Dual Weakness in Supply and Demand Dominates Magnesium Price Trends, with Structural Divergence Across Segments [SMM Magnesium Weekly Review]

1 Market Review

1 Dolomite

This week, the ex-factory prices excluding tax for 1-3 cm dolomite (Wutai) were 108 yuan/mt, basically flat WoW, while those for 2-4 cm dolomite (Wutai) were 138 yuan/mt, basically flat WoW.

This week, the China dolomite market operated steadily overall. Supply side, the market showed regional structural divergence. Top-tier enterprises in the Wutai area remained shut down, but local raw material inventory provided strong support for market supply. Coupled with timely follow-up supply additions from other major producing areas, nationwide overall supply remained stable. Demand side, the operating rate of primary magnesium enterprises in the main producing areas of Shaanxi, Shanxi, and Inner Mongolia remained steady, with rigid demand released in an orderly manner. Enterprises held sufficient raw material inventory, and the overall procurement pace was relatively prudent. Overall, based on supply and demand fundamentals, China dolomite market prices remained mainly stable.

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

This week, magnesium prices consolidated at highs. As of press time, mainstream transaction prices for 9990 magnesium ingot in the main producing areas were stable at 16,650 yuan/mt, basically flat WoW.

This week, magnesium prices in the main producing areas fluctuated rangebound. Looking back at this week's magnesium market, the magnitude of price changes continued to narrow, with transaction prices hovering around the quotation range of 16,600-16,700 yuan/mt, and the market stalemate in supply and demand intensified. In terms of weekly transaction volume, overall trading showed mediocre performance, with only a few trading days seeing relatively active deals, mainly due to the phased shipments pace of smelters. The concentrated emergence of low-priced cargoes provided some stimulus to transactions. In terms of regional trading patterns, sellers in the main producing areas of magnesium ingot showed strong reluctance to sell this week, and producer quotations were generally firm. Ningxia and Shenmu in Shaanxi became important supplementary sources of magnesium ingot supply for the market. Overall, the market showed a weak supply and weak demand pattern this week, with insufficient momentum for unilateral fluctuations in magnesium prices, which continued to fluctuate rangebound.

1.2.2 Magnesium Ingot (Tianjin Port - China FOB)

This week, China FOB prices were quoted at $2,410-2,450/mt, with an average price of $2,430/mt. Magnesium ingot FOB quotations loosened slightly this week.

This week, both magnesium ingot FOB quotations and the actual transaction center edged down into the lower end of the market range, at around $2,400-2,420/mt. Some traders said new orders remained limited this week, but as ocean freight rates gradually eased, inquiries from the European and Indian markets rebounded slightly. Downstream enterprises still held bullish expectations for the magnesium market, and some forward tender orders are expected to be released one after another in the near term. Overall, foreign trade market orders are expected to gradually increase in volume.

1.3 Magnesium Powder

This week, mainstream tax-included ex-factory prices for 20-80 mesh magnesium powder in China were 17,850-18,050 yuan/mt; China FOB prices were $2,570-2,610/mt.

This week, the magnesium powder market generally held up well. Affected by fluctuate rangebound raw material prices, magnesium powder quotations remained firm. Recently, export orders were gradually finalized, and demand from magnesium powder enterprises to procure magnesium ingot increased, forming strong support on the raw material side and driving magnesium prices to remain firm. Since March, the operating rate of the magnesium powder industry has gradually rebounded, with supply steadily recovering; the domestic trade market maintained a pace of purchasing as needed and moderate stockpiling.

1.4 Magnesium Alloy

This week, the mainstream tax-inclusive ex-factory prices of magnesium alloy in China were 18,750-19,050 yuan/mt, and the mainstream FOB prices of magnesium alloy in China were $2,780-2,850/mt.

This week, magnesium alloy prices generally remained stable, while low-priced cargoes emerged periodically in the market. In terms of supply, the operating rate of top-tier magnesium alloy enterprises steadily rebounded, and with new capacity coming on stream successively, market supply increased significantly, expanding the room for negotiated discounts on some spot transactions. In terms of demand, downstream die-casting enterprises had gradually depleted their pre-holiday inventory and mainly restocked for just-in-time procurement, with moderate market transactions. Overall, the current magnesium alloy market showed a pattern of strong supply and weak demand, and magnesium alloy prices are expected to remain in the doldrums.

2 Weekly Summary

This week, price trends across various products in China’s magnesium industry chain diverged, while the overall market maintained a core tone of stability with rangebound fluctuations. The stalemate in supply and demand was prominent, and momentum for a unilateral market move was insufficient. The upstream dolomite market remained stable. Although a top-tier enterprise in the Wutai area suspended production, raw material inventory was sufficient, replenishment from capacity in major producing areas was timely, and coupled with the steady pace of just-in-time procurement by primary magnesium enterprises, prices remained stable without fluctuations. As the core product, magnesium ingot prices in China’s major producing areas consolidated at high levels, mainstream transaction prices remained stable, market transactions showed mediocre performance, and producers had strong reluctance to sell. Under the pattern of both weak supply and demand, quotations fluctuated rangebound. On the export side, FOB quotations loosened slightly. Along with the pullback in ocean freight rates, inquiries from outside China recovered slightly, and there were expectations for long-term order placements. Supported by raw materials and boosted by the entry of export orders, the magnesium powder market maintained firm quotations and held up well. In March, the industry’s operating rate gradually recovered, and support from the demand side became more evident. Magnesium alloy market prices generally remained stable. On the supply side, with the rebound in operating rates of top-tier enterprises and the gradual release of new capacity after commissioning, supply increased progressively; downstream buyers mainly restocked for just-in-time procurement, showing a pattern of strong supply and weak demand. Prices are expected to remain in the doldrums going forward. Looking across the entire industry chain, there were no significant changes in current market fundamentals, and in the short term the market will still mainly see steady fluctuations with localized fine-tuning.