Upstream Holds Back from Selling While Downstream Waits; Magnesium Ingot Slowly Declines Amidst Bargaining [SMM Magnesium Weekly Review]

1 Market Review

1 Dolomite

This week, the EXW price excluding tax for 1-3 cm dolomite (Wutai) was 128 yuan/mt, flat WoW, and the EXW price excluding tax for 2-4 cm dolomite (Wutai) was 158 yuan/mt, flat WoW.

This week, delivered prices for dolomite operated steadily overall. Affected by the continued production suspension of the core large-scale dolomite mine in the Wutai area, local high-quality supply was tight, prompting primary magnesium smelters to shift procurement focus to Hebi in Henan, Datong in Shanxi, Shiyan in Hubei, and other sources. With continuous replenishment from multiple channels, the overall supply of dolomite in the current market was ample, and prices did not show significant fluctuations, maintaining a firm and stable trend.

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 the main production areas was 15,800-15,900 yuan/mt, down 100 yuan/mt WoW.

This week, magnesium ingot prices showed a stepwise downward trend, with a strong tug-of-war between downstream reluctance to buy high and upstream reluctance to sell. At the beginning of the week, primary magnesium smelters were more inclined to hold back from selling, while downstream mainly adopted a wait-and-see attitude, resulting in sluggish overall transaction volume. Smelters faced increasing inventory buildup pressure in the first half of the week. Meanwhile, smelters that had undergone maintenance earlier in the week basically resumed production, leading to ample spot supply on the supply side. Dragged by spot pressure, some smelters successively reduced prices to stimulate transactions. However, supported by cost support, smelters were generally rational in price reductions, limiting the decline in magnesium prices, which exhibited a slow stepwise downward trend.

1.2.2 Magnesium Ingot (Tianjin Port – China FOB)

This week, the China FOB price was quoted at $2,250-2,350/mt, with an average of $2,300/mt. Magnesium ingot FOB prices remained stable overall this week, with no significant fluctuations compared to the previous week.

This week, the foreign trade market for magnesium ingot operated stably overall. On the supply side, domestic magnesium ingot prices fluctuated within a limited range, with market transactions mainly driven by just-in-time procurement. Under the dual game of cost and inventory, magnesium smelters showed low willingness to sell at concessional prices, and low-priced cargo was scarce, causing traders to adopt a wait-and-see attitude. On the demand side, the summer break outside China was gradually ending. Although inquiries recovered somewhat, actual orders remained low, and downstream clients pushed significantly for lower prices. Coupled with factors such as exchange rate fluctuations, traders' enthusiasm for quoting and taking orders was notably suppressed, and the foreign trade market overall operated in the doldrums. In the short term, it is expected that by month-end, with the release of contract-related procurement demand and further increases in inquiries, the foreign trade market may see a phased recovery.

1.3 Magnesium Powder

This week, the mainstream EXW price including tax for 20-80 mesh Chinese magnesium powder was 17,050-17,150 yuan/mt; the China FOB price was $2,410-2,510/mt.

This week, the transaction center of gravity in the magnesium powder market shifted slightly downward. The mainstream EXW price for 20-80 mesh regular magnesium powder was 17,050-17,150 yuan/mt. Profit margins for magnesium powder processors narrowed, and many enterprises focused on maintaining orders and stabilizing operating rates, showing weak willingness to adjust prices proactively. On the demand side, just-in-time procurement for steel desulfurization was relatively low, with most execution on previous contracts and replenishment on an as-needed basis, without any growth release. Export magnesium powder inquiries remained sluggish, as the summer break outside China was not yet fully over, and overseas clients mostly postponed large-scale purchases. Moreover, raw material magnesium ingot prices weakened at the current stage, causing downstream to maintain a wait-and-see sentiment and delay restocking pace. In the short term, no wild swings are likely for magnesium powder, and the market is expected to continue following magnesium ingot trends.

1.4 Magnesium Alloy

This week, the mainstream EXW price including tax for Chinese magnesium alloy was 17,750-18,100 yuan/mt, and the mainstream FOB price for Chinese magnesium alloy was $2,580-2,660/mt.

This week, magnesium alloy prices consolidated on a strong note along with upstream magnesium ingot, but the processing fee was notably under pressure. In terms of supply, although some magnesium alloy producers suspended production for maintenance, the industry's previously accumulated spot inventory was still relatively ample, with sufficient market supply and fierce competition among peers. On the demand side, the drag was more pronounced. Downstream die-casting enterprises arranged production suspensions and maintenance due to high temperatures, leading to a decline in operating rates. Additionally, the widespread replacement of magnesium alloy parts with plastic parts in the two-wheeled electric vehicle industry directly reduced actual consumption of magnesium alloy. The simultaneous weakening of both supply and demand constituted the core characteristics of the magnesium alloy market this week, with processing fees continuing to be under pressure.

2 Weekly Summary

This week, magnesium prices were in the doldrums. As of press time, the mainstream quotation for 99.90% magnesium ingot in the main production areas was 15,800-15,900 yuan/mt, down 100 yuan/mt WoW. Magnesium series products showed a divergent operating pattern overall this week. Dolomite prices were stable; the continued production suspension of core mines in Wutai drove smelters to shift procurement outward, and ample supply from multi-channel replenishment kept prices firm. Magnesium ingot showed a stepwise downward trend, with intense games between upstream hold-back and downstream wait-and-see. Inventory buildup pressure combined with maintenance resumptions made spot supply abundant; smelters reduced prices to stimulate transactions, but cost support limited the decline. The foreign trade market was in the doldrums, and a phased recovery is expected by month-end with the release of contract-related demand. Magnesium powder's transaction center of gravity shifted slightly downward, with both domestic demand and exports weak, and the market followed magnesium ingot. Magnesium alloy consolidated on a strong note along with magnesium ingot, but processing fees remained under pressure amid weak supply and demand. Overall, the magnesium series market is expected to continue consolidating on a weak note in the short term, with core games between cost support and sluggish demand.