This week, the magnesium market continued to be in the doldrums, with downstream players waiting and watching for demand to recover [SMM Magnesium Weekly Review]

1 Market Review

1 Dolomite

This week, the ex-factory price (excluding tax) of 1-3 grade dolomite (Wutai) was 78 yuan/mt, and the ex-factory price (excluding tax) of 2-4 grade dolomite (Wutai) was 128 yuan/mt, with prices remaining stable.

Dolomite prices remained stable this week. Supply side, regional differentiation was evident; leading dolomite manufacturers in the Wutai area were still in a state of production suspension, with current market transactions mainly focused on delivering previously accumulated inventory, and no new capacity has been released. Meanwhile, dolomite manufacturers in Hubei region operated normally, providing a steady supply, effectively compensating for the supply gap in some areas, keeping the overall market supply stable. On the demand side, there was a gradual increase. On one hand, magnesium plants that had suspended operations due to high temperatures have gradually resumed production; on the other hand, magnesium plants planning to resume production due to improved profit margins will also start the furnace ignition process soon. As the resumption of magnesium plants progresses, the subsequent supply of magnesium ingots will gradually increase, driving up the demand for dolomite. Overall, supported by growing demand, it is expected that dolomite prices will maintain a firm trend.

1.2 Magnesium Ingot

1.2.1 Magnesium Ingot (Fugu, Shenmu - Main Production Area)

This week, the mainstream quotations for 99.90% magnesium ingot in the main production area ranged from 17,000 to 17,100 yuan/mt, with magnesium prices continuously declining, down 250 yuan/mt WoW.

Magnesium prices showed a weak trend this week. Looking back at August, magnesium prices generally maintained a high-level consolidation, with some downstream customers choosing to lock in orders early. Coupled with the traditional off-season effect in August, the demand for magnesium ingots was poor this week. On the supply side, as magnesium plants in the main production area resumed production, the supply of magnesium ingots increased, significantly raising inventory pressure. Some magnesium plants chose to offer discounts for sales promotions, resulting in a one-sided downward trend in magnesium prices. Overall, the magnesium market this week was characterized by high inventory and weak demand. It is expected that with the return of foreign trade demand, magnesium prices may see a slight rebound.

1.2.2 Magnesium Ingot (Tianjin Port - China FOB)

This week, the China FOB price was $2,340-2,400/mt, with an average of $2,370/mt. The FOB quotation continued to decline, with a slight increase in trading volume and prices continuing to fall.

Although some overseas orders were signed as scheduled this week, market quotations became more divergent: affected by the continuous decline in magnesium prices in the main production area, competition among traders' FOB quotations intensified, with spot transaction prices mostly concentrated at $2,350-2,370/mt. On the other hand, influenced by the new tax regulations from the State Taxation Administration in October, quotations for orders delivered after mid-September became more cautious. Most traders were unwilling to take on "buying export" business, with inclusive tax quotations generally ranging from $2,420-2,450/mt, but actual transactions were limited. Currently, overseas downstream customers are mostly in a state of wait-and-see and bargaining, still needing time to digest the current price difference and re-plan procurement and shipment pace.

1.3 Magnesium Powder

This week, magnesium powder prices declined due to the impact of raw materials, with the mainstream ex-factory price (including tax) for 20-80 mesh Chinese magnesium powder at 18,300-18,500 yuan/mt; the FOB price for China was $2,500-2,550/mt.

This week, as magnesium prices continued to decline, some magnesium powder factories began to buy the dip, driving a significant short-term recovery in market demand. In terms of the magnesium powder market, production increased this month, mainly due to the concentrated release of overseas orders at the beginning of the month, requiring accelerated processing and delivery; domestic trade demand slowed slightly, and the September parade led to some downstream steel mills scheduling maintenance shutdowns, resulting in an overall weak demand trend. It is expected that magnesium powder demand will gradually recover after entering September.

1.4 Magnesium Alloy

This week, the mainstream ex-factory price (including tax) for Chinese magnesium alloy was 18,700-18,800 yuan/mt, and the mainstream FOB price for Chinese magnesium alloy was $2,550-2,620/mt.

This week, magnesium alloy prices generally followed the weak performance of magnesium ingots, with bullish and bearish factors intertwined, and downstream operations were cautious. Driven by the market mentality of "rush to buy amid continuous price rise and hold back amid price downturn," some downstream enterprises adopted a wait-and-see attitude, slowing down their procurement pace. Considering that the price of raw material magnesium ingot has gradually approached the bottom, further downside room is relatively small, to avoid subsequent price fluctuation risks, recent downstream customers have chosen to diversify their orders, ensuring that procurement prices remain at a relatively low level. Overall, although magnesium alloy prices are currently weak due to the drag from magnesium ingots, actual demand is supported by downstream diversified procurement, and low inventory provides a buffer for prices. It is expected that magnesium alloy prices will follow magnesium ingots in a narrow rangebound fluctuation at high levels, with a relatively small possibility of significant changes.

2 Weekly Summary

This week, the magnesium market as a whole showed a pattern of weak supply and demand, with prices under pressure and declining. The price of dolomite, the raw material, remained stable, with regional supply differentiation but overall stability, and demand gradually recovered as magnesium plants resumed production; the main producing area's magnesium ingot quotations fell to 17,000-17,100 yuan/mt, down 250 yuan MoM, with increased supply and weak domestic demand, and cautious foreign trade inquiries, leading to promotional sales under inventory pressure, with FOB quotations also declining and showing a divergence between spot and forward order prices; both magnesium powder and magnesium alloy prices followed the weak performance of magnesium ingots, with short-term buying the dip in magnesium powder driving a demand recovery, but domestic trade was still suppressed by steel mill maintenance, while downstream magnesium alloy buyers mostly adopted a wait-and-see approach and diversified procurement to control costs. Overall, the current market is dominated by destocking and waiting, and it is expected that with the gradual recovery of foreign trade demand and enhanced cost support, magnesium prices will stop falling and stabilize, entering a narrow rangebound fluctuation phase.