This week, magnesium ingot consolidated on a weak note, while the tug-of-war between sellers and buyers persisted [SMM Magnesium Weekly Data].

Production and Inventory Briefing

1.1 Weekly Production

August 21-August 27, weekly production at sampled magnesium smelters nationwide was 23,580 mt, and the weekly operating rate was 77.36%, down 1.62% WoW. According to our survey, the supply-side reduction in primary magnesium continued this week. In main producing regions, one additional smelter adopted rotational maintenance, while several producers in Xinjiang remained shut for maintenance. Together, these factors caused total production reductions to exceed increases, sending weekly production lower. However, as two producers in main producing regions successively resume production next week, weekly production is expected to turn upward.

1.2 Weekly Inventory

1. This week, inventory at primary magnesium smelters nationwide rose 2.03% WoW. On the supply side, primary magnesium smelters in Shaanxi completed maintenance and resumed production in a concentrated manner, leaving magnesium ingot supply at a high level; on the demand side, downstream recovery was not yet evident, so inventory was not effectively digested. Going forward, as weekly primary magnesium production continues to rebound, smelters are still likely to face inventory buildup pressure under a loose supply-demand balance.

2. This week, social inventory of magnesium ingots rose 0.71% WoW, showing a slight inventory buildup pattern. Tianjin port inventory saw slight destocking. Port warehouse withdrawals were mainly supported by existing orders placed earlier and a small number of new orders; new orders from outside China were limited, and sustained withdrawal momentum was lacking. This week, magnesium ingot prices drifted lower. Traders showed strong sentiment of rushing to buy amid continuous price rise and holding back amid price downturn, while speculative stockpiling willingness was weak, slowing the stockpiling and procurement pace. However, in Shaanxi and Shanxi, some previously stockpiled material still circulated and some delivery-related stockpiling took place, causing inventory pressure to edge up. Overall, social inventory pressure still exists. Price consolidation, coupled with the lack of any clear demand recovery so far, suppressed traders' procurement and restocking pace. Going forward, close attention should be paid to the actual release of restocking orders from outside China in September.