Magnesium Prices Are Deep in the Mire, Caught in a Dilemma Between Rising and Falling; Who Will Become the Core Driving Force to Break the Current Deadlock? [SMM Analysis]

Looking back at the recent magnesium market, magnesium prices repeatedly fluctuated within the 16,600-16,700 range, with a relatively slow operating pace. Cost support for upstream primary magnesium producers has weakened, but their willingness to cut prices remained limited. Meanwhile, the long-standing inventory distribution pattern in recent periods has kept readily tradable spot cargoes scarce, and against the broader backdrop of surging demand in the magnesium alloy market, magnesium producers have shown a strong reluctance to sell. These three factors together have limited the downside room for magnesium prices. In addition, foreign trade demand was hit by hindered transportation caused by the conflict in the Middle East, severely affecting export procurement orders, and the post-holiday wave of export buying failed to materialize in time. On the domestic trade side, the procurement pace has been relatively loose, and no wave of concentrated procurement has yet formed. Judging from recent actual transactions, domestic demand has only provided basic support to the market, with relatively limited upward drivers. The magnesium market pattern of weak supply and demand on both sides has left magnesium prices lacking sufficient momentum for one-way fluctuations.

Geopolitical Conflict Disrupts the Energy Chain, Cost Support Keeps Magnesium Prices Holding Up Well

The ongoing escalation of geopolitical conflict in the Middle East has put the global energy supply chain under pressure, sending international oil and natural gas prices sharply higher and rapidly releasing substitute demand for coal. Stronger coal prices have provided solid cost support for magnesium prices. Magnesium smelting is a highly energy-intensive industry, and a rise in coal prices will directly push up the production cost per mt of magnesium, forcing enterprises to hold prices firm and sell reluctantly. In addition, currently low tradable inventory in China’s magnesium market, together with a phased contraction on the supply side, has further amplified the cost-driven effect, and magnesium prices may fluctuate upward. In addition, the geopolitical situation has pushed up ocean freight rates, leading to some reduction in export orders, but considering the gradual easing in ocean freight rates, inquiries from the European and Indian markets have rebounded slightly.

Stronger-Than-Expected Demand Ignites the Magnesium Market, Reluctance to Sell and Speculation Together Reshape Market Logic

The surge in magnesium alloy demand has disrupted market sentiment in two ways. First, on the sentiment side, the growth rate of magnesium alloy production in 2025 exceeded expectations, and the medium and long-term view on the magnesium market has remained broadly optimistic. As a result, primary magnesium smelters have shown a strong reluctance to sell, making large-scale cash-selling of magnesium ingot from the supply side unlikely, with strong support at the bottom of magnesium prices; in addition, the demand boom in the magnesium alloy market has attracted off-market participants to enter for stockpiling, and speculative demand has heated up. Caution is needed against low-price collapse caused by concentrated inventory sell-offs, which could limit the room for a price rebound. Second, on the fundamental side, the continued rise in magnesium alloy producers’ output has driven up procurement demand for magnesium ingot, significantly strengthening demand support for the magnesium market.                                      

High Supply Caps Magnesium Prices, Upward Resistance Is Significant

Compared with the market in the same period from 2025 to 2026, primary magnesium production increased sharply by 22,000 mt YoY, and overall market supply was significantly higher than in the same period last year. Although energy and auxiliary material costs remain elevated, smelters are still profitable.According to the survey, mainstream magnesium plants currently have no plans for centralized spring maintenance, operating rates remain high, market supply continues to be ample, and abundant supply has become the core factor constraining any rise in magnesium prices.