Domestic magnesium prices remained stable. As of the time of writing, the mainstream prices of 90# magnesium ingots in Fugu were around 15,950-16,000 yuan/mt. Downstream price suppression inquiries were common, and magnesium plants faced severe losses, with the overall magnesium market under pressure.
According to the SMM survey, after the previous decline in magnesium prices, the average profit margin of magnesium plants in the main production area of Shaanxi was compressed to around -5%. Some factories, due to their technical limitations, faced relatively high costs, resulting in even greater profit compression. In Shanxi, magnesium plants generally experienced losses, and pessimistic sentiment pervaded the magnesium market.
A representative of a major magnesium plant in the main production area stated that in a market with ample supply, downstream buyers generally suppressed prices during inquiries. Small plants actively shipped products using flexible pricing strategies, resulting in relatively limited inventory pressure. As the Chinese New Year approached, demand rebounded due to stockpiling, although the magnesium market had previously been in a state of oversupply. In domestic trade, downstream buyers generally held orders and waited, opting to purchase closer to delivery periods. In foreign trade, overseas demand was generally weak, and the concentrated purchasing seen in previous years had now fragmented. End-users chose to consume existing inventory while observing magnesium prices bottom out, leaving the foreign trade market sluggish.
According to SMM statistics, excluding the recovery in supply due to the end of summer maintenance, domestic production of magnesium ingots in October increased by approximately 3,500 mt compared to September. Currently, domestic magnesium ingot production has been declining for over two consecutive months. During the SMM survey, it was learned that due to the continued low-level consolidation of magnesium prices, some factories began implementing production cuts at the beginning of the month. As the losses on the supply side continued to spread, magnesium plants may continue to adopt production cuts and other measures to alleviate the destocking pressure caused by weakened demand. SMM will continue to monitor production changes in the main production areas.
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