Magnesium Prices Rise Due to Supply Cuts, Cost Hikes; Demand Weakness Limits Further Gains

【SMM Weekly Magnesium Inventory Express】This week, the inventory of primary magnesium smelting enterprises decreased by 2.20% month-on-month, and the overall primary magnesium market inventory showed a continuous downward trend this week. This round of inventory decline is mainly driven by two factors. On the one hand, although more enterprises in the main primary magnesium production areas resumed production this week and the total output of the industry was slightly adjusted upward, the resumption progress was relatively gentle, the overall increase in output was limited, and the supplementary strength of new supply to inventory was weak; on the other hand, downstream traders concentrated on restocking, coupled with the centralized fulfillment of pending orders in the early stage, the overall activity of the market trading atmosphere increased significantly, and the spot goods in the factory were greatly digested, which directly drove the rapid destocking of the factory-side inventory. Looking forward to the after-market, as the resumption rhythm of magnesium smelting enterprises continues to accelerate, the overall output of primary magnesium will further increase, and the pressure on the market supply side will gradually accumulate. By then, the inventory of magnesium plants is likely to end the current downward trend and usher in a situation of stopping the decline and rebounding.

[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.