Magnesium Ingot Prices Hold Up Well, Boosting the Market, While Weak Demand Restricts Downstream Price Gains [SMM Magnesium Weekly Review]

1 Market Review

1 Dolomite

This week, the ex-works tax-exclusive price of 1-3 cm dolomite (Wutai) was 128 yuan/mt, flat WoW, and the ex-works tax-exclusive price of 2-4 cm dolomite (Wutai) was 158 yuan/mt, flat WoW.

This week, delivered dolomite prices were generally stable. The large dolomite mines in the core area of Wutai remained suspended, forcing primary magnesium smelters in the main production areas to change their procurement direction and seek raw material sources from outside the region. Hebi Investment Group recently reached a cooperation intention with magnesium plants in Fugu on securing dolomite supply, and planned to lock the tax-included delivered price of Hebi dolomite below 170 yuan/mt and improve regional logistics conditions to ensure long-term supply. At this stage, overall dolomite supply in the market was ample, and supplies from multiple channels were sufficient, resulting in no price fluctuations and keeping prices firm and stable.

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

This week, magnesium prices held up well. As of press time, mainstream quotations for 99.90% magnesium ingot in the main production areas were 15,900-16,000 yuan/mt, up 100 yuan/mt WoW.

This week, primary magnesium spot prices consolidated on a strong note. Looking back at the driving forces behind this round of increases, support came mainly from three aspects. Supply side, concentrated maintenance was implemented across the industry, primary magnesium supply contracted, and producer inventories were at relatively low levels; producers proactively held back from selling and locked up cargoes, boosting spot quotations. Cost side, coal and ferrosilicon prices strengthened, while semi-coke showed a weaker trend; overall smelting production costs rose, providing strong bottom support for magnesium prices. Demand and distribution side, traders restocked in a concentrated manner near delivery deadlines, spot transactions increased, and demand effectively strengthened, boosting magnesium prices steadily higher.

1.2.2 Magnesium Ingot (Tianjin Port - China FOB)

This week, China FOB prices were quoted at $2,250-2,350/mt, with an average of $2,300/mt. This week, FOB prices for magnesium ingot showed a stable-then-strong trend, up $10/mt WoW.

This week, the magnesium ingot export market was first stable and then strengthened. The rise in FOB quotations was mainly driven by stronger domestic ex-works magnesium ingot prices: traders' procurement costs rose, and selling prices were forced to increase accordingly. However, frequent exchange rate fluctuations weakened export activity, resulting in limited adjustments in some FOB prices and a simultaneous decline in low-priced cargoes. Demand side, overseas summer breaks should have gradually ended in mid-to-late August, but signs of order recovery were not yet obvious, and market transactions remained mediocre. After an extended period of sluggishness, traders turned more cautious, and their willingness to take low-priced orders or grab orders weakened noticeably. Overall, costs pushed quotations higher, but demand-side support was weak. In the short term, the export market is expected to continue moving sideways in a narrow range.

1.3 Magnesium Powder

This week, mainstream tax-inclusive ex-works prices for 20-80 mesh magnesium powder in China were 17,150-17,250 yuan/mt; China FOB prices were $2,410-2,510/mt.

This week, the magnesium powder market followed the stronger ex-works magnesium ingot prices and held up well. Magnesium ingot prices edged up, lifting raw material costs for magnesium powder. Producers raised their quotations in tandem, and the cost side provided strong support. However, downstream demand remained dull. Steel mill desulfurization, titanium dioxide and other sectors lacked support from new orders, and enterprises had limited acceptance of higher-priced cargoes. Transaction follow-through was insufficient, and magnesium powder prices only adjusted slightly, without any notable recovery or trend-like upward market. Overall, costs pushed quotations higher, while weak demand limited the increase. In the short term, the magnesium powder market is expected to continue moving sideways in a narrow range.

1.4 Magnesium Alloy

This week, mainstream tax-inclusive ex-works prices for magnesium alloy in China were 17,900-18,200 yuan/mt, and mainstream FOB prices for magnesium alloy in China were $2,590-2,670/mt.

This week, magnesium alloy prices followed the upstream magnesium ingot trend and consolidated on a strong note, but magnesium alloy processing fees were under significant pressure. In particular, supply side, although some magnesium alloy producers suspended production for maintenance, spot inventories accumulated earlier in the industry were ample, market supply was sufficient, and price competition among peers was intense. In addition, delivered quotations for magnesium alloy produced from some non-standard raw materials circulating in the market were below mainstream market prices, further intensifying supply-side involution pressure. The demand-side drag was more pronounced. Downstream die-casting enterprises scheduled production halts for maintenance due to high temperatures, and operating rates declined. Moreover, the two-wheeled electric vehicle industry replaced a large amount of parts with plastic parts, directly weakening actual magnesium alloy consumption. Simultaneous weakness in both supply and demand was the core feature of this week's magnesium alloy market, and processing fees remained under pressure.

2 Weekly Summary

This week, mainstream quotations for magnesium ingot in the main production areas were 15,900-16,000 yuan/mt, up 100 yuan/mt WoW, and FOB prices were $2,250-2,350/mt. This round of increases in magnesium ingot prices was driven by three factors: supply-side maintenance and production cuts, higher coal and ferrosilicon costs, and concentrated restocking by traders before delivery deadlines. However, after the price increases, downstream fear of high prices emerged and transactions returned to mediocre levels. Export trade was constrained by exchange rate fluctuations and unclear order recovery after the summer break, and remained weak. Upstream dolomite prices were stable, with sufficient supply from multiple channels. Downstream magnesium powder and magnesium alloy followed the increase but demand follow-through was insufficient. Magnesium alloy was affected by ample inventories, the impact of non-standard cargoes, high-temperature maintenance at die-casting enterprises, and substitution of plastics in two-wheelers, leaving processing fees under continued pressure. In the short term, with cost support and weak demand in a tug of war, magnesium prices are expected to continue moving sideways in a narrow range.