Production Resumption Wave Overlaps with Rigid Demand Stockpiling, Magnesium Prices Were Under Pressure This Week [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 the price for 2-4 cm dolomite (Wutai) was 138 yuan/mt, also flat WoW.

Dolomite market prices held steady overall this week. Supply side, top-tier enterprises maintained orderly production, ensuring stable supply without significant shortages or surpluses. Demand side, the operating rate of magnesium plants nationwide continued to fluctuate at highs, and two primary magnesium smelters in the main production area successfully produced magnesium ingots this week, further amplifying dolomite demand and significantly strengthening downstream market support. Considering both supply and demand, the dolomite market has entered a state of tight balance. Against this backdrop, dolomite prices in the Wutai area 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 were under pressure. As of press time, the mainstream market quotations for 99.90% magnesium ingot in the main production area were maintained at 16,050-16,150 yuan/mt, with the price center moving down, a decrease of 250 yuan/mt WoW.

The magnesium market this week was characterized by increased volume and falling prices, showing a unilateral downward trend with the price center slowly declining. Specifically, last week's magnesium industry conference did not alleviate the supply-demand imbalance. After a brief rebound, magnesium prices pulled back again. Primary magnesium producers offered discounts through sales promotions. Downstream buyers, who had delayed purchases last week due to fear of high prices, gradually entered the market. Transaction activity in the magnesium market recovered noticeably. However, the downstream sentiment of rushing to buy amid continuous price rise and holding back amid price downturn was quite strong. Most market transactions were for essential stockpiling. Furthermore, a wave of production resumptions pushed the daily production in the main area to 2,000 mt. The recovered transaction volume still failed to effectively consume the daily magnesium ingot output. Consequently, magnesium prices were under pressure this week.

1.2.2 Magnesium Ingot (Tianjin Port - FOB China)

This week, the FOB China price was quoted at $2,270-2,340/mt, averaging $2,305/mt. Overseas orders showed no increase this week, and transaction prices were at the lower end of the range.

Since the start of the week, as domestic magnesium ingot ex-factory prices continued to decline, FOB quotations followed suit. On the export front, trader sentiment diverged significantly: over 60% of enterprises insisted on tax-included quotations, but a minority continued to offer prices at the lower end of the FOB range, attempting volume discounts. Downstream performance was overall weak. On one hand, bearish sentiment spread, with most purchasers adopting a wait-and-see attitude. On the other hand, end-use demand was indeed sluggish, as orders typically seen in Q4 were either released earlier this year or significantly reduced, leaving new orders very limited. Overall, the overseas market remained sluggish, with buyers showing little willingness to counteroffer, leading to persistently low volume of firm export transactions and keeping the magnesium export market under pressure.

1.3 Magnesium Powder

This week, the mainstream ex-factory prices, including tax, for Chinese magnesium powder of 20-80 mesh were 17,250-17,450 yuan/mt; the mainstream FOB China prices were $2,410-2,520/mt.

This week, raw material prices continued to decline, which, to some extent, boosted procurement activity for magnesium powder. However, the overall market pattern of "weak supply and demand" remained unchanged. Dragged down by sluggish demand from downstream steel mills, orders for magnesium powder plants were generally flat, leading to a covert downward shift in the transaction center. Ultimately, amid the tussle between cost support and insufficient demand, magnesium powder prices showed a weak and stable trend.

1.4 Magnesium Alloy

This week, the mainstream ex-factory prices, including tax, for Chinese magnesium alloy were 18,000-18,100 yuan/mt; the mainstream FOB China prices for magnesium alloy were $2,520-2,580/mt.

This week, magnesium alloy prices followed primary magnesium prices in a persistent, gradual decline, but alloy processing fees held up well. From a supply-demand perspective, the magnesium alloy market experienced a structural imbalance in the short term. Although operating rates on the production side remained high, leading to a moderate easing of the previously tight supply, most producers still needed to follow their order books for production scheduling, with some manufacturers reporting schedules filled until mid-November. Looking ahead, as upstream magnesium alloy producers accelerate production, the tight supply situation is expected to ease effectively. However, downstream die-casting plants currently show low acceptance of increased processing fees. Processing fees for magnesium alloy are expected to hold up well in the near term, but there is a risk of a pullback later.

2 Weekly Summary

This week, performance varied across the magnesium industry chain. The dolomite market saw balanced supply and demand, with top-tier enterprises operating orderly and supply stable. Coupled with high operating rates at magnesium plants and new capacity releases boosting demand growth, the market entered a tight balance, and prices were expected to hold up well going forward. The magnesium ingot market showed increased volume but falling prices. Industry meetings did not resolve the supply-demand imbalance; production resumptions by manufacturers pushed up output, while rigid demand stockpiling from downstream sectors struggled to absorb the increase. On the export front, trader sentiment was divided, and weak overseas demand kept export under pressure. The magnesium powder market maintained its weak supply and demand. Falling raw material prices boosted some procurement demand, but sluggish demand from downstream steel mills weighed on orders, leading to prices stabilizing weakly amid the contest between cost and demand. Magnesium alloy prices weakened in line with primary magnesium, but processing fees remained firm. The industry faced structural imbalances, with enterprises having full order books. As supply increases later, processing fees face a risk of pullback.