China March magnesium ingot output and April forecast

China’s magnesium ingot output stood at 64,837 mt in March, down 2.6% MoM and 2.3% YoY.

Magnesium ingot output continued to decline in March, as some magnesium plants implemented maintenance plans based on funding and costs. At the beginning of March, magnesium prices kept falling due to oversupply and tight funds. In order to ease financial pressure, magnesium plants continued to lower prices to stimulate downstream purchases, resulting in lower profit margins. Magnesium prices fell below the break-even levels, putting some plants on production cuts or halts to reduce supply, leading to lower output.

In early April, news of production cuts and suspensions was flying. The backlog orders during Qingming Festival and the pre-stocking demand before Labour Day holiday released, supporting magnesium prices at 18,000 yuan/mt. If the magnesium price continue to rise steadily, factories may resume production ahead of schedule. However, considering that shutdown will mainly occur in late March or early April, the impact on April's production will be greater. SMM expects that the output in April will be reduced to 62,000 mt.