[SMM analysis] magnesium ingot prices fell and the trading market did not improve.

SMM3 June 6: this week, Shaanxi, Shanxi magnesium ingots prices have been significantly reduced, as of today, Fugu 99.9% magnesium ingots mainstream transaction price 13900-14100 yuan / ton, Wenxi area mainstream transaction price 14300-14400 yuan / ton, about 700 yuan / ton lower than last week's price.

In terms of production, the production situation in the main producing areas of magnesium ingots this week is basically the same as that of last week. In Fugu and Shenmu areas, only no more than 20% of the magnesium ingot smelters can reach the operating rate of 100%, and the rest of the operating rate is basically maintained at 6-8%. The main influencing factors are that all the workers have not returned to their positions, and the coal mines in Yulin area have returned to work slowly, the supply of coke oven gas is insufficient, superimposed at present, the price of magnesium ingots is declining and the trading market is bleak, so enterprises lack the motivation to increase production. Magnesium ingot manufacturers with Shenmu said that because of strict epidemic protection, the factory was closed and a group of workers had been quarantined in the factory since the Spring Festival, so after the factory opened last week, the workers had been approved to return home. It is expected that it will take 10-15 days to return to the factory, so it is expected to be produced at 50% capacity during this period.

Although the price fell significantly this week, but the transaction is still light, most of the downstream magnesium alloy processing enterprises in the south, affected by the epidemic, slow to return to work, so demand is weak. In order to withdraw funds or reduce inventory pressure, some magnesium ingot manufacturers can only ship goods at reduced prices. Magnesium ingot export traders and producers said that at present, there are not many foreign orders, the export situation is not very optimistic, so now the downstream needs to be dominated by domestic rigid demand.

According to SMM analysis, at present, the price of magnesium ingots is close to the cost line, and there is little room for further decline, while downstream processing enterprises are slow to resume work, and there is little possibility of a short-term demand blowout, so it is expected that a small adjustment will be made next week on the basis of the current price and tends to stabilize.