[SMM analysis] magnesium ingot prices have been slightly reduced by less than half of the downstream manufacturers' resumption of work.

SMM2 28: this week's domestic Shaanxi, Shanxi magnesium ingot prices have been lower than last week, but the decline is not large. As of today, 99.9% magnesium ingots in Fugu area are quoted at 14800-15000 yuan / ton, and the ex-factory price is 14700-14800 yuan / ton, while 99.9% magnesium ingots in Wenxi area are quoted at 15000-15200 yuan, with little difference between the transaction price and the quotation.

This week, about 80% of magnesium ingot manufacturers in Wenxi, Shanxi and Fugu, Shaanxi, have resumed their operating rate of more than 80%, and only a small number of manufacturers still maintain half or even 20% to 30% of their operating rate. Control of the epidemic in the Shenmu area is relatively strict, and most workers are still not allowed to rework, so production capacity at magnesium ingot manufacturers in the region has recovered by less than 30 per cent, and this state will continue for some time. Most producers say the supply of coal and ferrosilicon now has a big impact on magnesium ingot production. The recovery of coal production in Shaanxi is not obvious, it is difficult for private enterprises to resume work, and the supply has not been liberalized, so coal prices are still high, with prices rising 100 yuan / ton compared with before. Although the situation of ferrosilicon is not as serious as coal, it has also caused some pressure on magnesium ingot production enterprises.

On the other hand, the resumption of magnesium powder and magnesium alloy enterprises downstream this week has not changed much compared with last week. The downstream enterprises that have not resumed work are mainly because of strict local control and do not allow factories to resume production for the time being; the current operating rate of downstream magnesium ingot processing manufacturers that have resumed work is not high, mainly because workers have not all returned to the factory, in addition, the current price of magnesium ingots is on the high side, and downstream factories are also interested in shrinking production and reducing the amount of magnesium ingots.

All in all, magnesium ingot transactions this week, although better than last week, but the trading volume is still small. Downstream inquiry is more active, but the actual purchasing demand is not high, price is still the primary factor to be considered downstream. Some magnesium ingot manufacturers say that 99.95% of magnesium ingots currently account for a large proportion of the transaction volume, most of which are purchased by sponge titanium manufacturers to produce sponge titanium as reducing agents.

SMM believes that as downstream enterprises resume work and production capacity recovers, the demand for magnesium ingots will gradually increase, and the current coal prices are on the high side. Upstream production enterprises are under pressure on production costs, and there will be no significant price reduction. Therefore, it is expected that magnesium ingot prices will remain stable or have a small adjustment next week.