Magnesium Ingot Prices Bottom Out, Inventory Divergence in Major Production Areas Boosts the Rally [SMM Magnesium Weekly Review]

1 Market Review

1 Dolomite

This week, the ex-factory price, excluding tax, for 1-3 cm dolomite (Wutai) was 108 yuan/mt, flat WoW; the price for 2-4 cm dolomite (Wutai) was 138 yuan/mt, flat WoW.

This week, the domestic dolomite market operated steadily. On the supply side, leading dolomite producers supported overall industry supply to remain stable. On the demand side, the operating rates of primary magnesium smelters in the main production areas remained stable, providing solid demand support for the dolomite market. Overall, the current dolomite market's supply-demand pattern tended towards balance, and dolomite prices were expected to maintain a steady trend.

1.2 Magnesium Ingot

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

This week, magnesium prices bottomed out, with the market showing a pattern of weakness first followed by strength. As of press time, the mainstream market quotation for 99.90% magnesium ingot in the main production areas was maintained at 15,600-15,700 yuan/mt, up 100 yuan/mt WoW.

This week, magnesium prices fluctuated rangebound. At the start of the week, upon market return, smelters showed strong reluctance to sell, and prices operated firmly. Some downstream users, considering that current prices had fallen to their psychological price level, entered the market collectively for restocking, resulting in excellent market transactions. Supported by transactions, smelters tentatively raised their quotations. Some downstream users continued to restock based on rigid demand, leading to a steady climb in magnesium prices. Reviewing the magnesium market this week, the entry of procurement for magnesium powder and foreign trade orders depleted the inventories of small primary magnesium smelters. The inventory pattern for primary magnesium in the main production areas showed large plants building inventory while small plants had zero stock, which effectively reduced resistance to the rise in magnesium prices.

1.2.2 Magnesium Ingot (Tianjin Port - FOB China)

This week, the FOB China price was quoted at $2,200-2,260/mt, with an average price of $2,230/mt. The foreign trade market cooled down this week, with transaction prices slightly higher WoW.

Overall heat in the foreign trade market pulled back this week, as the market gradually entered a phase of order execution and stockpiling. According to the SMM survey, driven by the landing of a special magnesium ingot tender project in the Middle East, market procurement orders increased. The actual transaction price for mainstream regular magnesium ingot currently remains in the FOB $2,170-2,200/mt range. Due to previously accepting some orders, traders' procurement volume from plants increased slightly this week. Affected by the slight rise in magnesium ingot ex-factory prices, traders' quotations to end-users also saw a corresponding small increase.

1.3 Magnesium Powder

This week, the mainstream tax-included ex-factory price for 20-80 mesh Chinese magnesium powder was 17,100-17,300 yuan/mt; the FOB China price was $2,410-2,450/mt.

Last month, the magnesium powder market saw a relatively high volume of overseas orders released, but downstream demand remained generally weak, with orders mostly being released on an as-needed basis. In November, the operating rate in the magnesium powder industry stayed at a low of 49.88%, and order performance was not ideal. Against this backdrop, the supply of by-product magnesium ingots tightened, leading to a price increase.

1.4 Magnesium Alloy

This week, the mainstream tax-inclusive ex-factory price for magnesium alloy in China was 17,550-17,750 yuan/mt, while the mainstream FOB price for Chinese magnesium alloy was $2,460-2,510/mt.

Magnesium alloy prices held up well this week. Cost side, magnesium ingot prices remained firm with demand support, and the benchmark price saw a slight WoW increase. Supply and demand side, supply side, the magnesium alloy market faced tight spot supply overall. Specifically, Anhui and Shanxi maintained full-capacity operations, while Shaanxi's magnesium alloy production rose rapidly, effectively filling the supply gap. Demand side, new orders in the two-wheeled electric vehicle sector grew rapidly, coupled with stable demand release from the NEV sector, leading to favorable magnesium alloy demand. Overall, the magnesium alloy market maintained a tight supply-demand balance this week, with alloy processing fees quoted firmly and supported by raw material magnesium ingot prices, keeping magnesium alloy prices strong.

2 Weekly Summary

The magnesium market showed a clear divergence this week. Raw material side, dolomite prices held steady with stable supply and solid demand support. Magnesium ingot market fluctuated rangebound; it briefly rebounded early in the week due to stockpiling news, but fell back as downstream follow-through was insufficient, remaining under pressure amid a supply-demand imbalance. FOB prices for exports stayed in the doldrums, with transactions mainly for forward orders, squeezing traders' profits and intensifying competition. The magnesium powder market continued to hit bottom as cost support weakened and new orders were scarce, with just-in-time procurement unable to reverse the weakness. Magnesium alloy was the highlight of the week; with main production areas operating at full capacity and increased recycled material output in Guangdong, boosted by new national standards and NEV demand, supply and demand stayed in a tight balance, and processing fees remained firm. Overall, except for magnesium alloy, other magnesium products faced insufficient demand, and the short-term market is likely to remain in the doldrums.