March 14, 2017 2:50 am JST

Magnesium prices in Japan up 10% since January

China's move to reduce coal-related air pollution causes a drop in output

TOKYO -- Magnesium prices are rising as China, the mineral's major producer, is ramping up efforts to control air pollution.

Chinese magnesium bound for the Japanese market is currently trading in the range of $2,380 to $2,410 per ton, including freight costs, up about 10% from its mid-January low.

Behind the higher prices is a decision by Chinese authorities to curb production of coal, the primary energy source for magnesium production, in a move to combat air pollution.

The Chinese government sent environmental inspection teams to 18 cities, including Beijing, starting in mid-February. Coal plants violating environmental regulations were ordered to suspend production. As a result, magnesium production has declined, causing the price to turn north. Some exporters are reportedly having difficulty securing inventory.

The National People's Congress, whose latest session ended on March 5, adopted a policy to reduce the country's annual coal production capacity by at least 150 million tons this year. A consensus view among market participants is that the government will continue to tighten environmental regulations for some time.

Japan-bound magnesium "could rise to the $2,400-$2,550 range from now to April," said Takashi Kamishima, president of Tokyo trader Tak Trading.

(Nikkei)

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