Magnesium Prices Consolidate Amid Coal Price Fluctuations, End-use Demand Weakness Drags Down Rise [SMM Magnesium Weekly Review]

1 Market Review

1 Dolomite

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

This week, delivered prices of dolomite remained generally stable. Affected by the continued production halt at major large dolomite mines in the Wutai area, local supply of high-quality material remained tight, and primary magnesium smelters gradually shifted their procurement focus outward, turning to Hebi in Henan, Datong in Shanxi, Shiyan in Hubei, and other areas to supplement supply. As multi-channel replenishment continued to arrive, overall market supply was relatively ample, and prices showed no significant fluctuations, maintaining a firm trend.

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

This week, magnesium prices held up well. As of press time, mainstream quotations for 99.90% magnesium ingot in main producing areas were 15,900-16,000 yuan/mt, down 50 yuan/mt WoW.

This week, magnesium ingot prices showed a rise-then-fall trend. At the start of the week, driven by sharp increases in raw material prices such as coal and ferrosilicon, primary magnesium smelters held firm quotations, and magnesium prices rose sharply, briefly shooting up to 16,200 yuan/mt, hitting a weekly high in tandem with coal prices. However, as magnesium prices continued to climb, downstream fear of high prices intensified, purchase willingness weakened significantly, and market transactions turned sluggish. Subsequently, coal prices pulled back sharply, triggering panic sentiment in the magnesium market, and suppliers' willingness to sell increased, causing magnesium prices to fall rapidly. As of press time, magnesium ingot prices had fully given back last week's gains and returned to pre-rise levels. Overall, this week's magnesium price fluctuations were mainly driven by coal price movements on the raw material side, and market sentiment volatility intensified amid the tug-of-war between sellers and buyers, with a short-term consolidating pattern likely to continue.

1.2.2 Magnesium Ingot (Tianjin Port - FOB China)

This week, FOB China prices were quoted at $2,270-2,370/mt, with an average of $2,320/mt. This week, FOB magnesium ingot prices pulled back slightly overall, down $10/mt WoW.

This week, the magnesium ingot foreign trade market rose first and then fell, with the decline exceeding earlier gains, ending slightly lower overall. With no significant recovery in external demand, FOB prices mainly followed domestic EXW prices and exchange rate fluctuations. Some export traders holding inventory sold off previously low-priced cargoes when prices rose, while others remained on the sidelines. Recent wild swings have caused losses for some traders, further intensifying the wait-and-see sentiment in the market. Meanwhile, export orders did not improve after the overseas summer break, and the traditional "September-October peak season" expectations fell through, with only a small amount of tentative inquiries and difficulty in closing actual deals. The magnesium ingot foreign trade market is expected to remain in the doldrums in the short term.

1.3 Magnesium Powder

This week, mainstream tax-inclusive EXW prices for 20-80 mesh magnesium powder in China were 17,150-17,250 yuan/mt; FOB China prices were $2,430-2,530/mt.

This week, China's magnesium powder market consolidated following upstream magnesium ingot prices, maintaining a subdued pattern overall. In terms of prices, magnesium powder quotations were based on magnesium ingot raw material costs plus processing fees, while processing fees remained under pressure, leaving large room for negotiation in actual transactions with low downstream acceptance. On the supply side, insufficient end-use demand suppressed powder producers' production enthusiasm, and some enterprises cut production to control output, but inventory pressure from earlier stockpiles persisted. On the demand side, domestic steel mills maintained only just-in-time procurement for desulfurization, demand in other sectors was mediocre, and peak season expectations fell short. Overall, before downstream orders show substantive improvement, the magnesium powder market is expected to consolidate on a weak note.

1.4 Magnesium Alloy

This week, mainstream tax-inclusive EXW prices for magnesium alloy in China were 17,800-18,100 yuan/mt, and mainstream FOB China prices were $2,595-2,675/mt.

This week, the magnesium alloy market was characterized by weak supply and even weaker demand, with processing fees remaining under pressure. On the supply side, some producers underwent maintenance shutdowns, but spot inventory accumulated earlier in the industry remained relatively ample, with sufficient market supply and fierce competition among peers. The demand side was a more significant drag, as some die-casting enterprises were forced to halt production for maintenance due to insufficient orders, with operating rates declining and directly reducing actual magnesium alloy consumption. Although smelters actively sought clients, results were minimal, overall order performance was weak, and inventory recently rose at a noticeably faster pace. Against the backdrop of simultaneous weakening on both supply and demand sides, pressure on processing fees became more pronounced, with processing fees consolidating on a weak note overall.

2 Weekly Summary

This week, the dolomite supply structure diverged, with local high-quality ore supply in Wutai remaining tight and enterprises purchasing from other provinces to supplement supply. Overall supply was ample, and prices remained stable. Driven by wild swings in coal prices, magnesium ingot in main producing areas rose first and then fell. At the start of the week, raw material costs pushed magnesium prices up sharply, but downstream clients reduced purchases due to fear of high prices, and subsequent coal price pullbacks caused magnesium ingot to give back all gains. FOB quotations in foreign trade edged down along with domestic prices, export orders fell short of expectations, September-October peak season demand failed to materialize, and traders maintained a strong wait-and-see sentiment. Downstream magnesium powder and magnesium alloy were also under pressure. Magnesium powder consolidated along with magnesium ingot, processing fees were under pressure, and downstream maintained only just-in-time procurement. Magnesium alloy saw weak supply but even weaker demand, with die-casting plant operating rates declining, inventory rising, and processing fees weakening. Overall, this week's magnesium industry chain market was primarily disrupted by coal cost fluctuations, end-use demand showed no substantive recovery, the entire industry lacked strong support, and the market is expected to maintain a consolidating on a subdued note pattern in the short term.