Prices Under Pressure, Downward Trend; Downstream Adopts Wait-and-See Approach, Awaiting Consensus on Hitting Bottom [SMM Magnesium Weekly Review]

1 Market Review

1 Dolomite

This week, the ex-factory tax-excluded price of 1-3 cm dolomite (Wutai) stood at 78 yuan/mt, while that of 2-4 cm dolomite (Wutai) was 128 yuan/mt, with prices remaining stable.

This week, dolomite prices remained stable, with significant regional differentiation in the supply side. Currently, leading manufacturers in Wutai are still suspending production and mainly delivering from inventories. Manufacturers in Hubei are operating normally, with stable supply making up for part of the shortage, resulting in an overall stable supply. The expected increase in demand for dolomite has weakened somewhat, as some primary magnesium smelters in the main producing areas have reported maintenance news again, narrowing the growth in demand for dolomite. Overall, supported by demand, it is expected that dolomite prices will remain firm in the subsequent period.

1.2 Magnesium Ingot

1.2.1 Magnesium Ingot (Fugu, Shenmu - Main Producing Areas)

This week, the mainstream quotations for 99.90% magnesium ingot in the main producing areas ranged from 16,700 to 16,800 yuan/mt. Magnesium prices were under pressure, down 200 yuan/mt from last Thursday on a WoW basis.

This week, magnesium prices showed a unilateral downward trend, with the magnesium market in the doldrums. Reviewing the magnesium market this week, transactions exceeded 1,000 mt for four consecutive working days, indicating significant market activity. However, magnesium prices continued to decline. The key factor was that downstream customers' pessimistic expectations about the magnesium market led to split purchasing of orders, preventing concentrated order releases and challenging manufacturers' pessimistic expectations for the market outlook. This triggered a shift in magnesium manufacturers' behavior from occasional low-price sales by small manufacturers to competitive sales among all manufacturers, accelerating the decline in magnesium prices. However, considering the expected rise in demand in September, the magnesium market may see widespread transactions at a mutually agreed point in the future, leading to a bottom-out rebound.

1.2.2 Magnesium Ingot (Tianjin Port - China FOB)

This week, the China FOB price was reported at $2,360-2,400/mt, with an average price of $2,370/mt. The FOB transaction price slightly decreased this week, while traders' quotations remained firm.

Affected by the pullback in ex-factory prices, overseas order trading was active this week. Some quarterly orders were released early in the week, but the overall transaction price remained low, with spot delivery orders mostly concentrated at $2,340-2,350/mt. However, the recent continuous weakening of the US dollar exchange rate, coupled with expectations of policy controls approaching in October, has to some extent offset the downside room for prices. Facing inquiries after mid-week, approximately 80% of traders were unwilling to risk offering low tax-excluded prices, and mainstream market quotations gradually stabilized at $2,380-2,410/mt. As downstream customers returned to a wait-and-see stance, the gap between quotations and inquiries between traders and end-users widened, and the market once again fell into a stalemate. Despite this, some traders have gradually accepted the tax-inclusive prices and a few deals have been reached. Customs clearance will end on September 20, after which it is expected to be difficult to secure low-price orders, and market pressure may gradually become apparent.

1.3 Magnesium Powder

This week, magnesium powder prices continued to decline due to the impact of raw material prices; the mainstream tax-inclusive ex-factory price for 20-80 mesh Chinese magnesium powder was 17,900-18,100 yuan/mt; the FOB price in China was $2,510-2,550/mt.

The overall trading atmosphere in the magnesium powder market this week was active, showing a robust supply and demand pattern. On the supply side, the operating rate of magnesium powder plants continued to rise, with production steadily increasing, and they actively purchased magnesium ingot raw materials to ensure production. On the demand side, downstream purchase willingness has strengthened, with some domestic trade buyers gradually entering the market to replenish stocks, and foreign trade orders also maintained a steady release. However, due to the downward trend in magnesium ingot prices, the cost support for magnesium powder weakened, leading to overall quotes under pressure, and although market transactions have recovered compared to earlier, the overall order volume still falls short of the same period in previous years. It is expected that the magnesium powder market will continue to operate in the doldrums in the short term, with price trends continuing to be influenced by magnesium ingot costs and actual transaction conditions.

1.4 Magnesium Alloy

This week, the mainstream tax-inclusive ex-factory price 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 fluctuated in tandem with magnesium ingot prices. On the supply side, magnesium alloy manufacturers produced according to their plans, with some experiencing tight spot supply and nearly inverted inventory, indicating an upward trend in magnesium alloy production in the future. On the demand side, new application areas such as NEVs and EVs saw increased demand, leading to an upward trend in magnesium alloy demand. Overall, supported by demand, magnesium alloy manufacturers' willingness to raise processing fees has strengthened, but they are still waiting for transaction follow-up.

2 Weekly Summary

This week, the magnesium market as a whole showed a weak supply and demand pattern, with prices under pressure. On the raw material side, dolomite prices remained stable, with regional supply differentiation but overall stability, and expectations for demand growth have weakened. The magnesium ingot market was pervaded by market pessimism, with main producing area quotes down 200 yuan/mt MoM. Although transactions continued to increase, the practice of downstream batch purchases and competition among magnesium factories to sell led to continuously weakening prices, with no signs of stabilization yet. In terms of exports, FOB quotes were in a stalemate due to the impact of the RMB exchange rate and policy expectations, with traders reluctant to sell at low prices. Later, as customs clearance deadlines approach, low-priced resources will decrease. Both magnesium powder and magnesium alloy prices followed the downward trend of magnesium ingot, with active magnesium powder trading but order volumes not reaching the levels of previous years, while magnesium alloy benefited from demand support in sectors like NEVs, with tight spot supply and processing fees expected to remain firm. Overall, the market is still in the process of hitting bottom. Subsequent attention should be paid to whether increased trading volume and the formation of enterprise consensus can drive a rebound in magnesium prices.