The magnesium market held up well this week [SMM Magnesium Weekly Review]

1 Market Review

1 Dolomite

This week, the ex-factory price (excluding tax) of 1-3 cm dolomite (Wutai) was 108 yuan/mt, unchanged from last week. The ex-factory price (excluding tax) of 2-4 cm dolomite (Wutai) was 138 yuan/mt, also unchanged from last week. Domestic dolomite prices held steady this week. On the supply side, leading dolomite enterprises maintained a stable pace of capacity release, ensuring a steady supply of dolomite. On the demand side, primary magnesium smelters in the main production areas operated at high operating rates, continuously releasing rigid demand for dolomite, providing solid support. Overall, the current supply-demand pattern of the dolomite market is trending towards a dynamic balance, and prices are expected to remain stable in the short term.

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

Magnesium prices held up well this week. As of the time of writing, mainstream quotations for 99.90% magnesium ingot in the main production areas were maintained at 15,800 yuan/mt, with top-tier prices rising by 100 yuan/mt compared to last Thursday. This week, magnesium prices first strengthened then weakened. The magnesium market continued the trend from last week, with strong sentiment among smelters in the main production areas to hold prices firm. Although foreign trade demand was lackluster, domestic trade saw frequent pre-holiday restocking, leading to improved market transactions and a rise in magnesium prices. In summary, the recent rise in magnesium prices can be attributed to two factors: first, inventories were mostly concentrated among financially strong producers, while the supply from willing sellers in the main production areas was limited, forcing downstream buyers to purchase at higher prices. Second, recent meetings among smelters in the main production areas to discuss price protection measures alleviated the sentiment of rushing to buy amid continuous price rise and holding back amid price downturn, resulting in good market transactions.

1.2.2 Magnesium Ingot (Tianjin Port - FOB China)

This week, the FOB China price was $2,210-2,290/mt, with an average of $2,250/mt. The foreign trade market remained stable, with almost no new orders added.

This week, coinciding with the Christmas and New Year holidays, the release of new overseas orders nearly came to a halt. Meanwhile, domestic ex-factory magnesium prices remained firm and slightly increased, causing end-users to adopt a wait-and-see attitude. Additionally, as magnesium prices were low at the beginning of December, many forward orders have already been locked in until H1 next year, leading to expectations of limited new orders next month. Currently, traders have completed stockpiling for recent orders but remain cautious about purchasing for some forward orders.

1.3 Magnesium Powder

This week, the mainstream ex-factory price (including tax) for 20-80 mesh Chinese magnesium powder was 16,900-17,100 yuan/mt; the FOB China price was $2,380-2,440/mt. The magnesium powder market saw overall stable trading this week. Recent orders on the demand side were relatively active, with a concentration of year-end order releases, prompting magnesium powder producers to enter a stockpiling phase. Suppliers continued to implement a sales-based production strategy, with an enhanced willingness to procure raw material magnesium ingots. Supported by raw material costs, magnesium powder prices were expected to remain stable.

1.4 Magnesium Alloy

This week, the mainstream tax-inclusive ex-factory price of magnesium alloy in China was 17,800-18,000 yuan/mt, while the mainstream FOB price was $2,470-2,520/mt.

Magnesium alloy prices continued to hold up well. Specifically, the supply-demand dynamics showed structural tight balance. Magnesium alloy enterprises maintained stable operating rates, but leading manufacturers had order schedules extending into February of the following year, with spot supply remaining tight. The supply-demand gap drove a steady rise in magnesium alloy processing fees. Cost side, upstream magnesium ingot prices fluctuated rangebound, with a slight increase in the benchmark price, providing some cost support for magnesium alloy prices.

2 Weekly Summary

The magnesium market exhibited significant divergence this week. On the raw material side, dolomite prices remained stable with steady supply and solid demand support. The magnesium ingot market fluctuated rangebound; it saw a brief rebound early in the week due to procurement and storage news, but fell back after insufficient downstream follow-through, remaining under pressure amid a supply-demand imbalance. FOB prices for foreign trade remained in the doldrums, with transactions mainly focused on forward orders, squeezing trader 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; despite full-capacity operations in main production areas and increased output of recycled materials in Guangdong, it maintained a tight supply-demand balance driven by new national standards and NEV demand, with processing fees staying firm. Overall, except for magnesium alloy, other magnesium products faced insufficient demand, and the short-term market was expected to remain in the doldrums.