SMM January 12 Magnesium Morning Meeting Minutes:
Magnesium Raw Material
Prices
The ex-factory price, excluding tax, for 1-3 cm dolomite (Wutai) was 108 yuan/mt, flat from the previous working day; the ex-factory price, excluding tax, for 2-4 cm dolomite (Wutai) was 128 yuan/mt, flat from the previous working day; the mainstream ex-factory price for 75# ferrosilicon in Shaanxi was 5,700-5,800 yuan/mt.
Supply and Demand
Recently, Wutai dolomite prices held steady. Recently, a leading dolomite producer in Wutai confirmed a production halt, reducing the supply of high-quality dolomite in the market. Considering the current high operating rates at primary magnesium plants provide strong support for dolomite demand, dolomite prices are expected to hold up well. The most-traded ferrosilicon futures contract, 2603, closed at 5,632 on the previous working day, down 112 yuan. In the spot market, 75# ferrosilicon showed a strong performance last week, driven by the magnesium metal market. However, demand showed a mediocre performance amid the traditional off-season effect, and there might be room for negotiation on ferrosilicon transaction prices.
Magnesium Ingot
Today, the mainstream quotation for magnesium ingots in the Fugu area was 16,800-17,000 yuan/mt, flat from the previous working day; the Chinese FOB price was $2,380-2,460/mt.
Supply and Demand
Domestic magnesium prices climbed significantly last week, with the domestic and foreign trade markets showing interconnected influences. Domestically, boosted by a sharp rise in nonferrous metals futures, magnesium ingot market sentiment improved. Coupled with magnesium plants' strong willingness to hold prices firm and uneven inventory distribution leading to scarce circulating supply, transactions were mostly concentrated in a limited number of magnesium plants, creating a short-term illusion of undersupply, collectively pushing prices higher. In foreign trade, there was almost no new order increment; quotations followed the rise in domestic ex-factory prices, while overseas market transactions were generally stable. After returning from the holiday, overseas buyers generally adopted a wait-and-see approach. Due to a large volume of pre-holiday orders already released and end-user inventory at high levels, acceptance of price increases was limited. End-use demand in January is expected to see no significant increase. However, foreign traders still have some pending orders to execute; European traders' orders may not be fully released, and some domestic traders also have small volumes of pending shipment orders requiring restocking purchases. This provides some demand support for magnesium plants in the main production areas to hold prices firm. The FOB export price is expected to follow domestic ex-factory prices and remain high, but actual trading activity is low, presenting a situation of high offer prices and limited actual transaction volumes.
Magnesium Alloy
Today, the mainstream tax-included ex-factory price for magnesium alloy in China was 18,950-19,050 yuan/mt; the Chinese FOB price for magnesium alloy was $2,660-2,730/mt.
Supply and Demand
Magnesium alloy prices continued to hold up well last week. Specifically, cost side, the simultaneous rise in magnesium and aluminum prices pushed up the raw material costs for magnesium alloys. Magnesium alloy producers raised processing fees this month, and magnesium alloy prices held up well. Supply and demand side, magnesium alloy enterprises maintained stable operating rates, but leading magnesium alloy producers had order schedules extended to February of the following year, with spot supply in the market remaining tight. On the procurement side, downstream users showed a strong fear of high prices, and some producers had not yet implemented high processing fees. Overall, the future supply-demand gap is expected to drive magnesium alloy processing fees to hold up well.
Magnesium Powder
Prices
Today, the mainstream tax-inclusive ex-factory price for 20-80 mesh Chinese magnesium powder was 17,000-17,200 yuan/mt; the FOB China price was $2,390-2,450/mt.
Supply-Demand
Last week, magnesium powder prices continued to rise, driven by raw material costs. The overall industry operating rate remained stable, and production continued to implement a produce-based-on-sales model. Enterprise order schedules had extended to January, with some producers already purchasing raw materials to replenish inventory. On the demand side, overall growth was expected to slow down: the domestic trade market was projected to remain driven by rigid demand, while the foreign trade market saw no significant new orders in the short term.
