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[SMM analysis] there is still a downward risk that magnesium ingot prices hit bottom again.
Jul 17,2020 17:59CST
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Source:SMM
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SMM7 March 17: in mid-July, the spot price of magnesium ingots fell back to the previous lowest price, and it was more difficult for the upstream to maintain production under the double pressure of high cost and low price, and there was more negative sentiment in the off-season market, and most of them were not optimistic about the late trend, and there was a greater risk of continuing to decline.

In July, the overall turnover of the magnesium ingot market declined, in addition to export restrictions, magnesium powder downstream pharmaceutical factories entered the maintenance period also indirectly affected the demand for magnesium ingots. A magnesium ingot factory in Fugu said that few downstream traders have completed orders recently, one reason is that the psychological price of traders is much lower than the current price, and another reason is that traders do not have many orders in actual demand, so they are in no hurry to buy during the price decline. In the case of the reduction of market transactions, the reduction of production in the upper reaches is not enough, and the imbalance between supply and demand, social inventory is also gradually increasing. According to SMM research, the inventory of magnesium ingot factories in Fugu area is about 30, 000 tons, and the inventory of traders in Wenxi area is also several thousand tons, so the social inventory pressure is greater, and it is more difficult for magnesium ingot prices to rise in the future.

Recently, the production cost pressure of upstream magnesium ingots has been alleviated. As far as SMM knows, ferrosilicon prices have been revised back recently, but only 72 ferrosilicon has dropped by 50 murals 70 yuan / ton, 75 ferrosilicon has not changed for the time being, and coal prices have stopped rising. At present, the mainstream transaction price in Fugu area is 12800mur12850 yuan / ton, which has dropped to the lowest price in recent years for the third time this year. Although the current cost has been alleviated, the imbalance between supply and demand in the market cannot be solved in the short term. July to August in previous years is the off-season of the magnesium ingot market. Under the circumstances that exports are blocked this year and the overall inventory is on the high side, magnesium ingot prices are at risk of continuing to decline.

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