Aluminum prices broke through 20,000 yuan/ton, magnesium-aluminum ratio reversed, and downstream applications of magnesium usher in a golden period of development?

After the holiday, aluminum prices went up and broke through the 20,000 yuan/ton mark. As of Apr 9, SMM A00 aluminum spot price was 20,060 yuan/ton, up 10 yuan/ton from the previous trading day. Amid favorable domestic policies and positive macroeconomic data, coupled with the recovery of terminal consumption, aluminum prices will go up in the long run. With the expectation of rising aluminum prices, industry insiders are also paying attention to whether the downstream applications of magnesium alloys have entered a golden period of development.

The downstream applications of magnesium alloys are closely related to the price trend of raw material magnesium ingots and the maturity of magnesium processing technology.

First, in terms of magnesium prices in the past three years, the highest transaction price of 90 magnesium ingots in the main production areas was 69,000 yuan/ton, and the lowest transaction price was 17,200 yuan/ton, with a price difference of up to 51,800 yuan/ton. The rapid and drastic fluctuations in magnesium prices increased the risks for downstream magnesium alloy processing companies and customers, and also prevented magnesium alloys from being effectively expanded in downstream applications like aluminum in the past.

Second, due to the small volume of magnesium alloys, the amortization costs of molds required for magnesium alloy processing materials remain at a relatively high level. In addition, many processing technologies for magnesium alloys are still in the research and development stage or have not yet been mastered, and magnesium alloys have not been widely used downstream.

Apart from technical factors, some heads of magnesium alloy processing material companies said that over the past three years, due to the sharp fluctuations in raw material prices, the use of magnesium alloys has been reduced to varying degrees.

Magnesium price trend: The strong supply and weak demand pattern of magnesium ingots is difficult to change in 2024, and the magnesium price fluctuates in a narrow range.

In terms of supply and demand: At the beginning of the year, the oversupply of last year continued. Coupled with multiple factors such as the unexpected accumulation of inventory during CNY and the tight funds of magnesium plants, the magnesium price continued to bottom out at 17,200 yuan/ton. As downstream demand gradually picks up, coupled with optimistic expectations for inventory before the May Day holiday, it is expected that magnesium ingot inventories may enter a period of rapid destocking. Considering that the enterprises that were overhauled in late March and early April have gradually resumed production, and the current downstream demand is unlikely to reverse the oversupply, SMM expects magnesium prices to fluctuate in a narrow range.

With the gradual stabilization of magnesium prices, the downstream application of magnesium alloys will gradually regain confidence. We look forward to a bright future for the magnesium market.