China Magnesium Weekly: Chain Oscillates Lower Then Rebounds, Weakness to Persist Short-Term

[SMM Weekly Magnesium Ingot Social Inventory Express] The destocking trend of weekly social inventory of magnesium ingots continued this week, with a further slight month-on-month decline. The overall weak trend remained unchanged this week; overseas downstream end-users have consistently been making cautious purchases with obvious price suppression, which has continuously dampened traders' willingness to purchase and stock up. Even when new orders were concluded, they were mostly purchased on an as-needed basis, and some traders even took the initiative to destock when opportunities arose; no large-scale bargain-hunting stockpiling was seen, and traders operated more prudently. Combined with destocking from order fulfillment, the social inventory of magnesium ingots drew down again this week.

[SMM Weekly Magnesium Cost Express] During the week of Nov 1–6, prices of raw materials and by-products diverged for primary magnesium smelting: rising coal prices pushed smelting costs higher, while semi-coke prices kept falling on weak downstream demand; the two moving in opposite directions aggravated losses on the semi-coke side. Although coal tar remained at high levels, its limited output could hardly offset losses on the main products. On the cost side, under the dual impact of higher raw material costs and shrinking by-product income, primary magnesium smelting costs rose by nearly 3 percentage points week-on-week. Despite a mild rebound, magnesium prices lacked sufficient upward momentum, and losses of primary magnesium smelters widened further.

[SMM Weekly Magnesium Smelter Inventory Express] This week, inventories of national primary magnesium smelters edged down month-on-month. Spot transaction prices moved into the bottom zone this week; the prolonged price decline prompted downstream buyers to postpone their orders and concentrate purchases at the same time, notably warming up market turnover. Meanwhile, smelter output kept declining, significantly easing supply pressure. Under the combined effect of higher turnover and contracting supply, primary magnesium inventories continued to trend lower.