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Heatwave hits, smelters' hidden costs rise, strengthening bottom support for magnesium prices [SMM analysis]

iconJul 17, 2025 15:58
Source:SMM
[SMM Analysis: Heatwave Hits, Smelters' Hidden Costs Rise, Magnesium Prices Gain Stronger Bottom Support] Since July, the heatwave has swept across most parts of the country, driving electricity consumption to record highs. Additionally, while energy consumption such as electricity and water usage has surged significantly, the persistent heatwave has inevitably driven up the hidden costs of enterprises.

Since July, high-temperature weather has swept across most parts of the country, driving electricity consumption to successive record highs. Additionally, amid a significant increase in energy consumption such as electricity and water use, the persistent high-temperature weather has inevitably driven up the hidden costs of enterprises. According to SMM, coal, which accounts for the main energy cost of magnesium ingots, has seen its raw coal price bottom out and rebound since July due to the growth in thermal power demand. On the other hand, the high temperatures in production workshops have made it difficult to endure, leading to an increase in employee leave frequency and prolonged smelting cycles, which have increased hidden costs.





The coal market has recently shown signs of recovery. Affected by the persistent high temperatures nationwide, the increase in power demand has driven a significant rise in power plant loads, and various power plants are actively increasing their procurement of market coal. From the supply side, coal transportation in the main producing areas remains smooth, and the overall inventory level is within a reasonable range. Analysis suggests that coal prices may maintain a mild upward trend in the short term, and future market trends will require close attention to two factors: first, the persistence of extreme weather conditions, and second, the actual inventory replenishment needs of end-users.





The ferrosilicon market is currently experiencing a tug-of-war between supply and demand. From the supply side, spot supply in some main producing areas is tight, and factories are maintaining a production mode based on order scheduling. Although tender prices have seen a slight MoM increase, the pullback in electricity prices and semi coke prices has weakened cost support. On the demand side, amid the traditional consumption off-season, end-use demand is weak, and buyers generally adopt a wait-and-see attitude, with a clear mindset to drive down prices and limited actual restocking needs. Overall, the market is in a volatile pattern of "pressure from above and support from below," and it is recommended to closely monitor the restocking rhythm of steel mills and changes in energy prices in the future.


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