There's plenty of magnesium metal around these days. Reason: Demand looks to be falling by more than 10% this year because of the collapse of its major market, motor vehicle parts. Magnesium prices are down as a result, but not as low as might be expected because of punitive tariffs imposed against Chinese and Russian magnesium suppliers. Upshot: Magnesium die casters and fabricators are looking for new uses of the lightweight metal.
Despite new applications in making laptop computers, power tools, sporting goods and office furniture, North American magnesium use has slipped in making die castings for aerospace, automotive and machinery parts. Use of magnesium oxide in the production of aluminum and steel also has dropped dramatically since smelting of both metals has collapsed.
And, it could be 2011–2012 before North American magnesium sales volume rebounds to 2005–2007 tonnage, suggests Greg Patzer, executive vice president of the International Magnesium Association in Wauconda, Ill. "The 2008–2009 recession has had the most profound impact on demand and production, and 2010 probably won't be a strong recovery year."
The collapse of auto and truck assembly in North America has cut projected magnesium use to 67,300 metric tons this year from an annual average of 81,600 metric tons in the previous five years. The slowdown in aviation production also has reduced magnesium need. Airlines have canceled and deferred orders this year as the global recession has reduced flight demand. Boeing has had 85 orders and 84 cancellations through June, leaving the Chicago-based firm with a mid-year net order book of just one plane. Toulouse, France-based Airbus hasn't released its figures yet but global airlines are mimicking Qantas, which has deferred deliveries of four Airbus SAS A380 superjumbo jetliners.
Demand for aluminum-magnesium die castings from the appliance, consumer products and residential construction industries also has been very weak—and so has demand for wrought products by machinery and consumer products makers. Purchasing of parts designed for wind energy and other biofuel machinery applications have been nearly nonexistent this year. Also, the use of magnesium to make the aluminum alloys that make 1.5 million metric tons per year annually of beverage cans appears to have stagnated in the face of competition from plastics bottles.
Magnesium, as an oxide, also is used as a deoxidizing agent in the smelting of aluminum, titanium and other nonferrous metals; as refractory material in furnace linings for producing iron, steel and glass; as a desulphurization agent in steelmaking; as a raw material when making Portland cement in dry process plants; as an insulator in industrial cables, as a basic refractory in industrial cables and as a principal ingredient in construction materials used for fireproofing.
Patzer of the International Magnesium Association says that "the typical seasonal summer slowdown is being exacerbated by the lack of business from traditional, big-volume end users and materials competition from the aluminum industry." The big debate, he says, is whether the bottom of the demand slide has occurred and, if it has, when the demand pickup will become apparent.
Driven by environmental programs across the consumer electronics industry, portable electronics product manufacturers are opting for light, yet tough, magnesium for everything from flash audio/video players to digital cameras, mobile phones, computer notebooks and radar detectors. Patzer says that "components that house and protect highly sensitive technology inside entertainment and communications devices must exhibit strength and durability and magnesium meets the design challenges of the consumer electronics becoming lighter, thinner, and more mobile."
He notes that magnesium alloys emphasize lightness and toughness of new generations of computer notebooks being manufactured for business, industrial, public safety, military, gaming and personal use. Also, the power tool industry increasingly is relying on die-cast magnesium components to offer durable, lighter weight designs that are easier to handle and manage over long work shifts. "Users may think that lighter weight means less power, but the opposite is true: using lighter die-cast magnesium for a pneumatic tool's housing or a worm drive power saw's gear case allows the design to accommodate a larger, more powerful motor for the same or less weight," says Patzer.
Lightweight, high-tech magnesium has crossed over from the purely industrial- and mechanical-type applications into the high visibility world of furniture design. For example, the world's first magnesium-framed chair is the Go Chair design of Bernhardt Furniture in North Carolina. Patzer explains the design blends science and nature, taking full advantage of magnesium's light weight and high strength-to-weight ratio.
This isn't to say that automotive engineers have given up on magnesium. ASM International's Ground Transportation Committee has focused its technical program on magnesium, aluminum, titanium and ultra-high-strength steels. Arianna Morales, staff researcher at General Motors based in Warren, Mich., and chair of the committee says in a statement, "the materials showing the way to future vehicles may be light in terms of weight, but they are far from 'lightweight' in importance." She says these metals—especially magnesium—will be critical to meeting new U.S. government mandated fuel economy standards of 36 miles per gallon for passenger cars by the year 2014.
"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 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 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.