Weak supply and demand, prices maintaining sideways movement [SMM Magnesium Morning Meeting Summary]

SMM Magnesium Morning Meeting Minutes on July 2:

Raw material

prices

for 1-3 grade dolomite (Wutai) ex-factory prices excluding tax stood at 78 yuan/mt, while 2-4 grade dolomite (Wutai) was priced at 128 yuan/mt. The mainstream ex-factory price for 75 ferrosilicon in Shaanxi ranged between 5,600-5,700 yuan/mt.

Supply and demand

Recently, a magnesium plant in Shaanxi resumed production, focusing primarily on high-quality magnesium ingots. This is expected to boost demand for premium dolomite. However, with dolomite production in Wutai still halted, supply of high-grade dolomite may tighten. Yesterday, ferrosilicon futures showed a fluctuating trend, with the most-traded contract fer2509 closing at 5,204 yuan, down 120 yuan MoM. In the spot market, prices for 72# ferrosilicon softened slightly, attracting downstream buyers. Transactions were active yesterday, but ferrosilicon prices are expected to remain in the doldrums.

Prices

Today, magnesium ingot transaction prices in Fugu held steady at 16,200 yuan/mt for the third consecutive working day. China's FOB prices remained unchanged at $2,220-2,300/mt.

Supply and demand

The magnesium market currently maintains a weak supply-demand balance. Supply remains stable as new capacity has not been fully released. Demand shows divergence: domestic fundamental demand provides support, while foreign traders mainly execute existing orders cautiously. European demand weakened significantly due to the summer break and economic downturn, leading to persistently sluggish overseas orders. Overall, lacking breakthrough drivers, the market may continue its fluctuating trend in the short term.

Magnesium alloy

prices

Mainstream tax-inclusive ex-factory prices for Chinese magnesium alloy ranged between 17,700-17,900 yuan/mt, with FOB prices at $2,480-2,510/mt.

Supply and demand

Recently, as major magnesium alloy producers expanded capacity, supply continued to increase, intensifying competition in processing fees which currently hover at low levels. According to one producer, entering the off-season for die-casting, magnesium alloy orders declined. With weak demand support ahead and rising inventory pressure, processing fees are expected to remain in the doldrums.

Magnesium powder

prices

Mainstream tax-inclusive ex-factory prices for 20-80 mesh Chinese magnesium powder stood at 17,450-17,650 yuan/mt, with FOB prices at $2,380-2,450/mt, unchanged from the previous trading day.

Supply and demand

quotations remained stable. Domestic market was dominated by just-in-time procurement, with producers being cautious about restocking. Inquiries cooled overseas due to summer break. Currently, producers are manufacturing based on orders, without building inventory, and only maintaining a small amount of working capital inventory. The market was in a wait-and-see mood, with sluggish trading.