China Weekly Magnesium Output Edges Lower as Supply Contraction Signals Emerge

【SMM Weekly Magnesium Price Newsletter】 This week, the magnesium industry chain showed a weak oscillating pattern of first declining then rebounding. As for raw materials, high-grade local dolomite mines in Shanxi have suspended production, leading to tight supply; smelters have expanded their procurement radius to secure supplies, and dolomite prices have remained stable. Magnesium ingots in major production areas edged down slightly during the week; driven by low prices, inelastic demand purchases have picked up somewhat and prices rebounded from the bottom, but upward momentum was insufficient once supply was released; foreign trade FOB prices rose slightly in tandem, with transactions improved by phased order fulfillment, yet overseas end-users have exerted obvious downward pressure on prices, limiting upside room. Magnesium powder oscillated in line with magnesium ingot costs, with weak demand at home and abroad, and only small orders under inelastic demand were maintained; orders for magnesium alloys contracted significantly in the fourth quarter, and manufacturers cutting operating rates still failed to ease oversupply; end demand from sectors such as automobiles lacks meaningful momentum, and the overall market will remain weak in the short term. Key focus will be placed on the implementation of production cuts by domestic smelters and overseas procurement order dynamics.

[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.