Raw Material Tight Balance Coupled with Demand Surge, Magnesium Alloy Becomes Growth Highlight in Industry Chain [SMM Magnesium Weekly Review] https://t.smm.cn/05ZDlPc8 [SMM Magnesium Weekly Review]

1 Market Review

1 Dolomite

This week, the ex-factory price (excluding tax) of 1-3 cm dolomite (Wutai) was 108 yuan/mt, unchanged WoW, and the ex-factory price (excluding tax) of 2-4 cm dolomite (Wutai) was 138 yuan/mt, also unchanged WoW.

Dolomite prices held steady this week. Supply side, dolomite producers operated according to their production plans; demand side, most magnesium plants produced as per their schedules, with some undergoing short-term maintenance last week. Overall, the national operating rate of magnesium plants remained at a relatively high level compared to last month, with robust downstream demand support. In general, the supply and demand for dolomite is in a tight balance, and Wutai dolomite prices are expected to hold up well.

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 were 16,700-16,800 yuan/mt, with magnesium prices fluctuating rangebound.

Magnesium prices remained stable this week. Supply side, most magnesium plants across the country maintained their normal production pace, with a few conducting routine maintenance. The supply of magnesium ingots was relatively stable. However, magnesium plants in Shaanxi and Ningxia provinces are expected to resume production at the end of September and early October, which will likely increase supply pressure. Considering this, magnesium plants adopted a low-inventory sales model, showing a strong willingness to sell, and there were occasional low-price offers in the market this week. Demand side, foreign trade orders were concentrated for delivery in early September, while domestic orders increased slightly due to pre-National Day purchases. However, overall, the market had a strong fear of high prices, and acceptance of high prices was low, leading to insufficient upward momentum for magnesium prices. Overall, the magnesium ingot market was in a supply-demand balance, with a strong stalemate atmosphere. This week, magnesium transactions occurred at 16,650-16,700 yuan/mt, with a significantly narrowed price fluctuation range.

1.2.2 Magnesium Ingot (Tianjin Port - China FOB)

This week, the China FOB price was $2,400-2,440/mt, with an average of $2,420/mt. There was a significant gap in FOB transaction prices this week, with traders' quotations mostly hovering at highs.

The export market showed a strong wait-and-see sentiment this week, mainly due to the approaching customs export control policy on October 1st. Given the uncertainty over subsequent tariff reviews, traders kept their quotations for October shipments firm. This week, new overseas orders were limited, with most delivery dates extended to October, and mainstream transaction prices concentrated at $2,400-2,420/mt. Currently, both traders and downstream players are primarily in a wait-and-see mode. It is expected that order volumes in October will significantly contract, as some of the September demand has been released through a rush to export. FOB prices are expected to fluctuate at highs next week before the holiday.

1.3 Magnesium Powder

This week, the mainstream tax-inclusive ex-factory prices for Chinese magnesium powder with a mesh size of 20-80 ranged from 17,900 to 18,100 yuan/mt, while the FOB prices in China ranged from $2,540 to $2,580/mt.

This week, the magnesium powder market maintained a pattern of fluctuating rangebound, with price trends closely linked to raw material costs. As the National Day holiday approaches, the domestic demand market shows signs of recovery, with procurement activities gradually resuming, driving overall demand upward. On the production side, operations remain stable, with magnesium powder plants operating at normal levels and supply being adequate. However, the overseas market remains sluggish, with limited release of downstream orders and buyers adopting a wait-and-see attitude. The current market exhibits characteristics of the domestic market outperforming the overseas market, with the supply-demand relationship in a weak balance. It is expected that prices will continue to fluctuate within a range before the holiday.

1.4 Magnesium Alloy

This week, the mainstream tax-inclusive ex-factory prices for magnesium alloy in China ranged from 18,400 to 18,550 yuan/mt, while the mainstream FOB prices for magnesium alloy in China ranged from $2,590 to $2,630/mt.

This week, magnesium alloy prices held up well. On the supply side, magnesium alloy manufacturers continue to face a situation of tight spot supply and inverted inventory, prompting some manufacturers to slightly increase their operating rates in response to the current situation, resulting in a slight upward trend in magnesium alloy supply. On the demand side, driven by the peak season demand during the September-October peak season, coupled with the upward trend in demand for magnesium alloy die-castings such as CCB and dashboard brackets from some terminal automakers, magnesium alloy demand has seen a small-scale surge this year. Overall, the magnesium alloy market is experiencing undersupply, with processing fees for some alloy manufacturers slightly increasing. It is expected that magnesium alloy prices will remain firm in the future market.

2 Weekly Summary

This week, the markets for various segments of the magnesium industry chain have shown a divergent trend. The price of upstream dolomite has held up well, with supply and demand in a tight balance, providing support for subsequent raw material costs. In the main producing areas, magnesium ingot prices have fluctuated rangebound, with a strong atmosphere of supply-demand stalemate. Although short-term supply remains stable, expectations of capacity recovery in the future market bring supply pressure, leading some manufacturers to sell with low inventory. In terms of exports, affected by the upcoming implementation of export control policies, the magnesium ingot offshore market has a strong wait-and-see sentiment, with limited new orders. It is expected that order volumes will contract in October. The magnesium powder market exhibits characteristics of the domestic market outperforming the overseas market, with domestic demand recovering as the National Day holiday approaches and overseas demand remaining sluggish, maintaining an overall weak balance. Magnesium alloy has performed impressively, with prices holding up well. On the supply side, there is a tight spot supply, while on the demand side, growth has been driven by the peak season and orders from automakers, resulting in undersupply in the market. Against this backdrop, enterprises such as Fuwei Wheel have achieved mass production at their magnesium alloy bases, echoing the growth in industry demand and demonstrating significant linkage between upstream and downstream sectors of the industry chain.