Magnesium Market Holds Up Well as Cost Support and the Tug-of-War Between Sellers and Buyers Continues [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.

This week, the Chinese dolomite market remained generally stable. Supply side, dolomite production in the Wutai area remained suspended, with dolomite plants in surrounding counties providing supply support. It was learned that the ex-factory price of dolomite in Yaoshan, Shanxi was basically flat with quotations in Wutai, with the ex-factory price excluding tax for 1-3 cm material at 110 yuan/mt and that for 2-4 cm material at 140 yuan/mt, indicating overall ample market supply. Demand side, primary magnesium smelters in Shaanxi and Shanxi maintained stable operations, providing notable support to market demand. Overall, the dolomite market was in supply-demand balance, and dolomite prices are expected to remain stable going forward.

1.2 Magnesium Ingot

1.2.1 Magnesium Ingot (Fugu, Shenmu - Main Producing Areas)

This week, magnesium prices consolidated at highs. As of the time of writing, mainstream transaction prices for 99.90% magnesium ingot in the main producing areas were stable at 17,000 yuan/mt, up 350 yuan/mt WoW.

This week, magnesium prices in the main producing areas held up well. Looking back at this week's magnesium market, prices climbed steadily at the beginning of the week, with market quotations jumping 300 yuan/mt in a single day. Subsequently, fear of high prices among downstream buyers intensified, and market transactions followed up weakly, leaving magnesium prices fluctuating at highs. Specifically, regarding the drivers behind this week's magnesium price increase, geopolitical disruptions in the Middle East were pronounced this week. At the beginning of the week, ferrosilicon and coke futures fluctuated at highs amid rising energy prices. Supported by cost support and factors such as tight spot availability at certain stages, magnesium prices consequently gained stronger upward momentum.

1.2.2 Magnesium Ingot (Tianjin Port - FOB China)

This week, China's FOB price was quoted at $2,450-2,510/mt, with an average price of $2,480/mt. FOB quotations for magnesium ingot edged up this week.

This week, driven by further firmness in domestic ex-factory prices, export quotations and transaction center for magnesium ingot moved up to $2,440-2,470/mt. Since late March, export orders had generally remained on the sidelines, but due to strong cost support, coupled with a demand boost from domestic magnesium alloy demand, the Chinese market was broadly bullish on ex-factory prices for magnesium ingot, with expectations that this trend may continue into Q2 and Q3. Affected by this, overseas rigid-demand orders were released one after another, and some forward orders had already begun locking in cargoes for Q3.

1.3 Magnesium Powder

This week, mainstream tax-included ex-factory prices in China's 20-80 mesh magnesium powder market were 18,150-18,350 yuan/mt; China's FOB prices were $2,620-2,660/mt.

This week, magnesium powder prices extended their firm trend. Supported by continued increases in raw material magnesium ingot prices, cost support strengthened, and magnesium powder prices are expected to be more likely to rise than fall this week. Export data from January to February showed cumulative magnesium powder exports up 10.3% YoY. As foreign trade orders were gradually finalized, magnesium powder enterprises increased demand for purchasing magnesium ingots, providing strong support to the raw material side and keeping magnesium prices firm. At present, the operating rate of the magnesium powder industry steadily rebounded, supply recovered in an orderly manner, and overall inventory remained low, with enterprises mainly producing based on demand; the domestic trade market continued at a pace of just-in-time procurement and moderate stockpiling.

1.4 Magnesium Alloy

This week, the mainstream tax-inclusive ex-factory prices of magnesium alloy in China were 19,100-19,400 yuan/mt, and the mainstream FOB prices of magnesium alloy in China were $2,840-2,910/mt.

This week, magnesium alloy benchmark prices held up well, while processing fees remained in the doldrums. Supply side, as the operating rate of top-tier enterprises steadily rebounded and new capacity was gradually commissioned, market supply increased significantly, and bargaining room for some spot deals widened somewhat; demand side, downstream die-casting enterprises had basically digested their pre-holiday inventory, and at this stage mainly restocked for just-in-time needs, with overall market transactions remaining stable. At present, the magnesium alloy market as a whole showed a pattern of strong supply and weak demand, and prices are expected to remain in the doldrums.

2 Weekly Summary

This week, the magnesium industry chain as a whole held up well, with prices of all products generally raised. The raw material dolomite market operated steadily, with ample supply and stable demand. Magnesium ingot prices consolidated at highs. At the beginning of the week, supported by rising energy costs such as ferrosilicon and coke and tight circulating cargo availability, prices jumped by 300 yuan/mt; subsequently, fear of high prices emerged downstream, transaction follow-up was weak, and prices consolidated at highs. In foreign trade, the center of magnesium ingot FOB quotations moved up to $2,440-2,470/mt. Wait-and-see sentiment outside China remained strong, but affected by bullish expectations in China, forward orders were gradually locked in. Magnesium powder prices remained firm, with strong cost support, export data up YoY, and domestic trade mainly driven by just-in-time procurement. Magnesium alloy benchmark prices held up well, but the release of new capacity led to increased supply, processing fees remained in the doldrums, and the market showed a pattern of strong supply and weak demand. Overall, cost support remained the core driver of magnesium prices fluctuating at highs, while downstream acceptance of high prices was limited, and the market may continue in a tug-of-war in the short term.