Recently, influenced by news related to the resumption of work in major production areas, the market has been more bearish on the future outlook for magnesium prices. This week, magnesium ingot prices have fluctuated rangebound, with a clear tug-of-war between supply and demand. As of press time, the mainstream transaction prices for 99.90% magnesium ingot in major production areas today ranged from 16,200 to 16,300 yuan/mt, up 200 yuan/mt from last Friday.
As magnesium prices fell below 16,000 yuan/mt mid-week, magnesium producers' willingness to cut prices decreased, and the availability of low-priced supplies in the market contracted. Some traders chose to enter the market to restock, driving an increase in downstream procurement volume. Market transactions warmed up somewhat, and the transaction prices for magnesium ingots returned to 16,250 yuan/mt. From the perspective of market transactions, the main transactions this week were concentrated on Wednesday and Thursday, during which traders had a higher willingness to restock, driving some downstream enterprises to enter factories for procurement. Reviewing the reasons for the increase in magnesium prices over the past two weeks, it was mainly influenced by foreign trade entering the market to restock. Previously, magnesium prices had been falling for a long time, leading to low willingness to restock in the market, while downstream raw material inventories continued to decline. As magnesium prices rebounded, downstream enterprises chose to restock at opportune moments to avoid significant price increases, leading to a significant increase in market trading volume.
SMM analysis suggests that the timing of magnesium producers' resumption of work is currently unclear. However, as news of the resumption of work at halted factories spreads, market sentiment has shifted from previous expectations of reduced supply-side inventories to future expectations of inventory buildup. Downstream procurement is generally becoming more cautious, and magnesium prices may lack demand-side support in the future. It is expected that magnesium prices will remain in the doldrums. SMM will continue to monitor specific news regarding the resumption of production in major production areas.
