As August progresses halfway through, magnesium prices have been consolidating at a high level. Half of the market traders are taking a short-term break to adjust their market operation rhythms, leaving the magnesium market "silent." However, beneath the calm market atmosphere, there are undercurrents in the magnesium ingot market. Can the magnesium market maintain its current situation and continue to surge ahead in August?
The production resumption plans of primary magnesium smelters are steadily advancing. How will the supply side evolve?
In August, magnesium ingot smelters in the main production areas are still undergoing normal maintenance. Currently, six smelting enterprises are undergoing maintenance in August, with two of them having relatively large capacities. Additionally, two primary magnesium smelters that underwent maintenance in late July will resume production in August. Two magnesium plants that resumed production in July will operate normally in August. However, considering the continuous impact of high temperatures on the efficiency of primary magnesium smelting, the increase in primary magnesium production from the recovery of previous maintenance will be less than the decrease in production. It is estimated that primary magnesium production in August will be 80,000 mt, down 1.5% MoM, and magnesium ingot production will be 71,000 mt, down 1.7% MoM. In early September, magnesium plants that underwent previous maintenance will gradually resume production, with one magnesium plant's resumption increasing magnesium ingot supply. Additionally, considering that one magnesium plant may undergo maintenance in September according to past practices, this will, to a certain extent, reduce magnesium ingot supply. Overall, it is estimated that primary magnesium production in September will be 85,000 mt, up 5.7% MoM, and magnesium ingot production in September will be 76,000 mt, up 6.5% MoM.
The Impact of Major Commemorative Events Driven by Political Factors on the Price Trend of Magnesium Ingots
From historical data, during major events such as National Day celebrations, international conferences, and military parades, steel enterprises in the Beijing-Tianjin-Hebei region and surrounding areas usually implement temporary emission reduction measures to ensure air quality. On the supply side, the National Energy Administration issued a notice on coal mine verification on July 22, explicitly requiring strict control of overproduction. Illegal coal mines must suspend production for rectification, and a special verification of coal mine production will be initiated in eight provinces (regions), including Shanxi and Shaanxi. All regions are required to complete the verification and reporting work by August 15. On the demand side, due to production restrictions in the Beijing-Tianjin-Hebei region, industrial coal demand may decline. Combining the market conditions during previous major military parades, prices generally fell throughout the period, with the core reason being that the demand suppression effect exceeded the impact of supply contraction. Overall, the current raw coal price is facing downward pressure. As coal is an important raw material for magnesium ingot smelting, cost support may weaken.
Overseas Summer Break Enters Countdown, Waiting for Foreign Trade Demand to Return
In early August, the overseas magnesium ingot market was sluggish in trading. Domestic leading magnesium powder manufacturers entered the market for stockpiling, and the stable demand for magnesium-aluminum alloys provided bottom support, with overall demand slightly weakening. In mid-to-late August and early September, the implementation of the new national standard for magnesium alloys stimulated the release of new alloy demand. The rigid demand for restocking of aluminum alloys provided bottom support, and foreign trade demand may be concentrated for stability, providing strong support for magnesium ingot demand. Overall, both supply and demand in the subsequent market are expected to increase slightly. Considering that the current inventory of magnesium ingot manufacturers is at a low level and it still takes time for magnesium ingot manufacturers to resume production, it is expected that the magnesium ingot market will be more likely to rise than fall in late August.
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