China's magnesium sector faces challenges such as oversupply and low prices, with average utilisation of magnesium metal production capacities at 63pc over the past decade, delegates heard at the China magnesium association's 27th annual conference.

The country's total capacity was around 1.3mn-1.5mn t/yr over the past 10 years, but output was 800,000-1mn t/yr over the same period, according to China's Nonferrous Metals Industry Association's (CNMA) data.

Most consumption was dependent on traditional downstream sectors such as aluminium alloy, steel and titanium sponge during 2014-23. Development of magnesium for applications in new downstream fields has been inadequate, resulting in oversupply and magnesium prices falling to as low as production costs.

Titanium sponge producers have reduced their use of magnesium metal feedstock in production in recent years, Pangang Vanadium and Titanium Resources' lead engineer Jiang Baowei said at the conference. "Titanium producers used to use magnesium metal as a reductant to produce titanium sponge, but the titanium tetrachloride residue from this process was environmentally contaminative and dramatic fluctuations in magnesium metal prices made sponge producers' production cost volatile," Jiang added.

About 1.05-1.25t of magnesium metal is typically used to produce 1t of titanium sponge in China. A number of titanium sponge producers have obtained in-house magnesium metal supplies through electrolysation of titanium tetrachloride residue to reduce environmental pollution and lower production costs.

China's titanium sponge production capacity was 220,000 t/yr in 2023, with sponge producers' inhouse electrolytic magnesium metal output reaching 250,000 t/yr.

CNMA president Ge Honglin called on the industry to take measures to promote the advantages of magnesium as a light structural metal and to develop new downstream applications, such as in sectors like new energy vehicles, consumer electronics, magnesium alloy construction sheet and hydrogen storage. He also suggested that market participants try to reduce price volatility by not engaging in price competition, in order to relieve concerns about production costs from consumers.

Rising output

But China's magnesium production has increased in the last decade, in line with rising consumption from traditional downstream sectors, despite challenges.

The country's total magnesium output rose to 702,900t during January-September, up by 18pc from a year earlier, CNMA's magnesium branch vice president Sun Qian told delegates at the conference held in Xi'an. This was mainly because of production resumptions in the main production hub Shaanxi province, after suspensions caused by the local government's phase-out of smelters' in-house semi-coke furnaces during May-October 2023, Sun added.

Production in Shaanxi rose by 14pc on the year to 421,500t during January-September, according to Sun. Output in neighbouring province Shanxi increased by 10pc to 152,100t over the same period.

Shaanxi is the country's largest production hub for magnesium metal, with more than 50 producers in the province. There are 34 producers located in the province's Fugu county, with a total production capacity of 678,000 t/yr.

China's magnesium industry has made significant progress particularly in terms of production which rose from 650,000t in 2012 to 820,000t in 2023, accounting for 83pc of the world's total output, Ge told delegates.

The country's magnesium metal consumption increased to 485,600t in 2023, up sharply by 76pc from 2012, with 192,100t used in structural materials, more than doubling over the same period. Comprehensive energy consumption to produce 1t of magnesium metal has decreased to 4t of standard coal from 5.2t in 2012, Ge said.