Alert! The average price of magnesium metal is expected to decline in October, and the risk of price inversion intensifies with stable costs [SMM Domestic Analysis]

In September, the smelting cost of primary magnesium showed a narrow-range fluctuating trend. Both the prices of raw coal and semi-coke increased, but due to the lag in the price increase of semi-coke, the smelting cost of primary magnesium first increased and then decreased. Additionally, in September, the operating rate of primary magnesium manufacturers increased significantly, the price difference between 75# ferrosilicon and 72# ferrosilicon widened, 75# ferrosilicon showed strong performance supported by demand, and the cost of auxiliary materials increased. Overall, the full cost (including tax) of China's magnesium ingot smelting industry decreased to 16,258 yuan/ton, the profit margin of primary magnesium smelting in provinces such as Xinjiang and Shaanxi slightly narrowed, and the cost in areas such as Shanxi and Anhui was inverted.
Raw material cost: In September, the price of dolomite showed strong performance. After the maintenance of the five leading dolomite manufacturers ended, affected by the adjustment of the market operation strategies of these leading manufacturers, they raised the dolomite price, causing the dolomite price in Wutai region to show an upward trend; multiple provinces such as Hubei and Inner Mongolia filled the gap, and the ex-factory prices of dolomite in other provinces remained stable. Considering that current primary magnesium smelting manufacturers source from multiple suppliers for allocation and use, the raw material cost shows an upward trend, but the increase is limited.
Cost of auxiliary materials: In September, the operating rate of primary magnesium smelting enterprises increased. Supported by downstream demand, the price of 75# ferrosilicon showed a trend of high-level consolidation. At the end of September, affected by pre-National Day stockpiling, the price of 75# ferrosilicon rose to 6,100 - 6,200 yuan/ton, and the actual transaction price rose to 5,950 - 6,050 yuan/ton. The cost of primary magnesium smelting increased by 0.5% month-on-month.
Energy costs: On the supply side, it has been continuously tightening, while on the demand side, it has been steadily increasing. In terms of supply, policies have strictly controlled overproduction. Shaanxi has required coal enterprises to reasonably arrange production, and Inner Mongolia has notified coal mines with overproduction and ordered some mines to suspend production for rectification, effectively constraining coal production in the main producing areas. Meanwhile, at the beginning of the month, coal mine production was cautious due to the impact of important events; in the latter half of the month, approaching the National Day holiday, to ensure safety, some private mines in the producing areas reduced production or suspended production, resulting in a slight increase in supply in the main producing areas. On the demand side, the pre-holiday inventory replenishment demand of some coal-consuming enterprises was concentratedly released, and some end points in the Northeast region have even begun winter storage procurement. Speculative demand also entered the market after coal prices stabilized. However, subsequently, the semi-coke market has been strongly operating due to reasons such as rising costs and reduced supply caused by enterprise maintenance. Affected by this, the energy cost of primary magnesium smelting decreased by 6.4% month-on-month.
Labor costs: As the weather turns cooler, primary magnesium smelting manufacturers no longer need to provide high-temperature subsidies to workers, and labor costs are on a downward trend.
Entering October 2025, the smelting cost of magnesium metal is expected to fluctuate within a narrow range, energy costs are expected to rebound, raw material costs are expected to remain stable, and labor costs are expected to decline. Overall, SMM expects the average domestic fully-taxed total cost of the magnesium metal industry in October 2025 to be around 16,000 - 16,500 yuan/ton.