METAL MARKETS Growth opportunities for magnesium

The times are changing for magnesium, whose price movements have contrasted sharply with aluminum, the metal which provides magnesium’s chief market, Roskill Information Services says in a recent release. While magnesium producers have generally increased prices in line with costs, the free-market price of aluminum has fallen in the wake of recessionary pressures.

The positive outcome has been sustainable income generated by the 3% per year growth in the demand for magnesium in aluminum alloys since the late 1970s. The adverse magnesium/aluminum price ratio, however, effectively precluded the specification by motor vehicle manufacturers of magnesium die castings as alternatives to heavier aluminum components. Consumption of magnesium in die castings has consequently fallen by 6% per year since the late 1970s.

The high level of market penetration and recycling of aluminum alloys in the U.S. has raised doubts about the continued growth of magnesium demand in this “captive” market. But opportunities for expansion remain in Asia and Europe. And the wider acceptance of aluminum food cans remains a possibility. World-wide growth in this sector could exceed expectations. Industry expectations

The industry’s expectations of growth, however, hinge on, firstly, magnesium die castings getting the long-awaited acceptance that many believe is their due, and secondly, the continued growth of magnesium desulphurisation of molten pig iron. For the latter, the prospects are good; the former would require a reversal of past performance that may make the wary hesitate.

The adverse magnesium/aluminum price ratio, and unease about the effective corrosion resistance of magnesium die castings, have largely undermined past projections. The ailing automobile industry — potentially, by far, the largest market — chose aluminum. Visible, immediate cost savings from using aluminum, and scepticism about magnesium’s resistance to corrosion, outweighed the less immediate advantages of marginally reducing the vehicle’s weight, and the less evident economy of casting and machining in magnesium.

Better times, Roskill says, seem to lie ahead: the rigor of the recession has forced an appreciation of the wider elements of costing; the economic climate has improved; and the magnesium industry now has a more marketable product. It is on the availability of new high- purity, corrosion-resistant alloys, and on the greater appreciation of the “inherent” advantages of magnesium die castings, that the expectations for growth are based.

Confidence in the industry’s likely future growth is reflected by proposed increases in capacity (in Canada, Brazil and Norway) before 1990, and in Amax’s (Amax Inc. of Greenwich, Conn.) decision to rebuild its evaporation ponds. But existing capacity is at present still under-utilized, and is sufficient to meet short-term, projected growth. Strong competition in the domestic and export markets, Roskill says, awaits magnesium producers.