In August, Magnesium Market Saw Volume Shrink While Prices Rose, Consolidating at High Levels Amid Inverted V-Shaped Trend, With Weakness Gradually Emerging in Post-Market Performance [SMM Domestic Analysis]

Magnesium Market Price Review for August: Inverted V-Shaped Trend with Extended High-Level Consolidation, Magnesium Prices Rose 4.2% MoM

In August, magnesium prices fluctuated within the high range of 17,000-17,500 yuan/mt, exhibiting an overall "inverted V" trend. The monthly average price increased to 17,226 yuan/mt from 16,528 yuan/mt in July, up 4.2% MoM. Reviewing the magnesium market in August, prices maintained an upward trajectory in early August, supported by low production and tight spot inventory, coupled with foreign trade demand driving high-price transactions. Prices climbed again to 17,400-17,500 yuan/mt. However, as previous orders were gradually fulfilled, downstream buyers showed strong fear of high prices, leading to a demand gap characterized by "new orders not yet arriving while old orders already delivered." In mid-to-late August, prices declined slowly, but limited downside room was observed due to strong reluctance to sell among top-tier producers in key regions, keeping prices in high-level consolidation.

Divergent Production Trends in the Magnesium Industry Chain for August: Primary Magnesium Slightly Down, Magnesium Powder Down 10%, Weak Supply and Demand as Main Theme

Primary Magnesium:According to SMM data, China's primary magnesium production in August 2025 decreased 1.50% MoM, with the operating rate dropping to 60.95%. In August, smelters in key production regions continued routine maintenance, with six smelters undergoing maintenance during the month, including two with large capacity. Notably, two primary magnesium smelters that began maintenance in late July resumed production in August, while two others that restarted in July operated normally in August. Additionally, one smelter that had been under maintenance for two years resumed feeding at month-end, contributing to production growth. However, considering the persistent impact of high temperatures on smelting efficiency, the production increase from resumed operations was outweighed by the decline, leading to a downward trend in primary magnesium output for August.

In September, previously idled smelters will gradually resume production, supplemented by two additional restarts boosting magnesium ingot supply. However, one smelter may undergo equipment upgrades in September, slightly reducing output. Overall, primary magnesium production is projected at 88,000 mt in September, up 8.7% MoM, while magnesium ingot output is expected at 78,000 mt, up 9.7% MoM. SMM will continue monitoring smelter production updates.

Magnesium Alloy:SMM data shows China's magnesium alloy production in August 2025 rose 2.15% MoM and 4.72% YoY, with the operating rate declining to 58.68%. High temperatures slowed commissioning progress at top-tier enterprises, but production still edged up slightly. The increase was primarily driven by EV two-wheeler manufacturers adopting magnesium alloys to meet new national standards on weight and plastic restrictions, achieving overall vehicle weight reduction. According to the SMM survey, some magnesium die-casting manufacturers have received orders from brands such as Yadea, Aima, and Luyuan. A magnesium die-casting manufacturer in Guangdong reported that it received 20,000 sets of EV magnesium alloy component orders this month. As a result, August alloy demand showed a significant improvement YoY, with outstanding performance in magnesium alloy orders and an upward trend in magnesium alloy production.

Looking ahead to September, the market competitiveness of magnesium alloys is accelerating. With mainstream producers continuously increasing market promotion, their core advantages in cost-effectiveness have gradually gained widespread recognition across the industry. This positive signal is driving substantial changes in the industrial sector — some die-casting companies have started adjusting their production processes, gradually replacing traditional aluminum alloys with magnesium alloys. Although the current material substitution process has not yet generated large-scale orders, and market demand release remains gradual, it has successfully driven a mild increase in overall magnesium alloy demand, laying the foundation for future production growth and forming a clear expectation. Supported by the previous demand recovery and stable production preparations, magnesium alloy production in September is expected to show an upward trend.

Magnesium Powder: According to SMM data, China's magnesium powder production in August 2025 decreased by 10.41%, with the operating rate dropping to 43.83%. The magnesium powder market in August showed a clear divergence, influenced by policy factors. The production trends among magnesium powder manufacturers were opposite, with some facing dual pressures from domestic and international demand. The continuous sluggishness of the domestic consumer market and the shrinking procurement demand from international steel enterprises led to a decline in export orders, prompting some companies to actively reduce their capacity utilization rates. In contrast, other companies performed well, with their magnesium powder production showing an upward trend. However, the increased magnesium powder production was less than the reduced production, resulting in a downward trend in magnesium powder production in August.

September Magnesium Price Outlook: Market Weakness Gradually Evident, Magnesium Prices May Operate Under Pressure

As the resumption of production at major magnesium-producing regions progresses, magnesium supply will significantly increase. According to the SMM survey, the primary magnesium production in September is expected to be 88,000 mt, up 8.7% MoM. With a substantial increase in supply, the pressure on magnesium prices will notably intensify. On the demand side, in September, considering the return of overseas customers from summer break and pre-National Day stockpiling, new orders will provide strong support for magnesium prices. Additionally, the new national standard for EVs promoting the application of magnesium alloys and the public announcement by downstream magnesium alloy manufacturers that designated projects will start in Q3 are positive news, leading to steady growth in magnesium alloy demand. However, whether the increase in downstream demand can cover the increase in supply remains uncertain. More importantly, in the actual transaction phase, downstream customers are generally influenced by the sentiment of "rush to buy amid continuous price rise and hold back amid price downturn," with some companies choosing to delay their procurement plans. This market mentality adds another layer of uncertainty to the stability of magnesium prices. Overall, magnesium prices may remain under pressure in September, and SMM will continue to monitor the magnesium market closely.