SHANGHAI, Oct 8 (SMM) - It is understood from the factories in the main magnesium ingot production area that the majority of the large factories have basically resumed production, except for some factories that have not yet fulfilled the requirement due to their own environmental protection reasons.
In terms of the reasons that triggered the current decline of prices, some traders have chosen to force down the prices in order to take in goods after the holiday. On the other hand, some small factories have appropriately carried out shipments amid low prices in order to ease the financial pressures. Due to the relatively weak market transactions during the National Day holiday, most companies are still waiting for the prices to stabilise on the first day after the holiday before purchasing. The market mostly takes a wait-and-see stance.
SMM believes that with the resumption of production in the main production areas, the spot supply in the market is slowly recovering. Meanwhile, under the wild fluctuations in the magnesium price in September, the downstream market has a certain amount of unfulfilled demand. As such, the future market supply and demand situation is still uncertain coupled with uncertain impacts of power rationing. Considering that the prices of silicon, iron and coal remain high, the production costs of magnesium ingots have been hovered at a high level. The market will find a new balance under the support of restocking demand after the holiday. It is expected that the near-term magnesium prices will stand around 50,000 yuan/mt.