Looking back at China’s magnesium market in the first half of 2026, the supply-over-demand dynamic shifted subtly amid earlier concentrated production shutdowns by magnesium smelters. Tight spot supply and low inventory levels created sound fundamental conditions for a periodic rally in magnesium ingot prices. Coupled with market sentiment stirred by news of surging magnesium alloy demand, speculative demand surged and purchasing sentiment across the market strengthened notably. Magnesium prices climbed in a stepped pattern in Q1. Heightened market expectations boosted production enthusiasm among magnesium producers, driving output steadily higher. By June 2026, China’s primary magnesium output reached 110,000 tonnes. Rising production amplified sales pressure on smelters. With both output and inventories climbing, magnesium prices trended downwards in stages in Q2, forming an overall inverted V-shaped price trajectory in the first half of the year.
Review of Primary Magnesium Output in H1
Primary magnesium output posted an overall upward trend with fluctuations in H1 2026. Shaanxi, Anhui, Xinjiang and other provinces led the growth in primary magnesium production. The operating rate in Shaanxi remained steadily above 85%, with regional primary magnesium output hitting nearly 70,000 tonnes by June 2026.
Domestic primary magnesium output rose markedly in June, registering a month-on-month increase of 5.97%. Smelters across major producing regions lifted output simultaneously, driven by two key factors. First, enterprises ramped up operations to full capacity to amortize fixed costs and cut the comprehensive per-tonne production cost of magnesium ingots. Second, fully integrated industrial chain enterprises maintained stable production to secure raw material supplies for internal consumption.
As a result, the overall industry operating rate edged higher.As the high-temperature summer arrives, concentrated maintenance schedules for domestic primary magnesium smelters are being rolled out, shifting market trading logic toward production-cut expectations. The industry is currently trapped in a delicate equilibrium featuring ample supply and weakening domestic and overseas demand. Subsequent magnesium price movements will hinge on the cyclical contest between two opposing forces: supply contraction triggered by summer maintenance in China, and shrinking external demand amid overseas summer vacations. Now that magnesium prices have fallen below the threshold of 16,000 yuan per tonne, further downside room has narrowed substantially, and the industry bottom is likely to form in early to mid-July.
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