Feeble Downstream Demand Constrains the Magnesium Sulphate Market Growth

Beijing, China: The manufacturing and shipment of several agrochemicals, including Magnesium Sulphate, have been impacted by high energy prices, the Russia-Ukraine conflict, and rising interest rates over the past few quarters. Magnesium Sulphate plays a pivotal role in the agrochemical industry. However, the overflowing inventories amid tepid demand from the downstream agrochemical sector have curtailed the positive development in Magnesium Sulphate costs in the regional markets at the start of 2023.

In the Chinese market, the prices of Magnesium Sulphate has observed to be on the lower end. Due to adverse weather conditions, the destocking of goods has been encouraged, and the prices have continued to decline. The ChemAnalyst database has shown that the price realizations of Magnesium Sulphate have plummeted by approximately 3% in January on a FOB basis. As per the market participants, the Magnesium Plant was shut down for maintenance before and after the Spring Festival Holidays. Moreover, the overall trading atmosphere was relatively tranquil, and the market has been digesting the existing inventories. However, with the arrival of the spring planting season, the downstream demand is likely to recover gradually.

On the other hand, strong and consistent US oil and natural gas production has outpaced demand through 2023, driving down Magnesium Sulphate prices. The seasonally mild weather in January has also contributed significantly to the sharp decline in natural gas demand. Due to weakened economic activity in the US, Europe, and some parts of Asia, crude consumption has also decreased recently, reflecting lower operating costs. The prices of Magnesium Sulphate declined both in Germany and USA last month.

According to ChemAnlayst, the price of Magnesium Sulphate might gain upward momentum in the coming months. The rise in consumption from the agriculture industries will spur the procurement of Magnesium Sulphate at a high level, leading to escalated quotations. The input cost pressures are also anticipated to ease in the German market as Berlin continues to look for alternatives to Russian fuel supplies. Advanced negotiations between Germany and Oman are underway to sign a long-term agreement for liquefied natural gas lasting at least ten years.