The magnesium market's strong supply and weak demand is hard to reverse, and this week, the magnesium ingot market was in the doldrums [SMM Magnesium Weekly Review].

1 Market Review

1 Dolomite

This week, the EXW price (tax excluded) of 1-3 cm dolomite (Wutai) was 128 yuan/mt, unchanged WoW, and that of 2-4 cm dolomite (Wutai) was 158 yuan/mt, unchanged WoW.

This week, China’s domestic dolomite EXW quotations remained generally stable. Supply side, several large stone material enterprises in Wutai, Shanxi remained suspended due to environmental protection checks, tightening the supply of high-grade dolomite raw materials. Goods from Ordos, Inner Mongolia, Henan, and other regions were diverted for adjustment, while overall national inventory remained ample. Demand side, magnesium plants in Shanxi and Shaanxi maintained high operating rates, with just-in-time procurement providing bottom support. However, downstream users had ample earlier stockpiling, and the market only maintained a pace of purchasing as needed. Currently, the dolomite market shows obvious differentiation: local supply is tight while overall national supply is loose. Affected by the mutual checks of supply and demand, short-term prices are likely to remain stable.

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

This week, magnesium prices were in the doldrums. As of press time, the mainstream quotation for 99.90% magnesium ingot in main production areas was 15,950-16,050 yuan/mt, down 350 yuan/mt WoW.

This week, domestic magnesium ingot prices continued to fall, with the price center moving lower. After the holiday, information about low-price transactions during the Dragon Boat Festival gradually spread, and market pessimism gradually intensified. Primary magnesium smelters showed a growing inclination to sell, and the number of sellers in the market increased markedly. Coupled with strong sentiment among downstream clients of rushing to buy amid continuous price rise and holding back amid price downturn, market transactions were mainly for just-in-time restocking. Bargaining power gradually shifted toward buyers, market quotations loosened step by step, and magnesium prices showed a chronic decline. In summary, magnesium prices exhibited a supply-strong, demand-weak pattern this week, with prices falling again to around 16,000 yuan/mt.

1.2.2 Magnesium Ingot (Tianjin Port - FOB China)

This week, China’s FOB price was reported at $2,265-2,365/mt, averaging $2,310/mt. This week, quotations in the magnesium ingot foreign trade market were slightly on the low side overall, and influenced by the stable EXW prices, quotations were relatively steady.

This week, smelter quotations stabilized at 16,300 yuan/mt, but sentiment to hold prices firm was weak, and traders showed obvious bearish sentiment. Affected by this, FOB quotations were adjusted down to $2,300-2,330/mt at the start of the week. As the summer break approaches, overseas quarterly orders were not released as expected, and the market was likely still in a wait-and-see phase, lacking new demand support. Overall, foreign trade orders continued to be sluggish this week.

1.3 Magnesium Powder

This week, the mainstream tax-inclusive EXW price of 20-80 mesh magnesium powder in China was 17,200-17,300 yuan/mt; the FOB China price was $2,420-2,520/mt.

This week, the magnesium powder market followed magnesium ingot prices, first pulling back and then stabilizing. Overall demand was in the off-season, with enterprises mainly purchasing raw materials as needed. Domestic trade orders provided no boost, and after large-scale orders in Q1, new orders in overseas markets showed no significant improvement, leaving overall trading relatively sluggish.

1.4 Magnesium Alloy

This week, the mainstream tax-inclusive EXW price of magnesium alloy in China was 18,000-18,300 yuan/mt, and the mainstream FOB price of magnesium alloy in China was $2,620-2,700/mt.

This week, magnesium alloy prices followed the chronic decline trend of magnesium ingot prices. Cost side, both primary and auxiliary materials showed a chronic decline trend, with the magnesium-aluminum price spread narrowing to around 6,800 yuan/mt, and the processing cost of magnesium alloy trending downward. Supply-demand side, magnesium alloy smelters’ operating rates were stable, spot supply in the market was ample, and some magnesium alloy die-casting plants saw order reductions due to off-season effects. According to a sales manager at a die-casting plant, the operating rate of die-casting equipment for automotive orders was around 85%, while that for two-wheeler orders was only 30%, and previously produced two-wheeler die-casting parts were unsalable in inventory. Overall market demand showed mediocre performance. In summary, the magnesium alloy market exhibited a supply-strong, demand-weak pattern, and magnesium alloy processing fees were in the doldrums.

2 Weekly Summary

This week, domestic magnesium ingot overall drifted lower. The quotation for 99.90% magnesium ingot in Fugu and Shenmu was 15,950-16,050 yuan/mt, down 350 yuan/mt WoW. After the holiday, market pessimism spread, smelters actively sold, and downstream only made just-in-time purchases. Under the supply-strong, demand-weak conditions, prices continued to decline chronically. The average FOB Tianjin port price was $2,365/mt. Domestic smelters struggled to hold prices firm, and FOB quotations were adjusted down accordingly. As the summer break approached overseas, new orders were scarce, and foreign trade was sluggish. Dolomite cost support was limited, and magnesium powder and alloy weakened in tandem. Downstream off-season demand weakness dragged on the market. In the short term, magnesium ingot is expected to remain in weak consolidation.