Strong Supply vs. Weak Demand vs. Surging Costs: Which Prevails? How Will Magnesium Prices Perform in November? [SMM Domestic Analysis]

Looking back at the magnesium market in October, the smooth production resumption of primary magnesium smelters in the main production areas increased daily production to around 2,000 mt. The sudden rise in primary magnesium supply led to a supply-demand imbalance in the magnesium market. Downstream buyers delayed purchases, while primary magnesium smelters showed an increased willingness to sell, creating a divergence in sentiment between buyers and sellers that pushed magnesium prices into a continuous, gradual decline. However, due to sudden temperature drops in many regions prompting earlier winter stockpiling, coal prices held up well. Magnesium prices rebounded several times from the bottom, influenced by rising coal prices which strengthened cost support. Consequently, magnesium prices in October showed a trend of bottom consolidation.

Review and Forecast of Magnesium Market Production

According to SMM data, China's primary magnesium production in October 2025 increased by 6.67% MoM, with the operating rate adjusted up to 70.44%.

Primary magnesium production in October increased by 6.67% MoM, showing steady growth. The reasons for this growth are as follows: First, some primary magnesium smelters underwent annual equipment maintenance in September; after the maintenance ended that month, production resumed, and these plants operated normally in October, contributing to the increase in primary magnesium production. Second, primary magnesium smelters in provinces such as Shaanxi, Inner Mongolia, and Ningxia started production and produced magnesium ingots in October, leading to a slight increase in primary magnesium output. Third, a surge in demand in the magnesium alloy market prompted these plants, mostly part of an entire industry chain, to increase the operating rate of primary magnesium smelting to reduce reliance on externally purchased magnesium ingots. Primary magnesium production is expected to continue growing in November. Currently, newly resumed primary magnesium smelters in provinces like Shaanxi, Ningxia, and Inner Mongolia are producing magnesium ingots. As production equipment is debugged in the new month, daily output is expected to increase slightly. Additionally, Xinjiang province has plans to increase production, so primary magnesium output in November is projected to grow rapidly.

SMM data shows that China's magnesium alloy production in October 2025 was adjusted up by 19.49% MoM, up 36.01% YoY, with a cumulative increase of 10.78% YoY. The operating rate for magnesium alloy in October was adjusted up to 74.54%.

Magnesium alloy production grew rapidly in October, up 19.49% MoM. In September, demand growth momentum in the magnesium alloy market was significant, with widespread inventory inversions in the market. Most manufacturers were in back-to-back production mode, and spot supply remained tight. Some alloy manufacturers proactively increased production to supplement magnesium ingot supply, leading to a notable rise in magnesium alloy output. Specifically, the growth in magnesium alloy demand spread gradually from Anhui to areas like Shanxi and Shaanxi. Magnesium alloy manufacturers correspondingly increased their operating rates based on demand, with some plants in Shanxi raising their rates to 100%. Magnesium alloy manufacturers in Shaanxi accelerated the construction of magnesium alloy production lines, with some Shaanxi plants producing magnesium alloy by early to mid-October, resulting in a slight increase in magnesium alloy output in Shaanxi.

In November, most producers still need to arrange production according to order sequences, with some manufacturers' current production schedules extending to mid-to-late November. To alleviate the current tight supply situation, magnesium alloy producers in provinces such as Anhui and Shanxi continue to operate at full capacity. Considering that primary magnesium producers in provinces like Inner Mongolia and Shaanxi are releasing new capacity, which is expected to produce magnesium alloy in November, overall, subsequent alloy production is projected to show an upward trend.

According to SMM data, China's magnesium powder production in October 2025 increased by 4.04% MoM, with the operating rate rising to 43.96%.

Magnesium powder production increased slightly in October. Currently, some magnesium powder producers face dual pressures from domestic and external demand: the domestic consumer market remains sluggish, and procurement demand from steel enterprises has shrunk, so magnesium powder demand has not improved significantly. Affected by the gradual implementation of policies on forging or purchasing customs clearance documents from other import and export firms, foreign trade orders for some magnesium powder producers increased slightly, leading to a slight rise in October magnesium powder production. As the traditional peak season ends, the market generally expects demand to weaken further, and the industry may face greater pressure for production cuts in November.

Shaanxi Mine-Mouth Coal Prices Rise Over 90 Yuan From Previous Period: What Impact on the Magnesium Market?

The reasons for the rise in coal prices are complex. On one hand, capacity verification policies are strictly enforced, some coal mines have proactively cut production, and combined with the normalization of safety and environmental protection policies, coal supply is further constrained. In some regions, coal mines face expected production contraction due to overproduction rectification. Moreover, increased transportation difficulties have further exacerbated the tight supply situation. Maintenance on the Daqin Line in autumn and damage to railway facilities have reduced transport capacity, decreased port inflows, continued inventory declines, and intensified shortages, pushing prices up. On the other hand, after temperatures dropped in north China, residential heating demand increased, thermal power loads were higher than expected, daily consumption at power plants remained high, and demand for coal was robust. The "Indian summer" weather persisted in south China, with daily consumption at coastal power plants up about 16% YoY; industrial demand was stable, with industries such as chemicals and metallurgy in their production peak season, showing strong rigid demand for restocking coal. Traders also stockpiled in advance in anticipation of winter market conditions, further boosting demand.

Rising coal prices lead to higher electricity prices. Electricity costs account for a high proportion of ferrosilicon production costs, so production costs increase, and cost side supports price rises. On the other hand, higher coal prices will drive up prices of raw materials such as semi-coke. With raw material prices maintaining an upward trend, ferrosilicon production costs are further pushed up, and the cost side will provide strong support for ferrosilicon prices.

Raw material prices such as coal and ferrosilicon are holding up well, which will strengthen cost support for magnesium prices. However, as most magnesium plants in Shaanxi operate with integrated industry chains, the coal price increase is expected to lead to further upward price adjustments for semi-coke, which may partially offset the cost increase brought by higher coal prices. Additionally, after the previous pullback in coal prices, some magnesium plants replenished inventory at low levels, so the actual operating costs for primary magnesium smelters may be lower than theoretical costs. Overall, during the period of coal price hikes, sentiment among magnesium plants and downstream buyers will be boosted, driving magnesium prices upward. As coal prices pull back intermittently, magnesium prices are expected to experience minor declines again.

Looking ahead

in November, primary magnesium smelters in multiple provinces including Ningxia and Shaanxi are expected to resume production, leading to a significant increase in magnesium supply. Under the premise of substantial supply growth, pressure on magnesium prices will notably intensify. On the demand side, magnesium alloy market demand for primary magnesium has increased, but current supply is still projected to exceed demand. The supply-demand pattern in the magnesium market will shift back to supply strength outweighing demand, putting stronger pressure on magnesium prices. However, considering the rising coal demand in winter, which will provide solid support for coal prices, the downside room for magnesium prices is limited. Magnesium prices are expected to continue fluctuating rangebound.