SMM Analysis Of China Magnesium Ingot Production In May And Forecast For June

According to SMM data, China's magnesium ingot production in May 2024 was 73,071 mt, up 13.7% MoM.

In May 2024, magnesium ingot production at magnesium plants saw both increases and decreases. Some magnesium plants, affected by rising costs and squeezed profit margins, chose to reduce daily production or conduct rotational maintenance to reduce magnesium ingot supply. The increase in magnesium ingot supply in May was due to several factors: the oversupply of magnesium ingots at the beginning of March, together with tight funds at magnesium plants, led to a continuous decline in magnesium prices throughout March. To alleviate financial pressure, magnesium plants continuously lowered prices to stimulate downstream purchases. However, this price concession did not effectively reduce inventory but instead caused magnesium prices to plummet further. The growing panic among magnesium plants led some to reduce or halt production from late March to mid-to-late April. As maintenance ended, magnesium ingot production increased in May.

In June, soaring ocean freight costs caused overseas customers with non-rigid demand to delay purchasing magnesium ingots. Domestically, high aluminum prices increased inventory pressure on downstream aluminum billet producers. These producers, inhibited by high prices, might choose to cut production to reduce aluminum billet output, potentially decreasing magnesium ingot demand. With high coal and ferrosilicon price, the continuously rising cost of magnesium ingots, together with soaring ocean freight and the pessimistic outlook of reduced aluminum billet production, has led to sluggish magnesium ingot demand, further squeezing the profit margins of magnesium plants. In June, magnesium ingot smelting enterprises might reduce daily production to alleviate pressure. SMM expects magnesium ingot production to decrease to 70,000 mt in June.