Market Dominated by Sentiment: Magnesium Prices Show Alternating Trends of Increase and Consolidation [SMM Analysis]

Under the dual pressure of low ferrosilicon prices and weak downstream demand, coupled with the backlog of magnesium ingot inventory leading to tight funds for producers, magnesium plants have shown a more flexible attitude, and low-priced sources have gradually increased in the market. As of the time of writing, the mainstream transaction price of 90 magnesium ingots in the main production areas was 17,700 yuan/mt, down 300 yuan from the beginning of the week.

[Magnesium Ingot Supply Situation]

Due to the resumption of production by smelters that had previously suspended operations for maintenance, and the increase in inventory caused by sluggish market transactions in the past two weeks, the supply of magnesium ingots has been relatively ample recently.

[Magnesium Ingot Demand Situation]

In the magnesium powder market, the previous sharp decline in domestic steel prices negatively impacted overseas steel mills, forcing them to reduce their operating rates to cope with the challenge of reduced demand. As a result of the chain reaction from the decline in steel prices, overseas demand for magnesium powder has correspondingly decreased.

In the aluminum alloy market, according to the latest SMM survey data, as of the last week of August, the operating rate of aluminum billet at leading domestic enterprises was 71.32%, up more than 2% WoW. The latest SMM August PMI data for the domestic aluminum processing industry shows that industrial aluminum extrusion was the first to emerge from the industry off-season, with orders for automotive extrusion and 3C extrusion rebounding in August, and PV module production is expected to increase slightly in September. This has provided some support for the operating rates of suppliers. Overall, industrial aluminum extrusion has shown a warming trend. In advantageous regions such as Yunnan, Inner Mongolia, and Ningxia, the operating rates of casting industrial billets have risen significantly, while in regions dominated by ordinary construction billets such as Xinjiang, Guangxi, and Guizhou, there has been no significant upward trend in operating rates, and some areas have even seen declines. This reflects that the domestic construction materials market is still "feeling the chill."

SMM analysis indicates that with the continuous rise in raw coal prices, there is some support for magnesium ingot prices, limiting the space for magnesium price declines. It is expected that in the short term, the market price of magnesium ingots will fluctuate rangebound. SMM will continue to monitor downstream demand and market transaction conditions.