August maintenance and losses simultaneously presented, magnesium plants in major production areas raised magnesium prices in a bid for "stability"?  [SMM Analysis]

Magnesium ingot production in China stayed stable MoM in August, up 36.2% YoY. Although overall magnesium ingot production in August showed little change from July, individual enterprises saw both increases and decreases. The production decrease in some magnesium plants was primarily due to equipment maintenance or significant losses per ton, while some enterprises reduced production due to financial pressure and rejected low-priced orders to maintain normal operations. On the other hand, production increases were driven by the resumption of full production by enterprises previously under maintenance or those with newly added coking furnaces. Different enterprises faced varying conditions and had different downstream customer bases, resulting in differing production situations. On the cost side, in August, the price of ferrosilicon decreased, coal prices fluctuated rangebound, and semi coke prices remained stable. The overall raw material market weakened. With the market expectations gradually strengthening in September and summer maintenance programs nearing completion, it is expected that China's magnesium ingot production will increase both MoM and YoY in September.

By the end of August, magnesium smelters showed a strong willingness to hold offers firm due to news. Semlters in major production areas uniformly quoted 18,000 yuan/mt. Magnesium plants have held firm on prices for more than two weeks, with magnesium prices remaining stable. However, downstream customers mainly adopted a wait-and-see attitude. Domestic customers made purchases based on rigid demand, while foreign customers delayed their procurement schedules. High-priced transactions were frequently hindered, and the stalemate between sellers and buyers became increasingly evident. The tug-of-war between sellers and buyers in the magnesium market has clearly reached a fever pitch. According to SMM, on the supply side, current market transactions for magnesium are mediocre. Except for a few magnesium plants affected by tight funds occasionally lowering prices, overall magnesium ingot stocks in major production areas remain high. On the demand side, as the price negotiation period extends, some overseas clients' interest in the magnesium market is increasing, making their purchasing needs more urgent. Considering the end of the summer break overseas, it is expected that overseas demand will rise in September.

SMM indicates that as the tug-of-war in the magnesium market enters deeper stages, the price fluctuation space is limited. In the short term, magnesium ingot market prices are expected to remain stable. SMM will continue to monitor downstream demand and market transactions.