SHANGHAI, Sep 30 (SMM) - At present, the market players in the magnesium market have basically completed their restocking plans for the National Day holiday. Affected by multiple bearish factors, the “Golden Nine” seasonal high in September fell short of expectations, accompanied by lacklustre downstream orders. Magnesium prices thus lacked upside momentum and returned to the level recorded at the beginning of September. 

On the supply side, a salesperson of a large magnesium plant said that in addition to changes in overseas demand, domestic coal prices should also be given enough attention, as soon it comes the critical period for coal storage for the heating season. At the same time, the National Congress is about to be held with macro policies expected to tighten, the coal price is like to rise again. The cost pressure will be directly reflected in magnesium prices. Under the support of the traditional peak season, the magnesium price is more prone to rise and unlikely to fall.

It is learned from the person in charge of procurement of a downstream enterprise that the downstream market has basically completed the pre-holiday restocking cycle, and now waits and sees the market changes after the festival. The person in charge is mainly bearish on the follow-up magnesium market. Meanwhile, some foreign traders also expressed concerns about the magnesium ingot export market in the fourth quarter due to the continuous fermentation of the overseas energy crisis. A large trader said that export orders in October have been far less than expected. Without foreign trade support, domestic trade alone cannot support the current level of magnesium prices.

SMM believes that the failed expectation of the "Golden Nine" seasonal high in the magnesium market is partly the result of high magnesium prices, which encouraged downstream buyers to purchase in small amounts in order to control the procurement cost, instead of purchasing in a centralised manner seasonally. On the other hand, the European energy crisis has weighed on domestic export orders to a certain extent. Coupled with a poor domestic market, it is natural that the market performance fell short. As the downstream procurement has basically ended, the market prices tend to stabilise for some time as the transactions during the National Day holiday will be limited. SMM will keep monitoring coal price changes in the near term.