Recovery in Downstream Purchasing Sentiment Drives Rebound, Full Production at Supply End and Inventory Surplus Become Constraints [SMM Magnesium Morning Meeting Summary]

SMM Magnesium Morning Meeting Summary on August 25:

Raw Material Prices

The ex-factory price (excluding tax) for 1-3 grade dolomite (Wutai) is 78 yuan/mt, and the ex-factory price (excluding tax) for 2-4 grade dolomite (Wutai) is 128 yuan/mt; The mainstream ex-factory price for 75 ferrosilicon in Shaanxi is 5,800-5,900 yuan/mt.

Supply and Demand

Currently, dolomite prices are stable, with market supply remaining ample. On the demand side, as magnesium smelters gradually resume production, procurement demand has shown an increasing trend, and it is expected that dolomite prices will continue to hold firm. Yesterday, the most-traded 2509 futures contract for ferrosilicon closed at 5,462, up 0.11%, or 60 yuan. In the spot market, the current ferrosilicon market shows a pattern of strong supply and weak demand. Due to the impact of the military parade, some steel mills have suspended operations for maintenance, leading to slower-than-expected recovery in ferrosilicon demand. In the short term, ferrosilicon prices are expected to fluctuate rangebound.

Magnesium Ingot Prices

As of the previous working day, the mainstream quotations for magnesium ingots in Fugu were 17,250-17,350 yuan/mt, unchanged from the previous working day; The FOB China price was $2,380-2,430/mt.

Supply and Demand

Last week, magnesium prices showed a weak-to-strong trend. For the first half of the week, magnesium smelter quotations were only slightly firm on Monday. Subsequently, under the influence of downstream buyers driving down purchasing prices, the mainstream transaction prices for magnesium declined. By Wednesday, the mainstream transaction prices for magnesium were 17,100-17,200 yuan/mt. Some traders began to enter the market for purchases, and magnesium smelters' reluctance to budge on prices grew stronger. As a result, the recent cycle of magnesium price declines came to a temporary halt. Downstream traders gradually entered the market to place orders, and magnesium prices bottomed out and rebounded. Overall, the magnesium market remains in a tug-of-war between sellers and buyers. On the supply side, smelting plants are gradually resuming full production, and there is still a surplus in recent accumulated inventory, leading to increased inventory pressure. On the demand side, foreign trade deliveries at month-end may provide some support for magnesium prices. It is expected that next week, magnesium prices will face difficulty in either rising or falling.

Magnesium Alloy Prices

As of the previous working day, the mainstream ex-factory price (including tax) for magnesium alloys in China was 18,900-19,000 yuan/mt, and the mainstream FOB price for Chinese magnesium alloys was $2,580-2,650/mt.

Supply and DemandYesterday, magnesium alloy prices were closely linked to upstream raw material prices, and their overall trend was directly influenced by them. From a market fundamentals perspective, demand is steadily improving, and magnesium alloy processing fees are holding firm, with industry profitability remaining stable. However, the market also faces significant constraints. Supported by high magnesium ingot prices, magnesium alloy spot prices have remained at a high level, which has led to strong resistance from downstream die-casting plants. In the short term, the current stable situation is likely to persist.

Magnesium Powder

Prices

As of the previous working day, the mainstream ex-factory prices including tax for 20-80 mesh Chinese magnesium powder were 18,450-18,650 yuan/mt; the FOB China price was $2,530-2,580/mt.

Supply and Demand

The purchasing pace in the magnesium powder market has slowed down, with supply continuously increasing. Despite ongoing rigid demand from downstream, fluctuations in raw material prices have put pressure on product prices to stabilize, leading many companies to adopt a strategy of purchasing as needed to cope with the volatility in raw material prices.