Since October 2024, domestic magnesium prices have shown a significant downward trend, with magnesium ingot prices continuously declining from 17,900 yuan/mt to as low as 15,900 yuan/mt, a drop of 11.2%. Subsequently, stimulated by policy-related news, magnesium prices twice stabilized after halting their decline. However, the current trend of magnesium prices remains severe.
On one hand, after several rounds of news-driven stimulation, downstream expectations have been exhausted. Coupled with the low-level consolidation of magnesium prices, the downstream market has adopted a passive stance, showing low acceptance of price increases. This has led to a vicious cycle where price hikes result in sluggish transactions and high inventory levels, while price reductions prompt downstream players to hold off on purchases and observe the market.
On the other hand, regarding the future trend of magnesium prices, news of stockpiling has stimulated downstream procurement of magnesium ingots. However, in the short term, magnesium prices are expected to be struck by high upstream inventory levels and relatively weak downstream demand. Short-term magnesium prices are anticipated to remain weak. Considering that earlier production cuts and suspensions have been continuously reducing magnesium ingot supply, the supply-demand imbalance in the magnesium ingot market is gradually being corrected. Combined with the stockpiling news stabilizing prices, SMM expects the downside room for future magnesium prices to be limited.
Amid the sharp fluctuations in magnesium prices, magnesium alloy factories are actively planning for the future market by expanding primary magnesium production lines, upgrading smelting equipment, and introducing high value-added projects. A representative from a major magnesium alloy manufacturer stated, "As magnesium alloy applications are still in the promotion phase, the instability of raw material prices is extremely detrimental to the promotion of magnesium alloy applications. The market should adopt a more rational approach to raw material price fluctuations. Maintaining the long-term healthy and stable development of the industry requires joint efforts from all market participants."
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