Magnesium prices have dropped for two consecutive weeks. How will the market perform? [SMM analysis]

The mainstream transaction price of Mg90% magnesium ingots in the main production areas is 19,000 yuan/mt, which is 5.1% lower than the transaction price on the first day of the year. Judging from the recent trend of magnesium prices, after the CNY, magnesium plants were affected by financial constraints and their willingness to raise prices dropped sharply. The bearish sentiment spread in the market. Under the influence of the "holding back amid price downturn" sentiment, downstream companies that were not eager to replenish their stocks generally chose to wait and see, the magnesium market transactions seem to be more sluggish, and the magnesium prices followed the downward trend. In just two weeks, the magnesium prices dropped by nearly 1,000 yuan/mt.

From a supply and demand perspective, the current domestic supply of magnesium ingots is relatively stable, but magnesium prices continue to run close to the cost line. Magnesium plants may reduce or suspend production to stabilize magnesium prices. Some magnesium plants have recently lowered their magnesium ingot production, and a magnesium plant said that it is studying the maintenance plan. Correspondingly, the growth rate of exports, one of the main demands for magnesium ingots, is relatively weak. In addition, affected by the environmental factors after the domestic epidemic, domestic trade demand continues to be weak, causing the oversupply. The upstream bargaining power has been greatly weakened, and the magnesium price trend this year has shown a downward trend. SMM analysis believes that the recent continuous decline in magnesium prices is mainly due to three factors, including magnesium factory funding constraints, magnesium factory inventory accumulation exceeding expectations, and deserted terminal demand. Considering that the current stockpiling of magnesium ingots in the downstream is digested slower than expected, coupled with the pessimistic expectations of downstream raw materials for coal and ferrosilicon, downstream companies that are not in a hurry to purchase generally prefer to wait and see. The magnesium market inquiry volume has declined, and SMM expects magnesium prices to swing on a soft note. SMM will continue to pay attention to changes in spot transactions.