【SMM Domestic Analysis: Frequent Fluctuations in Magnesium Metal Raw Material Prices, Narrow Fluctuations in Magnesium Prices - What Exactly is the Impact on the Magnesium Market?】

Recently, the magnesium market has frequently received news of rising prices of raw materials such as ferrosilicon, coal, and dolomite. Affected by this, magnesium plants in major producing areas have become increasingly reluctant to sell, with the magnesium price steadily rising. So, what impact will the abnormal price movements of raw materials have on magnesium?
Shanxi dolomite stirs up another storm, with the price increase of dolomite driving a slight rise in costs.
Recently, the quoted price of Wutai dolomite, the main raw material required for primary magnesium smelting, has been raised. The price of 1-3 grade material has been raised to 108 yuan/ton, a month-on-month increase of 30 yuan/ton; the price of 2-4 grade material has been raised to 138 yuan/ton, a month-on-month increase of 10 yuan/ton. As of now, the quoted price of Wutai dolomite has ended its nearly one-year downward cycle.
Since late April, leading dolomite manufacturers in the main production areas have begun to carry out shutdown maintenance, and some magnesium plants in the main production areas have conducted safety dolomite inventory reserves. Freight prices were once raised due to the rush to purchase by magnesium plants. Leading dolomite manufacturers have sufficient dolomite inventory to supply the production consumption of magnesium plants. Recently, leading dolomite mines have resumed production, and the inventory of dolomite manufacturers has dropped to a low level. Moreover, recently, with the increase in the operating rate of magnesium plants in the main production areas, the consumption of dolomite has also increased, and supported by demand, the price of dolomite has been slightly raised.
The price increase of dolomite in Wutai region will drive up the theoretical production cost of primary magnesium smelting in Shenfu region. However, considering that the current safety inventory of dolomite in magnesium plants is three to six months, the impact of the price increase of Wutai dolomite on the current actual production cost of magnesium ingots is relatively limited. Additionally, some magnesium plants in Shenfu region will purchase dolomite from multiple provinces such as Hubei and Inner Mongolia to ensure the safe and stable supply of dolomite, which reduces the impact of the price increase of dolomite in a certain region. Overall, the impact of dolomite on the production cost of magnesium ingots is relatively limited.
The prices of ferrosilicon and coal have been running strongly, and the production cost of primary magnesium smelting has increased significantly.
The prices of semi-coke and electricity costs have remained stable, with the cost side providing support for ferrosilicon prices. Moreover, as the National Day holiday approaches, some steel enterprises have inventory replenishment needs, and the market's expectations for peak-season demand have strengthened, driving up ferrosilicon prices. The delivered price of 75# ferrosilicon is 5,900 - 5,950 yuan/ton, up 100 yuan/ton compared to last week on a week-on-week basis. In terms of coal, recently, coal supply first tightened and then increased. Affected by factors such as overproduction inspections and the "9.3" military parade, coal supply has been restricted, and the delivered price of coal has increased by about 50 yuan on a week-on-week basis. The energy cost of primary magnesium smelting has increased significantly. Although the simultaneous increase in the price of by-product semi-coke will effectively amortize coal costs, considering the reduction in transactions caused by the increase in semi-coke prices and the time lag in buying and selling, energy costs still show an upward trend.
after-market
Recently, the magnesium price has shown a trend of bottoming out and stabilizing. Although the prices of raw materials such as ferrosilicon, coal, and dolomite have all increased recently, considering the large-scale concentrated release of orders last week, downstream orders may experience a short window period, and the magnesium market lacks demand support, making it more difficult to raise the magnesium price. On the other hand, the magnesium price has repeatedly declined to 16,500 but was blocked, indicating strong support at the 16,500 level in the short term. Overall, it is expected that the magnesium market will continue to fluctuate within a narrow range in the short term, and the magnesium price will face a situation where it is difficult to rise or fall.