Under Oversupply Pressure, Magnesium Prices Were Under Pressure This Week [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 that of 2-4 cm dolomite (Wutai) was 138 yuan/mt, also unchanged WoW.

This week, the market price of dolomite remained stable. On the supply side, some small dolomite manufacturers were unable to resume production due to expired mining licenses, and most of the dolomite in the main magnesium metal producing areas was supplied by leading dolomite manufacturers, ensuring a stable supply of dolomite. On the demand side, two primary magnesium smelters recently started production by igniting their furnaces, leading to a steady increase in demand for dolomite, with strong demand support. Overall, the dolomite market maintained a supply-demand balance, with stable prices.

1.2 Magnesium Ingot

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

This week, magnesium prices were under pressure. As of the press time, the mainstream quotations for 99.90% magnesium ingot in the main producing areas remained at 16,000-16,100 yuan/mt, with the center of the magnesium price level moving downward, down 250 yuan/mt MoM.

This week, magnesium prices declined unilaterally. On the supply side, the wave of production resumptions among primary magnesium smelters pushed the daily production of primary magnesium to around 2,200 mt, resulting in a severe market surplus. Some primary magnesium smelters weakened their reluctance to sell, and in mid-month, some manufacturers faced increased needs to pay electricity bills and purchase raw materials, compelling them to sell magnesium ingots at low prices to recoup funds. On the demand side, influenced by the sentiment of rushing to buy amid continuous price rise and holding back amid price downturn, traders and buyers mostly engaged in bargain down purchasing prices, putting pressure on magnesium prices. Overall, the pull back in coal prices weakened cost support, and ultimately, the magnesium market was under pressure this week due to factors such as oversupply and weakened purchasing demand.

1.2.2 Magnesium Ingot (Tianjin Port - FOB China)

This week, the FOB China price was reported at 2,240-2,350 US dollars/mt, with an average price of 2,295 US dollars/mt. This week, foreign trade inquiries were sluggish, with a persistent bearish sentiment among downstream players.

At the beginning of this week, domestic magnesium prices continued to decline, breaking through the key support level of 16,100 yuan/mt by mid-week. US dollar quotations also showed a divergent trend, with the mainstream transaction range moving down to 2,240–2,280 US dollars/mt. Despite active market inquiries, actual transactions were extremely sluggish, with a strong bearish sentiment among downstream players and a continuously declining psychological price level. The current prices are gradually approaching a cyclical low, and it is expected that as some foreign trade orders enter their delivery dates next week, this may provide some support for prices, potentially slowing the decline. However, from the perspective of the overall supply-demand structure, the market remains in an oversupply situation, and a weak operational trend is expected to continue in the short term.

1.3 Magnesium Powder

This week, the mainstream tax-inclusive ex-factory prices for Chinese magnesium powder with a mesh size of 20-80 ranged from 17,250-17,450 yuan/mt; the Chinese FOB price ranged from 2,420-2,490 US dollars/mt.

This week, magnesium powder market prices continued to weaken, driven by declining raw material prices. Currently, there are few new orders in the market, and magnesium powder plants generally produce based on demand, presenting an overall weak and stable operating pattern. Although procurement volumes at some magnesium powder plants increased this week, this was mainly to fulfill fixed monthly requirements and existing orders, and did not reflect an actual recovery in demand. Overall, the magnesium powder market remains in a relatively weak state.

1.4 Magnesium Alloy

This week, the mainstream tax-inclusive ex-factory price for magnesium alloy in China was 18,000-18,100 yuan/mt, and the mainstream FOB price for Chinese magnesium alloy was $2,520-2,580/mt.

This week, magnesium alloy prices continued the slow decline seen in the primary magnesium market, but alloy processing fees remained firm. Analyzing the supply-demand pattern, the magnesium alloy market exhibited characteristics of structural imbalance in the short term. On the production side, operating rates remained high, moderately alleviating the previously tight supply situation. However, most enterprises in the industry still primarily engage in order-based production, with some manufacturers' production schedules extending to mid-November. Looking ahead, as upstream magnesium alloy producers accelerate their commissioning processes, the tight supply situation in the market is expected to improve further. Nevertheless, downstream die-casting enterprises currently have relatively limited willingness to accept increases in processing fees. Processing fees are expected to remain firm in the short term. Medium and long-term, with strengthening expectations of looser supply and cost transmission pressures downstream, processing fees face the possibility of a pullback adjustment.

2 Weekly Summary

This week, the magnesium industry chain showed a diverging operational trend. The dolomite market maintained a supply-demand balance. Supply remained stable, led by top-tier enterprises, while demand grew steadily alongside production resumptions at primary magnesium smelters, supporting stable prices. The magnesium ingot market faced price pressure due to oversupply and weak demand. Both domestic and overseas quotations were weak. Although the delivery of some foreign trade orders might temporarily slow the decline in the short term, the overall pattern of oversupply remained unchanged. Magnesium powder prices weakened following the decline in raw material prices, with insufficient new orders in the market and no signs of demand recovery. Magnesium alloy prices continued their slow decline, but processing fees held firm. Short-term supply is relatively eased due to order support, but medium and long-term, with looser supply expectations and downstream cost pressure, processing fees face the risk of a pullback.