As currently envisaged, magnesium oxide industry in 2016 is expected to result a turning point.
One of the factors is that RMB exchange rate fluctuations in favor of magnesium oxide industry sales rebound. China is magnesium oxide production base in the world, especially in terms of light, food & pharmaceutical grade, silicon steel grade magnesium oxide products, have a strong competitive advantage. The fluctuations of the exchange rate make renminbi-denominated products increase competitiveness in global. Therefore, magnesium oxide exports have strong momentum, is expected to boost revenue related company sustained, rapid recovery.
The second factor is that lower interest rates will significantly reduce the financial costs. In 2015, China continued to cut interest rates five times, more than 5-year benchmark lending rate from 6.15% to 4.9%, which is no doubt that it is big benefits for magnesium oxide industry. Because the magnesium oxide industry is larger investment industry, with high capital investment, long payback period features. Naturally, this will greatly enhance the profitability of large companies.
The third factor is that raw material cost reduction. In 2015, due to the global economic slowdown and other factors, a sharp fall in global commodity markets, this provides an excellent opportunity for the development of magnesium oxide industry. Because magnesium oxide industry chain source mainly include magnesite, magnesium hydroxide and coal, and their price are falling in 2015 with the typical channel. Magnesium industry of raw materials procurement spending will be greatly decreased, which benefits the industry profitability.