Magnesium Inventories Decline as Supply Slowly Ramps Up and Demand Increases

【SMM Weekly Magnesium Review】This week, the mainstream offer of magnesium ingots in major production regions stands at RMB 15,900-16,000/ton, up RMB 100/ton week on week, with FOB offer at USD 2,250-2,350/ton. This round of magnesium ingot rally is driven by three factors: supply-side maintenance-led production cuts, rising costs of coal and ferrosilicon, and concentrated order fulfillment and restocking by traders. However, after the price hike, downstream players have developed reluctance to chase high prices, leading to dull transactions; the foreign trade sector remains weak, constrained by exchange rate fluctuations and unclear recovery of orders amid the summer break. The price of upstream dolomite stays stable with sufficient supply from multiple channels; downstream magnesium powder and magnesium alloy follow the price hike but lack sufficient demand support. For magnesium alloy, processing fees remain under continuous pressure due to ample inventory, impact of non-standard supplies, high-temperature maintenance of die-casting enterprises, and plastic substitution in two-wheeled vehicles. In the short term, amid the game between cost support and sluggish demand, magnesium price will continue to fluctuate in a narrow range.

[SMM Weekly Magnesium Output Express] From August 7 to August 13, the weekly output of magnesium from national sample magnesium plants stood at 22,538 tons, with a weekly operating rate of 73.35%, up 1.91% month-on-month. According to research, a number of smelting enterprises in the main primary magnesium producing areas have resumed normal production, driving the market's primary magnesium output to rise steadily. As more magnesium smelters will gradually achieve stable and full production in the follow-up, the overall supply of primary magnesium is expected to maintain a continuous growth trend.

[SMM Magnesium Express]This week, social inventory of magnesium ingot rose 3.57% WoW, indicating slight inventory buildup. The magnesium ingot market was stable initially before strengthening this week, mainly due to stronger cost-side support—coal and ferrosilicon prices continued to climb, producers’ sentiment to hold prices firm increased accordingly, and market expectations for price declines weakened. Meanwhile, with some orders nearing delivery dates, traders made phased stockpiling purchases this week. However, of the volumes bought by traders this week, only a small portion flowed directly to domestic downstream end-users, while most was held in inventory to meet delivery needs in mid-to-late August. It was precisely this pace mismatch of “front-loaded procurement and delayed warehousing” that caused social inventory data to accumulate this week. Overall, the current inventory buildup is driven more by phased stockpiling behavior than by a substantial recovery in end-use demand. Going forward, cost-side trends and delivery pace still need to be watched for their further impact on inventory changes.