Since early August, magnesium prices have been on a downward trend. Although magnesium ingot prices rebounded strongly in the latter part of the month due to market news, the high prices deterred downstream buyers, making it difficult for transactions to follow through. This raises doubts about whether magnesium prices can stabilize at high levels. As of the time of writing, the mainstream quotes for magnesium ingots (Mg 90%) in the main production areas were 18,000 yuan/mt, with mainstream transaction prices ranging from 17,800 to 18,000 yuan/mt. This represents an increase of 150 yuan/mt from the beginning of the month but a decrease of 2,250 yuan/mt from the beginning of the year, a drop of 12%.
In early August, the supply-demand stalemate for magnesium ingots became increasingly apparent, plunging the magnesium market into a state of anxiety. Weak market demand left magnesium prices lacking upward momentum, while weak prices for ferrosilicon and coal provided little support on the cost side. Additionally, prolonged difficulties in shipping increased inventory pressure on magnesium ingot smelters. To alleviate financial pressure, some magnesium plants gradually lost their willingness to hold offers firm, leading to a weak downward adjustment in magnesium prices. In late August, downstream enterprises entered the market to purchase at low prices, combined with market news stimulation. Under the guidance of demand, magnesium prices continued to rise to 18,000 yuan/mt.
Reviewing the magnesium price trend from January to August, we can summarize that current market demand is mediocre. At times, concentrated purchasing or market news may cause a rapid price increase, but the current supply-demand imbalance, with strong supply and weak demand, makes it difficult for magnesium prices to sustain an upward trend. Overcorrection and price spikes are short-term phenomena, and the market will eventually return to rationality. Therefore, magnesium prices mainly fluctuate narrowly around the cost line of magnesium ingots, influenced by supply and demand relationships.
SMM indicates that recently, smelters have shown a strong willingness to hold offers firm due to market news stimulation. However, downstream customers mostly adopt a wait-and-see attitude, with high-level transactions frequently encountering obstacles. The supply-demand stalemate is becoming more pronounced. Considering that overseas demand recovery will take time, it is expected that the short-term market price of magnesium ingots will stay stable. SMM will continue to monitor downstream demand and market transaction conditions.
