Raw Material Support Weakens, Leading to Industry Chain Divergence, Magnesium Alloy Bucks the Trend and Strengthens [SMM Magnesium Weekly Review]

1 Market Review

1 Dolomite

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

This week, the overall market price of dolomite remained stable. On the supply side, various producers operated normally as planned, ensuring a steady supply of goods without significant shortages or overstocking. On the demand side, the operating rate of magnesium plants nationwide remained high, and two additional primary magnesium smelters are expected to resume magnesium ingot production next week, further boosting demand for dolomite and significantly strengthening support in the downstream market. Considering both supply and demand, the current dolomite market has entered a tight balance. Based on this, it is anticipated that dolomite prices in the Wutai region will exhibit a tendency to hold up well in the subsequent period.

1.2 Magnesium Ingot

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

This week, magnesium prices continued to decline. As of press time, the mainstream quotations for 99.90% magnesium ingot in the main producing areas had been adjusted downward to 16,100-16,200 yuan/mt, with the center of magnesium prices moving lower, down by 300 yuan/mt MoM.

This week, magnesium prices exhibited a unilateral downward trend, with a persistent gradual decline. The core reason lies in the price pressure caused by supply-demand imbalance in the market. Supply-side pressure has significantly increased. Currently, two magnesium plants are actively preparing for production resumptions, and another two primary magnesium smelters have confirmed that they will produce magnesium ingots next week. The anticipated increase in supply has directly intensified bearish sentiment in the market. On the demand side, the magnesium alloy market shows a trend where positive factors are difficult to transmit upwards. Although the release of demand in the magnesium alloy market has driven theoretical demand for primary magnesium, currently, half of the enterprises in the magnesium alloy industry adopt an entire industry chain layout model, with most of their demand increments being absorbed internally. Thus, the actual boosting effect transmitted upwards to the primary magnesium market is limited. The performance of the foreign trade sector is mixed. Due to uncertainties in the forging or purchasing customs clearance documents from other import and export firms policy, the participation of some traders has decreased. However, according to industry information, the turnover volume of magnesium ingots at Tianjin Port has recently increased, indicating relatively outstanding performance in actual foreign trade demand. Overall, although the magnesium market achieved a slight destocking this week, magnesium prices still struggled to reverse the downward trend due to the dissipation of magnesium plants' sentiment of holding back goods for higher prices and increased market selling pressure.

1.2.2 Magnesium Ingot (Tianjin Port - China FOB)

This week, the China FOB (Free on Board) price was reported at $2,310-2,350/mt, with an average price of $2,330/mt. The overall FOB prices continued to decline, but there was a stalemate between upstream quotations and downstream intended prices.

This week, there were significant discrepancies in FOB market quotations for magnesium ingots, resulting in an overall chaotic situation. Although domestic ex-factory prices continued to decline gradually, the price spread between domestic and overseas markets further widened. Currently, high quotations mostly come from traders, primarily due to stricter export customs supervision policies, leading to generally cautious order-taking; while low-end quotations mainly reflect downstream users' intended transaction prices and a small number of already signed order prices. As prices decline rapidly, market bearish sentiment intensifies, and downstream procurement target prices are correspondingly lowered. According to the SMM survey, overseas new orders this month are expected to shrink significantly. Even if there is intention to place orders, most are for long-term orders in 2026, which can hardly provide effective support to the current market. Considering the gradual increase in domestic supply, the magnesium market is expected to face certain inventory buildup pressure in Q4, and prices will likely remain under pressure.

1.3 Magnesium Powder

This week, the mainstream tax-included ex-factory price for 20-80 mesh Chinese magnesium powder was 17,300-17,500 yuan/mt; the Chinese FOB price was $2,450-2,530/mt.

This week, the magnesium powder market continued to be affected by the decline in raw material prices, showing a overall slight downward trend. Demand side, the domestic trade market stabilized after the holiday, becoming the main support for current demand, with relatively active order placement; in contrast, foreign trade demand remained weak, with overall sluggish performance. Against this backdrop, magnesium powder enterprises generally adopted a sales-based production strategy. Current production mainly relies on domestic trade orders and export shipment plans from late October to early November, maintaining a weak and stable supply-demand relationship. Affected by the continuous slight price decline, downstream sentiment of "rushing to buy amid continuous price rise and holding back amid price downturn" became evident, and procurement behavior turned cautious.

1.4 Magnesium Alloy

This week, the mainstream tax-included ex-factory price for Chinese magnesium alloy was 18,100-18,200 yuan/mt; the mainstream FOB price for Chinese magnesium alloy was $2,570-2,600/mt.

This week, magnesium alloy prices fluctuated upward. The dual situation of tight spot supply and inverted inventory pushed up the quotations for magnesium alloy processing fees. Supply side, most established magnesium alloy enterprises in the market continued to increase their operating rates, actively filling the spot supply gap; on the other hand, primary magnesium manufacturers in main production areas actively extended their industry chain downstream, further promoting the rapid growth of magnesium alloy supply scale. Demand side, most magnesium alloy manufacturers reported that the market this month has shown a clear undersupply situation, with significantly increased difficulty in obtaining spot inquiries, and order schedules for some enterprises have been extended to 20 days later. Among these, the demand boost from the new energy vehicle sector was the most critical, directly supporting magnesium alloy processing fees to remain high with strong support. Overall, the broader trend of magnesium alloy prices will still follow primary magnesium prices in fluctuating downward. However, considering the current phase of strong support from its own demand, if primary magnesium prices stop falling or demand is further released, the possibility of a slight rebound in magnesium alloy prices cannot be ruled out.

2 This Week's Summary

This week, the magnesium market exhibited a divergent pattern characterized by stable raw materials, weak magnesium ingot, declining magnesium powder following the downturn, and strong magnesium alloy. Dolomite prices held steady, with stable supply and demand supported by high operating rates at magnesium plants, and are expected to hold up well. Magnesium ingot prices trended downward unilaterally, with offers in major production regions down 300 yuan/mt MoM, primarily due to strong expectations of increased supply but limited transmission of actual demand, coupled with growing selling pressure in the market. Magnesium powder was dragged down by the gradual decline in raw material prices and weak foreign trade, making domestic trade the main support, while downstream buyers showed a clear tendency to rush to buy amid continuous price rise and hold back amid price downturn. Magnesium alloy performed strongly due to tight spot supply and rising processing fees, with robust NEV demand driving undersupply, though in the long term, it will still be constrained by the price trend of primary magnesium.