[SMM Domestic Analysis: Magnesium Alloy Emerges as Core Direction for Material Industry Upgrade; Industry Expansion Generates Upstream Raw Material Dividends; Magnesium Ingot and Ferrosilicon Enter Growth Window Period] Magnesium alloy, with its core advantages of lightweight, high strength, and corrosion resistance, is seeing its penetration rate continuously increase in high-end manufacturing sectors such as NEVs, aerospace, electronic equipment, and rail transit, becoming one of the core directions for global material industry upgrade. As downstream application scenarios continue to expand, the market size of magnesium alloy is showing rapid growth, leading to structural expansion in the demand for upstream raw materials like magnesium ingot and ferrosilicon in its industry chain, with the industrial chain transmission effect gradually becoming prominent.
Dual Engines Drive Demand Surge; China's Magnesium Alloy Production Expected to Reach 645,000 mt in 2027
Under global carbon neutrality goals, there is an urgent need for NEVs to improve driving range. Magnesium alloy is currently the structural metal material with the lowest density; increasing magnesium usage per vehicle by 10 kg can reduce energy consumption by 5%-8%. Currently, magnesium usage in some mainstream NEV car models has increased to 10-15 kg per vehicle, with some high-end models even exceeding 20 kg. Magnesium usage per NEV in China is expected to grow to around 6.3 kg by 2025 and further to 8.2 kg by 2027, making it the primary engine for magnesium alloy demand growth.
Domestically, intensive policy support for the development of lightweight materials, coupled with the implementation of new national standards for EVs, is driving the rapid increase in magnesium alloy's penetration rate in the two-wheeled EV market, which will become another core engine for magnesium alloy demand growth. Additionally, continuous breakthroughs in key technologies such as melting, casting, forming, and recycling of magnesium alloy have effectively reduced production costs, accelerating its transition from high-end niche applications to large-scale popularization. Under conservative estimates, magnesium alloy production is projected to increase to 645,000 mt by 2027.
1. Direct Boost to Magnesium Ingot Demand: Clear Trend of Volume-Price Synergy
Magnesium ingot is the core raw material for magnesium alloy production. The growth of the magnesium alloy market directly drives the rigid expansion of magnesium ingot demand. Domestic magnesium ingot demand will similarly benefit from the expansion of the magnesium alloy industry. In particular, higher purity 99.9 magnesium ingot, being suitable for magnesium alloy production, is expected to see its demand growth rate significantly outpace the industry average. In the future, a price spread may develop between 99.9 and 99.8 due to the growth in magnesium alloy demand.
2. Indirect Transmission to Ferrosilicon Demand: 75# Ferrosilicon Emerges as the Primary Beneficiary
Ferrosilicon is an essential reducing agent in the magnesium ingot production process, with approximately 1-1.1 mt of ferrosilicon consumed per mt of magnesium metal ingot produced. The growth of the magnesium alloy market indirectly drives structural growth in ferrosilicon demand through the magnesium ingot production stage.
Based on the projected increase in magnesium ingot demand to 1.24 million mt by 2027, the corresponding ferrosilicon demand is estimated to be about 1.36 million mt, representing an increase of approximately 240,000 mt compared to 2025. This becomes a significant emerging driver for ferrosilicon demand growth. This growth will complement demand from the steel industry. Traditionally, the steel industry accounts for about 70% of ferrosilicon demand, where it is used for steel deoxidation and alloying; this demand is heavily influenced by the steel industry's capacity and operating rates. In contrast, the 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 steel industry capacity adjustments and weak demand, the demand growth from the magnesium alloy industry chain will serve as a crucial support for the ferrosilicon market.
