Weekly review: Magnesium prices continued to weaken amid sluggish transactions

Magnesium market prices continued last week's decline. The market's bearish sentiment spread, and magnesium prices continued to fall in the first half of the week. As of Tuesday, the mainstream market transaction price of 90 magnesium ingots in the main production areas was 20,000-20,100 yuan/mt, down 100 yuan/mt. As the magnesium price reached around 20,000 yuan, it is difficult for magnesium factories to make concessions. The downstream stocking has been completed. In the second half of the week, magnesium prices bottomed out and stabilized. Industry insiders said that considering that the downstream industry has gradually entered vacation, magnesium plants have lowered their futures prices slightly in order to cope with the risk of rapidly rising magnesium ingot inventories. The futures price of 90 magnesium ingots in the main production areas is between 19,800-19,900 yuan/mt, and downstream purchased futures orders on demand.

From the perspective of supply and demand, on the supply, magnesium plants maintained normal production, the supply of magnesium ingots gradually increased, manufacturers’ inventories are waiting to be consumed, and magnesium plant inventories increased week by week; on the demand, as CNY is approaching, downstream customers’ pre-holiday stockings have basically ended, and there are a small amount of urgently needed purchases, combined with the impact of widespread snowfall in some areas, weakening demand and the spot trading was deserted. According to SMM analysis, there is currently a lack of good news for the magnesium market. Considering the tense situation in the Red Sea, tight export cabins, sluggish overseas procurement demand, strong wait-and-see mood in the downstream, and unstable mentality in the industry, we are bearish on the market outlook. At present, the magnesium price is close to the factory cost line, and it is difficult to explore the price downward. If the price continues to fall in the later period, some companies are expected to reduce production. Therefore, the short-term magnesium ingot market is expected to face downward risks.