Optimistic Outlook of Magnesium Oxide Manufacturer

   As a whole, the global magnesium oxide market has no obvious shortage of supply. Since 1990, any rise in price did not leaded by accelerated market requirement. Recently, the magnesium oxide’s price is increasing. However, the primary cause of this time is that the domestic magnesium oxide manufacture reduced capacity in the last year. It leaded the market has sense of hunger in the short run. In addition, there are some other causes to boost magnesium oxide’s price: appreciation of the RMB, the limit production of domestic and foreign magnesium oxide manufacturers, rising cost of raw materials, rising cost of environmental protection and others.

   Therefore, Meishen Technology thinks that the price of magnesium oxide is likely to remain high in short time. Except for the high pure magnesium oxide, the living space of most magnesium oxide manufacturers and medical intermediates get profit margin through low price of environmental protection cost and labor cost.

   The large-scale magnesium oxide business was pushed into a growing passageway by broad market space, the integration and expansion of industry, the improvement of enterprise profitability analysis and industrial policies. The orientation of magnesium oxide suppliers and manufacturers gradual change to “channel service provider” from “hamal”. What’s more, the profit model of it will change to provide more add value service from the simple price parities between the wholesale and retail trades. After improving efficiency of service and increasing class of service, the trade value of magnesium oxide production and marketing channel was improved a lot. After the industry's profitability return normal, there are some factors to improve the profitability of magnesium oxide suppliers, these factors are gross margins, scale effect and efficiency of operation. In addition, this tendency is irreversible.

   The supply and manufacture of magnesium oxide will move to oligopoly. The enhancement of produce concentration degree increases enterprises’ bargaining power. At the same time, in the magnesium oxide industry chain, the enhancement of production and marketing business’ concentration ratio in the middle will be faster than the upstream and down stream businesses. Extending the industrial chain of upstream and downstream can improve the position and profitability and take full advantage of existing channel resource.