Demand Was Sluggish, Pessimistic Sentiment Spread in Magnesium Market, How Will Magnesium Prices Develop? [SMM Analysis]

Last week, the magnesium market continued the sluggish trend, with a generally bearish sentiment prevailing. Downstream customers, influenced by the psychology of "rushing to buy amid continuous price rise and holding back amid price downturn," were not in a hurry to restock and mostly remained on the sidelines. Although trading volume increased last week, the supply-demand imbalance in the magnesium ingot market is unlikely to change in the short term. The slight improvement in transaction conditions temporarily strengthened the sentiment to stand firm on quotes among magnesium producers, slowing the rate of price decline. The mainstream transaction prices for 90 magnesium ingots in the main production areas were 16,300-16,400 yuan/mt, down 150 yuan/mt from the beginning of the week.

Demand side, in the context of a significant drop in magnesium prices, buyers were generally cautious, leading to a cooling in market transactions. Based on the current market operation, domestic transactions weakened, and overseas inquiries declined largely due to the significant price increase before the holiday. On one hand, enterprises had ample restocking in the early stage; on the other hand, purchasing willingness was poor amid market sentiment.

Overall, downstream and end-use demand remained sluggish, with market transactions mainly driven by minimal rigid demand. Considering the current strong supply and weak demand in the magnesium market, it is expected that the market will trend weaker in the short term. SMM will continue to monitor downstream demand and transaction conditions.