging industry consumer as this commodity is useful in cardiovascular stents and bone implants. The metal’s bone healing capacity makes it an important biomaterial asset in orthopedic applications.

Overall, based on the current situation and future price determiners, most analysts expect magnesium prices to remain elevated at $3,500 per metric ton or even higher in 2030.