National Magnesium Inventory Down 3.52% MoM, Prices Hit Year Low Prompting Smelter Closures

【SMM Weekly Magnesium Cost Briefing】From October 10 to October 16, the average production cost of magnesium ingots in Shaanxi province stood at 15,679 yuan/ton, up by around 1.73% week on week. In terms of profits, the industry posted an average loss of 379 yuan/ton this week, with the negative margin between magnesium price and production cost widening markedly. The underlying reasons are as follows: For one thing, the one-sided decline and sharp slump of magnesium prices after the holiday directly erased the remaining profit margins, pushing manufacturers deeper into negative profits. For another, the cost side also exerted simultaneous pressure: the transaction average price of Hongliulin lump coal this week came in at 1,048.77 yuan/ton, an increase of 22.34 yuan/ton from the previous period, while the price of semi-coke remained largely stable. The price hike of lump coal failed to be effectively passed through, exacerbating losses for semi-coke producers and further driving up the cost of magnesium ingots. In the short term, under the dual squeeze of persistently weak magnesium prices and high raw material costs, there remains a lack of support for magnesium plants to restore profits, and the current inverted price-cost situation is likely to persist.

【SMM Magnesium Flash】On October 16th, Latrobe Magnesium announced its latest progress, stating that the installation progress of Phase 1B of its demonstration plant in Victoria has reached 95%, with 35% of the commissioning completed. The company remains committed to its goal of producing the first batch of magnesium metal with a purity exceeding 98% by the end of 2026. Simultaneously, the company is advancing its plan to build a 50,000-ton magnesium plant in South Carolina, USA, and has secured a total of 32,000 tons/year of non-binding intention to purchase. As of the end of September, the company held AUD 3.4 million in cash and is currently undergoing a fully underwritten share placement financing of AUD 3.4 million, with the deadline for share placement extended from October 19th to October 26th. As the commissioning of the demonstration line progresses, the industrialization verification process of its low-carbon magnesium extraction technology is expected to accelerate further.

【SMM Magnesium Flash】On October 10th, the European Commission announced a new round of strategic projects for critical raw materials, with a total of 46 projects covering 15 of the 17 strategic raw materials, including magnesium. The selected magnesium project is the processing project developed by Verde Magnesium in Budureasa, Romania. The company has previously obtained the qualification for magnesium mining projects and aims to become the first primary magnesium producer in Europe in 25 years. It adopts the thermite reduction process and plans to restart the mine by the end of 2026 and build a magnesium smelting plant with an annual output of 30,000 tons by 2030. This round of 46 projects is expected to raise approximately 21.1 billion euros. Currently, China supplies 97% of the magnesium to the EU. This move aims to promote supply chain diversification and reduce dependence on a single source.