Magnesium scrap market unveils promising demand

----Interview with Changgao Cao
General Manager
Anhui Huanyue Material Technology Co., Ltd.

Anhui Huanyue Material Technology was established in July 2017, located in Xuanzhou Economic Development Zone, Xuancheng, Anhui and owning advantages in transportation and technical strength. They highly value quality management, especially quality control during production processes. They have introduced advanced testing equipment to ensure quality of magnesium alloy ingots, magnesium anodes, aluminum anodes and zinc anodes which could meet exact requirements from many die-casting plants and effective protection needs of customers for warships, military docks, military airports, oil tanks and civil oil and gas pipelines.
Asian Metal: Hello, Mr. Cao! Welcome to the Asian Metal Interview column. First of all, please introduce the main structure and main business of your company.
Mr. Cao: Our company established in 2017, and has been engaged in the one-stop industrial chain of magnesium alloy scrap recycling and processing. The current products include: various magnesium alloy products and anode products. Our company attaches great importance to quality management, especially the quality control during the production process. We have introduced advanced testing equipment to ensure that the quality of various magnesium alloy ingots, magnesium anodes, aluminum anodes and zinc anodes produced by us could meet not only the high requirements from many die-casting plants, but also the effective protection needs of customers for warships, military docks, military airports, oil tanks and civil oil and gas pipelines.

Asian Metal: As the low-carbon requirements continue to tighten, the demand for scrap in domestic and foreign magnesium alloy scrap processing plants is increasing. How does your company achieve fine product sorting and ensure stable packaging to accurately meet market demand?
Mr. Cao: As the domestic and foreign requirements for carbon emissions increase, the market demand for magnesium scrap boosted accordingly. From a narrow view, in view of the anti-dumping duties from USA and Brazil for magnesium ingot and magnesium alloy, the demand in American market for magnesium scrap continues to be firm and an increase of around 10% YoY. Additionally, some European die-casting factories purchase alloy ingots made of 75% magnesium scrap from Chinese magnesium alloy ingot production factories to ensure the carbon emission indicators of the factories. The market demand for magnesium scrap has broad prospects. In order to ensure the plant's carbon emission targets, we also began to focus on European remelting plant, and the current monthly demand could reach about 200t. It’s a big volume under such a gloomy economy. Our company follows the following process in the procurement of magnesium scrap: the delivery of magnesium alloy ingots, the recycling and sorting of magnesium scrap, and the one-stop service of shipment. We strive to achieve the concept of fine details and precise service, ensure the supply of quantity and quality, and stabilize our customers.
Asian Metal: How does Mr. Cao view the current scrap market and seize market opportunities under the background of low-carbon context?
Mr. Cao: As a professional scrap recycling and sorting supplier in the industry, with our company's many years of supply experience, our factory guarantees product quality from the source, refines customer needs, improves product packaging, reduces the workload of users after the goods are delivered, and ensures efficient satisfaction of customers' precise needs. Based on this, the magnesium scrap provided by our factory has won high recognition from domestic and foreign customers. From the export data, our factory's average monthly magnesium scrap export volume kept rising, accounting for a big number of China's total magnesium scrap export.

Asian Metal: Since 2024, the overall demand for magnesium anodes has been weak. What is the market demand for your company's anode products? How to ensure reasonable profits in market competition and weak demand?
Mr. Cao: We have always been mainly selling in the domestic market in the magnesium anode market. We adopt the strategy of joint research and development through school-enterprise cooperation, starting from the precise formulation of production raw materials and production auxiliary materials, to improve the quality of anodes, reduce costs, and increase competitiveness. Currently focusing on the domestic market, our company has about 100t of low-potential anode orders per month. By accurately grasping the market trend, controlling the cost level of magnesium alloys; increasing the output rate, reducing production costs, and giving benefits to customers, winning customer recognition also ensures our reasonable profits. We are also paying attention to foreign markets. The magnesium anode export market is mainly high-potential magnesium anodes. Against the backdrop of economic recession, downstream industries such as cables, pipelines, and ships are not operating smoothly, and the demand for anodes has been greatly reduced. It is difficult to boost market demand in the short term.
Asian Metal: Since the beginning of the year, the price gap between magnesium and aluminum products has continued, and the price advantage of magnesium products has been highlighted, but there has been no obvious effect in promoting the application. What do you think is the reason for the obstruction of magnesium product promotion?
Mr. Cao: Since entering 2024, with the emergence of the price gap between magnesium and aluminum, industry insiders have also placed high hopes on the application of magnesium. However, the actual demand has not increased but decreased. The main reasons are as follows: In 2021, the prices of magnesium ingot increased from RMB15,000/t (USD2,066/t) since January to RMB67,000/t (USD9,305/t) to late September. Subsequently, from October 2021 to 2022, the magnesium prices decreased sharply since October of 2021 to RMB21,500/t (USD2,986/t) in 2022, and the price boom and slump greatly weakened the trust and goodwill of downstream users for this product. Users have been questioning constantly, and after the product cycle, many workpieces have been changed to aluminum alloy products during the design process. The mainstream downstream users of magnesium alloys, mainly automotive parts, have switched production lines and changed products, which has largely inhibited the application of magnesium products. We have seen the advantages of the current magnesium price, but customers still remember the stage when the magnesium price soared. Once the production line is converted, it is cyclical, ranging from one year to three years. At the same time, the current price advantage coincides with the economic recession, and the downstream 3C and automobile industries have weak demand, and the demand for parts and components has shrunk accordingly, which has seriously hindered the promotion of magnesium alloy. As a member of the magnesium industry, although the current industry is full of thorns and difficult, I still hope that with the joint efforts of industry professionals, the application and promotion of magnesium products will usher in opportunities and regain glory in the next few years!

Asian Metal: What is the original intention and advantage of your company's new magnesium alloy production line? How is the current operation and promotion of the alloy production line?
Mr. Cao: From the original intention of our magnesium alloy production line, considering that we have multiple magnesium scrap channels and abundant materials; at the same time, after ensuring the direct demand of the North American market, there will be some surplus materials. The alloy line not only meets the efficient utilization of our scrap, but also realizes the high demand of foreign users for low carbon emissions. At present, our factory has an alloy production line with an average monthly output of 500t. At the same time, we are also actively promoting SCS demonstration.
Asian Metal: What is your prediction for the price trend and market demand of magnesium alloys in the third quarter?
Mr. Cao: I am optimistic about the magnesium alloy market in the third quarter. In terms of market orders, we have 1,200t of orders in hand in the third quarter; at the same time, domestic and foreign market inquiries have increased. After experiencing the downturn in the second quarter, the magnesium market is expected to improve in the third quarter. At the same time, the confidence of industry insiders is also extremely important. It is unreasonable and unsustainable for products to continue to fluctuate below the cost line.
Asian Metal: Thank you Mr. Cao for accepting the interview with Asian Metal. We also look forward to Anhui Huanyue Material a bright future!
Mr. Cao: Our company also thanks Asian Metal for its accurate market analysis and sharing of market situation. At the same time, we wish Asian Metal 2025 Summit to be more and more distinctive in advance.