Sources reported that such “middlemen” procured magnesium from producers, thus reducing plants’ stocks and pushing up prices, and then sold the material to exporters which needed to fulfil overseas contracts.
Traditionally, Chinese magnesium exporters, most of which were ordinary traders, purchased materials from producers after signing contracts with overseas buyers. Sources told Fastmarkets that traders usually would not purchase material from the domestic market immediately they had secured an overseas contract, but only started to look for material about two weeks before the date for shipment, so as to obtain discounted prices from the producers.
But with the emergence of middlemen into the scenario, the domestic Chinese magnesium market was exhibiting a new trading dynamic, and Fastmarkets was told that it has become increasingly difficult for exporters to do business.
Profit driving new market dynamic
Opportunities for profit provided the driving force behind the creation of these new middlemen.