Magnesium Prices Are Expected to Stabilise after Sharp Rise

Published: Sep 29, 2021 13:12 (GMT+8)

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

Sep 30, 2026 18:41 (GMT+8)

September's Magnesium Market: From Surge to Slump, Producers Navigate Cost and Demand Challenges [SMM Analysis]

Entering September, the magnesium market embarked on a near roller-coaster ride. The first half and second half of the month presented a stark contrast — hot versus cold, optimism versus pessimism — as market sentiment underwent a rapid switch from euphoria to freezing point within just thirty days. At the start of the month, the surging coal prices ignited the market;

Sep 30, 2026 18:41 (GMT+8)

Sep 30, 2026 17:28 (GMT+8)

First Rise Then Fall, Breaking Below the Year's Low: The Real Logic Behind Magnesium Plants' "Stop-Start" Operations [SMM Analysis]

[SMM Magnesium Market Analysis: Prices Rose Before Falling Below the Year's Low, the Real Logic Behind Magnesium Plants' "On-and-Off" Operations] The first and second halves of the month presented contrasting patterns, one hot and one cold, one joyful and one sorrowful, with market sentiment rapidly shifting from euphoria to a freezing point in just thirty days. At the start of the month, coal prices shot up, igniting the market, as cost support combined with speculative capital inflows drove magnesium prices sharply higher, briefly suggesting that a new upward cycle had begun. However, the heavy drag from fundamentals soon emerged, and the rally, lacking support from real demand, proved unsustainable. Magnesium prices then drifted lower, ultimately falling below the year's low, with 9990 primary magnesium ingot prices dipping to 156,500 yuan/mt. The monthly trend rose before falling, creating a stark contrast.

Sep 30, 2026 17:28 (GMT+8)

Sep 30, 2026 15:56 (GMT+8)

Magnesium Prices Consolidate Near Bottom: Producers Sell at Low Prices to Promote Shipments, Downstream Purchases Cautiously on Rigid Demand [SMM Magnesium Weekly Review]

[SMM Magnesium Weekly Review: Magnesium Prices Consolidate to Seek Bottom; Producers Sell at Low Prices to Promote Shipments, Downstream Purchases Cautiously on Rigid Demand] This week, the magnesium market maintained a weak supply-demand pattern. Supply side, magnesium ingot smelters showed active willingness to sell, with some offering low-price promotions to ease inventory pressure, though overall sentiment to hold prices firm persisted. Magnesium alloy enterprises faced high inventory levels, with several planning to initiate large-scale production cuts next month. Demand side, foreign trade deliveries largely concluded, while domestic trade maintained only rigid restocking. Downstream acceptance of current prices remained low, with a clear rush to buy amid continuous price rise and hold back amid price downturn mentality. Weakness in end-user automotive demand further dragged down magnesium alloy consumption. Overall, the market showed a strong supply and weak demand pattern, consolidating to seek bottom.

Sep 30, 2026 15:56 (GMT+8)