Asian Metal meets Nemcon

Asian Metal London analyst, Mark Moore, met with Doug Hulse of Nemcon LTD, on 7th October 2013 whilst Doug was attending events in London for the LME week. Doug explained his background in metal trading originated from time with Wogen who he joined in 1985. Working with Wogen he was assigned magnesium and antimony, metals supplied by Russian agents who had debt with Wogen in lieu of payment. He developed his coverage of these markets and in 2001 Doug left Wogen to start Nemcon LTD devoting the business to magnesium, along with some other aluminium raw materials, partnered with Greenwich Metals Inc to act as the European arm of the business.

Doug and Mark discussed the magnesium markets, Doug noted that economic pressures in Europe have had some negative effects on the business conducted in recent years with some 2011 being one of the worst years recently. Doug noted through 2012 and 2013 volumes of magnesium ingots sold have steadily improved but margins remain thin, restricting the profit yield. Doug also noted the cancellation of the Chinese export duties on 1st January 2013 had a stalling effect on the markets in late 2012 with many buyers opting to wait and see if the duty was cancelled and if any new duty would be imposed.

Discussing the future of the magnesium ingot markets Doug noted the effect of currencies is having a growing impact on the prices, with many supply chains for magnesium ingot going from renminbi to US dollar to euro and possibly into other local European currencies, such as Great British pounds, means the price paid by the consumer can show significant fluctuation even when the EXW price from the producers remains stable. Doug noted many European buyers are pushing for contracts to be completed in euro’s, with some Chinese producers and traders now happy to skip the US dollar conversion.

Doug noted a saying in the magnesium industry of “magnesium has a bright future, it always has done and always will do,” a reference to the difficulty with getting manufacturers to use magnesium alloys over aluminium alloys. Doug explained prices is the main factor with the benefits of magnesium often being out weight by the higher cost, with the ratio of 1 to 1.5 coming into play.

Doug confirmed many of his suppliers in China use Asian Metals price quotations as their benchmark, confirming these are the most accurate prices seen in the market with other publications often seeing up to 50% variance from the price of concluded transactions.

Finally Doug confirmed that he is winding down the business of Nemcon as he approaches retirement with Greenwich metals currently looking for a new trader to take over operations in Europe.