Supply-demand tight balance in magnesium alloy market Processing fees continue to rise and regional price spreads widen [SMM analysis]

From mid-to-late August 2025 through September, magnesium alloy market demand surged, leading to tight alloy supply that spread from south to north. From mid-to-late September to the present, the magnesium alloy market entered a phase of tight spot supply, with alloys being hard to come by. As a result, magnesium alloy processing fees bottomed out and rebounded, continuing to rise to 2,000 yuan/mt.

Price-wise, supply-demand imbalance pushed alloy processing fees higher. However, during the upward adjustment, some small and medium-sized producers quoted lower processing fees due to weak acceptance of high prices from downstream customers, leading to a widening price spread. Moreover, due to differences in the distribution of magnesium alloy plants and other factors, current quotations vary across provinces such as Shaanxi, Shanxi, and Anhui, with the price spread widening further.

Supply and demand side, supply side, driven by demand, magnesium alloy smelters gradually shifted to full-capacity operation. October magnesium alloy production increased by over 6,000 mt compared to August. Encouraged by the broad prospects of magnesium alloys, primary magnesium smelters in Shaanxi and Inner Mongolia actively extended the industry chain, with magnesium alloy capacity growing steadily. Demand side, the application of magnesium alloy parts in the automotive sector continues to expand, mainly into four categories: interior, auto body, chassis, and transmission. This round of demand growth was largely driven by increased market penetration of interior components, primarily including seat frames, dashboard frames, center console brackets, and die-cast parts such as display backplanes.

Overall, the magnesium alloy market remains in a tight balance. Inventory at most magnesium alloy producers is tight, and they continue to operate on a production schedule basis. Demand-side support is significant, and coupled with firm quotations from leading producers, magnesium alloy processing fees are expected to remain strong in the near term.