Magnesium Market Fluctuates Amid Intensified Tug-of-War Between Sellers and Buyers [SMM Magnesium Weekly Review]

1 Market Review

1 Dolomite

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

Dolomite market prices held steady overall this week. Supply side, leading dolomite enterprises maintained normal production, with stable supply and no significant shortages or accumulation. Demand side, magnesium plant operating rates nationwide remained high, and two primary magnesium smelters in the main production region started producing magnesium ingots this week, which will further boost dolomite demand, significantly strengthening downstream market support. Considering both supply and demand, the dolomite market is currently in a tight balance. Based on this, dolomite prices in the Wutai region are expected to hold up well going forward.

1.2 Magnesium Ingot

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

This week, magnesium prices fluctuated rangebound. As of press time, the mainstream market quotation for 99.90% magnesium ingot in the main production area was 16,300-16,400 yuan/mt, with the price center shifting lower, down 300 yuan/mt WoW.

Magnesium prices followed an inverted V pattern this week, fluctuating rangebound within the 16,000-16,500 yuan/mt range. Approaching the magnesium industry conference, smelters' reluctance to budge on prices recovered somewhat. Coupled with strong recent trading volume effectively depleting inventories at smaller smelters, the inventory distribution among producers in the main production area favored firm prices. Furthermore, an unexpected incident at a coal mine in the Shenhua region over the weekend boosted upward momentum for coal prices, strengthening cost support. Some downstream traders entered the market to purchase, and increased inquiries further solidified producers' confidence in raising prices, leading to a price rise. However, long-term, the supply-demand imbalance (strong supply, weak demand) is difficult to reverse, and continuously rising magnesium ingot supply is increasing market inventory pressure. Magnesium prices are expected to remain under pressure going forward.

1.2.2 Magnesium Ingot (Tianjin Port - FOB China)

This week, the FOB China price was quoted at $2,320-2,370/mt, averaging $2,345/mt. Spot orders from overseas were limited this week, and the tug-of-war between sellers and buyers continued.

FOB quotations showed a clear softening trend this week, with more low-priced resources appearing in the market, but overall trading activity was sluggish. Most tender orders were for forward delivery, expected to be concentrated for shipment from late October to November. Supported by costs and factors like industry conferences, prices held firm early in the week, but market wait-and-see sentiment regarding the future trend intensified. Magnesium prices are expected to remain under pressure and potentially decline next week, causing some purchasing orders to be withheld for now.

1.3 Magnesium Powder

This week, the mainstream market price (tax-included, ex-factory) for 20-80 mesh Chinese magnesium powder was 17,500-17,700 yuan/mt; the FOB China price was $2,460-2,550/mt.

This week, the magnesium powder market overall performed steadily, with transactions primarily driven by rigid demand. Due to weakened cost support, magnesium powder prices were generally under pressure. Current domestic demand remained stable, while overseas demand stayed mediocre, with most enterprises adopting a sales-based production strategy. The market overall maintained a weak balance, downstream users purchased as needed, and prices fluctuated rangebound following the primary magnesium trend.

1.4 Magnesium Alloy

This week, the mainstream tax-included ex-factory price for magnesium alloy in China was 18,250-18,350 yuan/mt, and the mainstream FOB price for Chinese magnesium alloy was $2,560-$2,610/mt.

This week, the magnesium alloy market showed a pattern of strong prices but tight volumes. The persistent tight spot supply and inventory inversion continued to provide support for magnesium alloy processing fees to remain firm. The core market contradiction currently lies in the temporary supply-demand mismatch. Magnesium alloy enterprises' operating rates fluctuated at highs this week. Although the tight supply situation for magnesium alloy eased somewhat, most magnesium alloy enterprises still operated with production scheduled based on orders, and spot magnesium alloy was tight. In the long term, the major trend of magnesium alloy prices will still be anchored to primary magnesium prices, likely continuing to fluctuate downward. However, in the short term, two key variables require close attention: first, whether primary magnesium prices can stop falling and stabilize, and second, whether downstream demand will be further released. If these variables show positive changes, coupled with the current temporary demand support, magnesium alloy prices are expected to rebound slightly.

2 Weekly Summary

This week, the magnesium market overall showed a fluctuating pattern amid a tug-of-war between sellers and buyers. Upstream dolomite prices held steady, and demand support strengthened as primary magnesium enterprises resumed production in main production areas, with prices in Wutai area expected to be relatively strong. Magnesium ingot prices showed an "inverted V" shaped fluctuation, with ex-factory prices in main production areas down 300 yuan/mt WoW to 16,300-16,400 yuan/mt. Although prices rose at the beginning of the week driven by meeting sentiment, cost support, and low inventory, inventory pressure gradually emerged under the pattern of strong supply and weak demand, and prices are expected to remain under pressure. FOB quotes softened correspondingly, with scarce overseas spot orders and strong wait-and-see sentiment in the market. The magnesium powder market maintained a weak balance, with prices fluctuating rangebound following primary magnesium, and enterprises produced based on sales. The magnesium alloy market exhibited a "strong prices, tight volumes" pattern, with processing fees remaining firm, mainly due to the temporary supply-demand mismatch. Long-term prices will still be anchored to the primary magnesium trend, while short-term focus should be on the stabilization of primary magnesium and the release of demand.