“There are three ways to reduce fuel consumption,” says Morales. “We can reduce or eliminate the use of gasoline by developing hybrid cars and fuel cell powered vehicles. We can make our direct combustion engines more efficient. Or, we can reduce the weight of the vehicle to use less gas.” That’s why a special ASM International symposium at the Materials Science & Technology Conference will be held in Pittsburgh, Oct. 25–29, to discuss how lightweight materials can provide effective solutions while maintaining vehicle strength and integrity.
Still, expanded use of magnesium die casting has proven difficult because of the cost of the metal, which has been 2.2-times higher than aluminum, its chief competitor, for the past three years. Also, a decline in imports from Russia and Canada, two of the country’s leading ingot import sources, has caused a supply shortage on the spot market for more than a year.
And, in recent months, China has become the world’s largest supplier of magnesium ingot and has been keeping world prices elevated. Meanwhile, softness in demand from the North American auto and machinery industries—coupled with high magnesium prices—has closed or bankrupted several magnesium die-casting companies. That’s why China—especially from plants in Shanxi Province—has become a major world supplier of magnesium die castings.
U.S. magnesium prices peaked cyclically at $3.65 in July 2008 but have since slipped to $2.29 in July 2009. Since magnesium isn’t traded on commodity exchanges, supply-and-demand fundamentals usually set price trends, except when such outside influences as trade restrictions or punitive tariffs artificially inflate sales costs. Lately, it’s been Beijing’s restrictions on raw material exports. The U.S. and the European Union have filed a World Trade Organization complaint that China is violating Article XI of the 1947 General Agreement on Tariffs and Trade—the founding document of what is now the World Trade Organization—as well as the terms of China’s own membership agreement with the WTO.
What’s happening is that China’s supplies of magnesium are so large that Beijing’s recent export restrictions have driven up the costs on world markets while holding them down domestically. The result is a subsidy of sorts for Chinese manufacturers, letting them charge less for finished die-cast goods than foreign firms pay for the raw material.
Also, with magnesium diecasting demand down worldwide, Chinese producers are delaying negotiations on 2010 ingot supply contracts with traders until winter this year—rather than the usual late summer or early fall. Market sources say most consumers are trying to determine how much raw material they will need next year—and that may take some time to crystallize.
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