Post-Holiday Magnesium Market Holds Up Well, Raw Material Divergence Leads to Tighter Supply, Intensified Competition Between Domestic and Foreign Trade [SMM Magnesium Weekly Review]

1 Market Review

1 Dolomite

This week, the ex-factory price, excluding tax, for 1-3 cm dolomite (Wutai) was 108 yuan/mt, flat WoW, while that for 2-4 cm dolomite (Wutai) was 138 yuan/mt, also flat WoW.

The domestic dolomite market held up well this week. Supply side, regional structural impacts were significant; top-tier enterprises in the Wutai area remained idled, while other major producing regions promptly supplemented volumes, keeping overall supply stable. Demand side, operating rates at primary magnesium enterprises in the key Shaanxi-Shanxi-Inner Mongolia production region remained steady, with rigid demand being released in an orderly manner. Enterprise inventory was generally sufficient, providing solid support for the futures. As the Chinese New Year holiday nears its end, logistics and transportation demand is expected to pull back, leading to lower freight rates and subsequently reducing the delivered cost of dolomite. Prices for delivered dolomite are expected to drop back slightly.

1.2 Magnesium Ingot

1.2.1 Magnesium Ingot (Fugu, Shenmu - Major Production Areas)

Magnesium prices held up well this week. As of press time, the mainstream transaction price for 99.90% magnesium ingot in the major production areas stabilized at 16,600 yuan/mt, up 200 yuan/mt WoW.

Domestic magnesium prices continued to hold up well this week, primarily driven by structural contraction on the supply side. Primary magnesium smelters in the major production areas showed a strong willingness to hold back shipments, coupled with ample pre-holiday futures presale orders, leading to tight spot market availability. Transactions were mainly scattered in Ningxia, Shaanxi, and other regions. Demand side exhibited a divergence between domestic and overseas trade. Domestically, mainstream aluminum plants had completed stockpiling before the holiday, covering needs until after the Lantern Festival, resulting in low current procurement willingness; however, some magnesium alloy plants entered the market for restocking after the holiday, providing just-in-time procurement support. Overseas, major clients had mostly locked in forward orders in advance, leaving the current market dominated by spot just-in-time procurement. Overall, weakened shipment willingness from smelters led the market supply-demand pattern to exhibit characteristics of temporary undersupply, pushing magnesium prices slightly higher.

1.2.2 Magnesium Ingot (Tianjin Port - FOB China)

This week, the FOB China price was quoted at $2,400-2,450/mt, averaging $2,425/mt. Post-holiday FOB quotations continued to rise, with traders quoting more cautiously.

Overseas market inquiries were relatively active this week, as European traders gradually released backlog orders. However, persistently high ex-factory prices, combined with intensified volatility in March ocean freight rates, made traders more cautious in their quotations, generally leaning towards the higher end of the range. Downstream procurement mostly adopted a wait-and-see attitude. Order volume is expected to increase as the traditional March procurement season approaches, with a peak in new overseas orders anticipated from late February to early March. The market is currently in a post-holiday adjustment phase, with the tug-of-war between sellers and buyers intensifying. Subsequent trends warrant close attention to the pace of European inventory digestion and changes in ocean freight rates.

1.3 Magnesium Powder

This week, the mainstream tax-inclusive ex-factory price for 20-80 mesh Chinese magnesium powder was 17,550-17,950 yuan/mt; the Chinese FOB price was $2,560-2,610/mt.

Post-holiday, the magnesium powder market held steady overall. Supported by firm raw material quotations, magnesium powder prices edged up. The current market primarily focused on fulfilling previous orders, with new orders limited. For foreign trade, some new orders were expected to be placed soon; in the domestic trade market, as downstream enterprises had ample pre-holiday stockpiling, new procurement rounds were mostly planned to start after resuming work in March.

1.4 Magnesium Alloy

This week, the mainstream tax-inclusive ex-factory price for Chinese magnesium alloy was 18,700-19,000 yuan/mt, and the mainstream FOB price for Chinese magnesium alloy was $2,670-2,730/mt.

This week, the domestic magnesium alloy benchmark price held up well, and processing fees remained stable and firm. Cost side, the weekly average price of core raw material magnesium ingot edged up, while auxiliary material A00 aluminum ingot fluctuated at highs, providing strong support to overall costs. Affected by the magnesium-aluminum price spread, the spread between AZ91 and AM50, AM60 maintained at 200 yuan/mt. Supply and demand, magnesium alloy producers operated normally overall, with most alloy enterprises still prioritizing scheduled production. The market's tight supply-demand balance continued to strongly support processing fees, keeping magnesium alloy processing fees firm.

2 Weekly Summary

This week, the magnesium industry chain showed a pattern of holding up well overall, with prices of various varieties rising slightly. Raw material side, the dolomite market was stable with some increases. Top-tier enterprises in Wutai area remained shut down, but other production areas filled the gap timely, ensuring stable overall supply. With the holiday over, logistics costs were expected to pull back, leading to a slight decrease in subsequent delivery-to-factory prices. The magnesium ingot market held up well, with offers in main production areas raised to 16,600 yuan/mt. Strong reluctance to sell on the supply side, combined with ample pre-holiday presales, led to tight spot circulation. Domestic trade restocking for rigid demand supported transactions, while foreign trade inquiries were active but actual orders were cautious, pushing FOB offers higher to $2,400-2,450/mt. The magnesium powder market held steady; supported by raw materials, prices edged up slightly, focusing mainly on fulfilling previous orders. New foreign trade orders were expected to be placed successively, while domestic trade procurement was mostly planned to start in March. The magnesium alloy market benchmark price held up well, with processing fees stable and firm; enterprises primarily focused on scheduled production, and the tight supply-demand balance continued. Overall, post-holiday, the magnesium market was in an adjustment phase. Structural contraction on the supply side supported prices, and competition between domestic and foreign trade intensified. Subsequent attention should be paid to the pace of European inventory digestion and changes in ocean freight rates.