Pre-holiday Stockpiling Falls Short of Expectations, Magnesium Industry Chain Diverges and Runs in the Doldrums [SMM Magnesium Weekly Review]

1 Market Review

1 Dolomite

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

This week, domestic delivered prices of dolomite were generally stable, with mainstream quotations remaining firm and delivered prices concentrated at 170-180 yuan/mt. On the supply side, the core large dolomite mine in Wutai, Shanxi remained suspended, tightening the circulation of local high-grade ore and leaving regional supply relatively tight. As a result, primary magnesium smelters adjusted their procurement strategies, extending their purchasing radius to Henan Hebi, Shanxi Datong, and Hubei Shiyan as the main restocking sources. With external supply replenished, overall market supply became more ample, easing the earlier supply-demand imbalance, and delivered quotations across producing regions showed no notable fluctuations. In the short term, before mine resumption news becomes clear, dolomite prices are expected to remain stable.

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

This week, magnesium prices were initially weak and then strengthened. As of press time, mainstream quotations for 99.90% magnesium ingot in the main producing areas were 15,750-15,850 yuan/mt, down 50 yuan/mt WoW.

This week, domestic magnesium prices gradually consolidated at lows and moved sideways. At the beginning of the week, magnesium ingot prices extended the slow decline from last week. With the dual festivals approaching, primary magnesium smelters faced dual pressure from inventory and capital. To recover funds and pre-sell futures, they offered sales promotions, pushing 99.9 magnesium ingot prices down to 15,750 yuan/mt. At this level, supported by cost support and with some producers having completed their earlier shipment plans, the willingness to sell at low prices weakened, and magnesium prices gradually stopped falling, showing signs of consolidating at lows. On the demand side, pre-holiday restocking for foreign trade was nearing completion, and this week's purchases were mainly for domestic trade restocking, with orderly market transactions. Some producers tentatively raised quotations to test downstream buyers, but downstream acceptance of higher prices was low, leaving magnesium prices lacking upward momentum. Prices subsequently pulled back again, maintaining a sideways range overall.

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's magnesium ingot FOB prices were flat WoW.

This week, the magnesium ingot market remained in the doldrums, with foreign trade tracking the domestic downturn. With the dual festivals approaching, most traders reported no notable growth in pre-holiday stockpiling orders, and the traditional "September-October peak season" fell short of expectations. On the supply side, domestic magnesium ingot operating rates and production changed little, with supply pressure continuing to accumulate and inventories rising. Traders and downstream buyers held strong bearish sentiment. Demand remained persistently weak, with total foreign trade exports falling for two consecutive months in July and August. The recovery in new overseas orders fell short of expectations, dampening market trading activity. Geopolitical conflicts, high ocean freight rates, and sluggish overseas economic recovery jointly dragged on demand. Under the current supply-strong, demand-weak pattern, magnesium ingot was stuck in a range-bound market with limited upside or downside. In the short term, if pre-National Day purchases remain lackluster, post-holiday purchase willingness may rebound, and magnesium ingot foreign trade will likely continue to consolidate.

1.3 Magnesium Powder

This week, mainstream ex-works prices including tax for 20-80 mesh magnesium powder in China were 17,000-17,100 yuan/mt; China FOB prices were $2,410-2,510/mt.

This week, the magnesium powder market remained in the doldrums. Downstream steel desulfurization procurement maintained rigid demand, but pre-holiday stockpiling for the dual festivals was weaker than the same period in previous years. Downstream enterprises mainly consumed their own inventories, with no notable increase in actual transactions. On the export side, affected by stricter export controls on dual-use items and weak overseas demand, magnesium powder exports remained under pressure. Overall, the magnesium powder market lacked clear demand growth. Cost support from magnesium ingot formed a floor, but upside was also limited. In the short term, the market is expected to continue moving sideways, with attention on whether post-holiday downstream restocking can begin.

1.4 Magnesium Alloy

This week, mainstream ex-works prices including tax for magnesium alloy in China were 17,650-17,950 yuan/mt, and mainstream FOB prices for Chinese magnesium alloy were $2,565-2,645/mt.

This week, the domestic magnesium alloy market was in the doldrums. Driven by the grinding lower of raw material magnesium ingot prices, magnesium alloy quotations followed downward, with fundamentals remaining weak. On the supply side, inventories at leading magnesium alloy processing enterprises continued to accumulate, forcing them to lower operating rates to ease supply pressure. On the demand side, weak automobile consumption transmitted downstream, with magnesium alloy orders in the automotive sector shrinking notably; two-wheeler demand was nearly halved, with little sign of recovery in the short term. Overall, the magnesium alloy market showed a weak supply and weak demand pattern, and processing fees are expected to remain under pressure.

2 Weekly Summary

This week, the magnesium industry chain showed a divergent and weak-stable trend. On the supply side, the large dolomite mine in Wutai, Shanxi remained suspended, tightening regional high-grade ore supply. Enterprises expanded procurement channels externally, and after external supply was replenished, overall dolomite supply pressure eased, with quotations remaining stable. Primary magnesium producers maintained basically stable output, while inventories continued to build. With the dual festivals approaching, some producers cut prices to recover funds, and magnesium prices hit bottom before stabilizing on cost support. Magnesium powder and magnesium alloy followed raw material prices in the doldrums, with finished product inventories at downstream processing enterprises rising, and operating rates being lowered to ease shipment pressure.