Magnesium: the impact of projected new supply on prices over the next five years

The high prices of magnesium in the first half of the 1990s led to a rapid increase in the supply. Although several projects could influence prices in the period until 2005, output from some of them seems likely to be delayed or reduced. In Australia the problems encountered by nickel-cobalt projects have dulled expectations of output from the magnesium projects. In Europe the current state of development of at least two projects makes it unlikely that they will have an impact on the supply-demand balance over the next five years. North American production will increase in line with the expansion at Noranda's Magnola plant. Given the current climate for project funding, some of this new or feasible capacity may be mothballed before it comes on stream. Thus, although prices are forecast to reach $3000/t in 2002, the effect of even subdued Australian output could force them down to around $2000/t by 2005.