Key Directions for Upgrading the Magnesium Alloy Finished Materials Industry Industrial Expansion Drives Upstream Raw Material Dividends Magnesium Ingot and Ferrosilicon Enter a Growth Window Period [SMM Domestic Analysis]

With its core advantages of lightweight, high strength, and corrosion resistance, magnesium alloy continues to increase its penetration rate in high-end manufacturing fields such as new energy vehicles (NEVs), aerospace, electronic devices, and rail transit, becoming one of the key directions for global material industry upgrades. As downstream application scenarios continue to expand, the market size of magnesium alloys is showing rapid growth, leading to a structural expansion in the demand for upstream raw materials like magnesium ingots and ferrosilicon, with the industry chain's transmission effect gradually becoming more prominent.

Dual-Engine Driven Demand Surge: China's Magnesium Alloy Production Expected to Reach 645,000 mt by 2027

Under the global carbon neutrality goal, NEVs have an urgent need to improve driving range, and magnesium alloy, being the lightest structural metal material currently available, can reduce energy consumption by 5%-8% for every additional 10kg used per vehicle. Currently, some models of mainstream NEVs use 10-15kg of magnesium per vehicle, with some high-end models even exceeding 20kg. By 2025, the magnesium usage per NEV in China is expected to grow to around 6.3kg, and it is projected to reach 8.2kg by 2027, becoming the primary engine for the growth in magnesium alloy demand.

The domestic rollout of policies supporting the development of lightweight materials, coupled with the implementation of new national standards for electric vehicles (EVs), is rapidly increasing the penetration rate of magnesium alloys in the two-wheeled electric vehicle market, which will serve as another core driver for the growth in magnesium alloy demand. Additionally, continuous breakthroughs in key technologies such as casting, forming, and recycling are effectively reducing production costs, accelerating the transition of magnesium alloys from niche, high-end applications to large-scale popularization. Under conservative estimates, magnesium alloy production is expected to grow to 645,000 mt by 2027.

Direct Boost in Demand for Magnesium Ingots: Clear Trend of Volume and Price Increase

Magnesium ingot is the core raw material for producing magnesium alloys, and the growth in the magnesium alloy market directly drives a rigid expansion in the demand for magnesium ingots. Domestic demand for magnesium ingots will also benefit from the expansion of the magnesium alloy industry. Especially, the higher purity 99.9 magnesium ingot, suitable for magnesium alloy production, will see a demand growth significantly higher than the industry average, potentially creating a price spread between 99.9 and 99.8 in the future.

Indirect Transmission of Demand for Ferrosilicon: 75# Ferrosilicon Becomes Key Beneficiary

Ferrosilicon is an indispensable reducing agent in the production process of magnesium ingots, with approximately 1-1.1 tons of ferrosilicon consumed for every ton of magnesium metal produced. The growth in the magnesium alloy market indirectly drives a structural increase in the demand for ferrosilicon through the magnesium ingot production link.

Based on the estimated magnesium ingot demand reaching 1.24 million mt by 2027, the corresponding ferrosilicon demand would be about 1.36 million mt, an increase of around 240,000 mt compared to 2025, becoming an important emerging force for the growth in ferrosilicon demand. This will complement the demand from the steel industry. The traditional demand for ferrosilicon primarily comes from the steel industry, accounting for approximately 70%, and is used for deoxidizing molten steel and alloying. Its demand is significantly influenced by the capacity and operating rate of the steel industry. In contrast, the growth in ferrosilicon demand driven by the magnesium alloy industry chain is independent of the steel industry cycle, effectively smoothing the cyclical fluctuations in the ferrosilicon market. Particularly during periods of capacity control and weak demand in the steel industry, the demand growth from the magnesium alloy industry chain will serve as a crucial support for the ferrosilicon market.