Tight Supply and Robust Demand Boost Magnesium Alloy Processing Fees, with Further Gains Expected [SMM Analysis]

From mid-to-late August to the entire month of September 2025, the magnesium alloy market witnessed an explosive growth in demand, leading to a shortage of alloy supply that spread from south to north successively. Since mid-to-late September up to now, the magnesium alloy market has entered a phase of comprehensive spot shortage, with magnesium alloy in short supply and hard to come by. Affected by this, the quoted price of magnesium alloy processing fees has bottomed out and rebounded, rising continuously to 2,000 yuan per ton.

In terms of prices: The imbalance between supply and demand of magnesium alloy has driven up processing fees. However, during the price increase of magnesium alloy processing fees, some small and medium-sized manufacturers have quoted lower processing fees due to low acceptance of high prices by downstream customers, resulting in a widening gap in magnesium alloy quoted prices. Moreover, it is understood that at present, affected by factors such as differences in the distribution of magnesium alloy plants, there are disparities in magnesium alloy quoted prices among provinces including Shaanxi, Shanxi and Anhui, and the price gap has further widened.

In terms of supply and demand: On the supply side, driven by demand, magnesium alloy smelters have successively switched to full-load operation. The output of magnesium alloy in October increased by more than 6,000 tons compared with that in August. Additionally, driven by the broad prospects of magnesium alloy, some primary magnesium smelters in Shaanxi and Inner Mongolia have actively extended the industrial chain, leading to a steady growth in magnesium alloy production capacity. On the demand side, the application scope of magnesium alloy parts in the automotive field is expanding, mainly divided into four categories: interior decoration, body, chassis and transmission. This round of demand growth is mostly caused by the increase in the market penetration rate of interior parts, which mainly include die castings such as seat frames, instrument panel frames, central control brackets and liquid crystal display backplanes.

Overall, the current supply and demand of the magnesium alloy market remain in a tight balance pattern. Most magnesium alloy manufacturers are facing tight inventory and are still in a state of production with orders queued up. The demand side provides significant support for magnesium alloy, and coupled with the firm quoted prices of leading magnesium alloy manufacturers, it is expected that the magnesium alloy processing fees will maintain a firm operating trend in the follow-up.