Magnesium Oxide Transform From Seller’s Market to Buyer’s Market

Magnesium oxide industry admittance threshold is high, therefore, in the past with the demand of cases, the upstream has strong bargaining power. In recent years, a large amount of magnesium oxide chemical plant put into production, upstream companies and raw material structure increasingly diversified, gradually to break the monopoly competition. Especially with China’s slowing economic growth, magnesium oxide demand slowdown becomes the new normal.

At present, magnesium oxide production industry is in the stage of reduced profits, which the supply is rapid increase and the demand grow slowdown. The increase in supply will continue down the new material price, and continuous extrusion feed back market share. Downstream bargaining power increase apparently, upstream production enterprise profits will be compressed further, the chemical industry gradually transformed into the buyer’s market. Though raw material prices down, but the terminal demand growth, the middle and lower reaches of enterprises especially traders profit will be markedly reduced.

In view of the above situation, the leader of Meishen Technology Co,.LTD said, traditional trader’s survival and the profit space are compressed, some enterprises has been forced to withdraw from the market this year. Current earnings is more and more difficult, traditional model of the past is zero profit or small profit, even faces the downstream factory default and the risk of bankruptcy.