According to SMM data, China's magnesium ingot production in January 2025 decreased by 4.9% MoM. This month's production decline in the magnesium ingot market was mainly due to production cuts by some smelters, driven by the dual impact of supply surplus and weak demand, which caused magnesium ingot prices to continuously decline over the past three months. When prices fell below the break-even line for smelters, they were forced to cut production or halt operations.
In-plant inventory of magnesium ingots remained high, and magnesium producers sold at market prices. Magnesium prices continued to decline steadily, leading poorly managed magnesium ingot smelters to successively cut production or shut down. In November, magnesium ingot production decreased by 1.0% MoM, while in-plant inventory of magnesium ingots was basically flat compared to the previous month, with limited progress in inventory reduction. In December, the earlier signals of production cuts failed to effectively halt the price decline, and inventory pressure on magnesium producers was not alleviated. The losses faced by magnesium ingot smelters worsened, prompting them to voluntarily lower their operating rates. As a result, magnesium ingot production in December decreased by 4.9% MoM.
In January, as the acquisition and storage activities progressed, the magnesium market saw a coexistence of tight spot supply from magnesium ingot producers and high in-plant inventory levels in warehouses used for acquisition and storage. Magnesium prices fluctuated at low levels, with the % change gradually narrowing. However, due to the current excessively low magnesium prices and severe losses for magnesium producers, occasional reports of production cuts emerged. It is expected that magnesium ingot production in February will decrease by 5.6% MoM.
