Looking at 2024, the strong supply and weak demand in the magnesium ingot market may last throughout the year, and magnesium prices may stablize after wide fluctuations in previous years.
The price of magnesium ingots has been fluctuating frequently, hindering the widespread application of magnesium ingots in downstream industries. The main reasons for the frequent price fluctuations of magnesium ingots are: first, the production capacity of primary magnesium companies in the main production areas is equivalent, and there is a lack of leading companies to lead market prices. Magnesium price fluctuations reflect the collective will of magnesium plants to a greater extent. Second, the magnesium factories in the main production areas are relatively concentrated. With the support of today's communication equipment, market news spreads very quickly.
According to SMM, on September 20, 2023, Yunhai Metal officially joined Baowu Group and changed its name to Baowu Magnesium. Baowu Magnesium’s strategic layout in the magnesium industry may ensure the stable operation of magnesium prices.
First quarter: From the perspective of supply and demand, the magnesium ingot market will be in the inventory accumulation stage during the Chinese New Year. At present, the inventory of downstream factories has basically come to an end. Before CNY, purchasing as needed will be the main focus. The price of magnesium ingot is expected to remain stable before the year. As the Chinese New Year ends, magnesium factory inventories increase WoW. However, considering that financial pressure has eased at the end of the Chinese New Year, magnesium factories are more willing to raise prices. In terms of cost, thermal coal inventories are currently at a high level and declining. Considering that the first quarter is still in the heating period, the demand side still has strong support for thermal coal prices, and thermal coal prices are expected to decline slightly. SMM expects magnesium ingot prices to fluctuate around 20,500 yuan.
Second quarter: Considering that magnesium plants in the main production areas are responsible for heating, and low temperature weather will damage the equipment and pipelines of magnesium plants, if magnesium prices continue to approach the cost line, magnesium plants may reduce the supply of magnesium ingots in March and April to stabilize magnesium prices. Judging from the news, Baowu Magnesium's Qingyang project will begin production in April and May. Under the pessimistic expectations of magnesium market, magnesium ingot prices have limited upward momentum. Taking into account the stockpiling before the holiday in late April, magnesium prices are expected to increase in April. As the supply of magnesium ingots increases in May, magnesium ingot prices will decline. However, considering the increase in coal demand in summer, magnesium prices may be largely stable. The fluctuation range of magnesium prices will increase in the second quarter, and the price fluctuation range is expected to be around 1,000 yuan.
