Magnesium Prices Are Expected to Stabilise after Sharp Rise

Published: Sep 29, 2021 13:12

Save

The government of Fugu County in Shaanxi Province issued the "Letter on Requesting the Suspension of Power Supply to Fugu County’s First Batch of Key Energy Consumption Enterprises under Dual Control” on September 19, requesting Yulin Power Supply Bureau to suspend power supply to local magnesium companies.

The impact of power rationing on the magnesium industry chain

Impacted regions

Shaanxi

Capacity proportion

60%

Power rationing policy

The impact on the supply side

According to SMM statistics, more than 60% of China’s magnesium ingots are produced in Shaanxi Province. This round of production restrictions will break the supply and demand balance of magnesium ingot. The output of China’s magnesium is expected to decline to 55,000 mt in September.

The impact on the demand side

The end users of the magnesium alloys were strongly resistant to the sharp rise of the magnesium prices, as the costs for the magnesium alloys in some die-casting products for cars rose by 20%. The magnesium alloy sales were stagnated, and some end users were considering about substitutes. At the same time, some titanium sponge enterprises were greatly affected. The semi-process titanium sponge plants mainly apply externally sourced magnesium ingots, and the rapid rise in magnesium prices has led to a significant increase in production costs. Meanwhile, the prices of titanium sponge were suppressed by the weak demand, causing serious losses in the semi-process titanium plants.

The impact on magnesium prices and the price forecast

The ignition time of the major plants in Fugu is uncertain. However, the panic caused by the production suspension in the major production areas has been digested by the market, and the upstream and downstream industries have returned to the wait-and-see stance near the production resumption. The overall transaction is sluggish. The supply and demand weaken simultaneously in the market, and the magnesium prices are expected to stabilise amid the lower stocks of traders. SMM will continue to follow the work resumption in the major magnesium production areas.

Price change in 2021

The prices of the magnesium ingots (Mg 99.90%) in Fugu have risen by about 297% from the beginning of the year.

magnesium prices production power rationing

Data Source Statement: Except for publicly available information, all other data are processed by SMM based on publicly available information, market communication, and relying on SMM's internal database model. They are for reference only and do not constitute decision-making recommendations.

For any inquiries or for more information, please contact: lemonzhao@smm.cn

For more information on how to access our research reports, please contact:service.en@smm.cn

Related News

21 hours ago

Magnesium Ingot Market Edges Lower in the Doldrums, Domestic and Overseas Demand Stay Weak in Tandem [SMM Magnesium Ingot Spot Report]

[Magnesium Ingot Market in the Doldrums, Drifts Lower; Domestic and Ex-China Demand Remains Weak] Today, the price center of magnesium ingot edged down, consolidating in the doldrums. Producer offers remained firm, but the room for price negotiation on actual orders widened. Downstream only made sporadic purchases on rigid demand, coupled with sluggish procurement due to summer break outside China and heavy price negotiations by foreign buyers. Tight supply of low-priced goods lent support to the market. In the short term, the market will maintain a narrow consolidation pattern on a subdued note.

21 hours ago

23 hours ago

Hefei Qixing Invests $453M in 50,000-Ton Magnesium Alloy Ingot Project in Anhui

[SMM Magnesium Express]Recently, Hefei Qixing Light Metal Technology Co., Ltd. invested a total of 453 million yuan in a project to produce 50,000 tons of lightweight magnesium alloy ingots annually, which has been established in Chaohu, Anhui. The project involves the construction of modern workshops and an intelligent smelting system, aiming to fill the local gap in high-end magnesium alloy materials and meet the stable supply demand for high-quality magnesium alloy raw materials required for large-scale integrated die-casting applications such as battery trays and electric drive housings in new energy vehicles. With the project's commencement, the local magnesium alloy industry chain's supporting capacity is expected to further strengthen.

23 hours ago

Aug 4, 2026 17:30

Magnesium Market in the Doldrums, Stagnant Consolidation, Rigid Demand Limited, Transactions Mediocre [SMM Spot Magnesium Ingot Express]

[Magnesium Ingot Futures Edge Down, Limited Just-in-Time Procurement Leads to Mediocre Trading] Today, magnesium ingot prices consolidated on a subdued note. Upstream producers held firm on offers, but room for negotiation on actual orders opened up. Downstream only had sporadic just-in-time procurement and low willingness to restock. Combined with the overseas summer break, where the ex-China market clearly pushed for lower prices, tight supply of low-priced goods limited the downside room. In the short term, the market remained stagnant and subdued, with little chance of significant improvement.

Aug 4, 2026 17:30