Gearing Up for 2026! Magnesium Market Ends January on a Stable Note, Nearly 300,000 mt of Demand Growth Boosts New Industry Prosperity [SMM Domestic Analysis]

In January 2026, magnesium prices moved sideways within the range of 15,700-17,000 yuan/mt, with the monthly average price at 16,465 yuan/mt, up 2.13% MoM. In early January, driven by non-ferrous metals futures, magnesium prices surged significantly, with a single-day increase of up to 400 yuan/mt, and the highest transaction price reached 16,800 yuan/mt. Subsequently, downstream fear of high prices intensified, market inquiry activity quickly pulled back, bargaining power shifted to the downstream, and magnesium plants were forced to offer discounts for shipments, leading to a rapid price pullback. In late January, pre-holiday stockpiling began in the market, transaction sentiment recovered, and magnesium prices rose again supported by transactions. Overall, domestic magnesium prices in January exhibited an N-shaped fluctuation pattern.

Primary magnesium production in January 2026 was 101,600 mt, down 2.67% MoM, while the operating rate increased to 76.96%. Primary magnesium production in January decreased by 2.67% MoM, marking the first decline after five consecutive months of growth. Production within the industry saw both increases and decreases, with the overall increase failing to offset the decrease. The main reason was persistent cost inversion, leading three primary magnesium smelters to halt production from the end of December to early January, affecting over 3,000 mt of primary magnesium output. Additionally, two other primary magnesium producers opted for production cuts, affecting less than 1,000 mt of primary magnesium output. Primary magnesium production in February 2026 is expected to remain stable. As the magnesium industry involves continuous production, enterprises maintained normal operations during the Chinese New Year period, with most enterprises seeing stable output. A newly resumed enterprise in Shanxi is expected to see increased production following prior equipment maintenance, while a magnesium plant in Xinjiang halted production. Overall, the change in primary magnesium production is relatively small.

China's magnesium alloy production in January 2026 was 51,100 mt, up 5.14% MoM and 65.8% YoY, with an operating rate of 61.74%. Magnesium alloy production continued to grow in January, with the main growth provinces being Shaanxi and Shanxi, while production in Anhui remained stable. Magnesium alloy production in February is expected to see a slight decline. The current order backlog cycle for the magnesium alloy industry overall is 1 to 2 weeks, with leading manufacturers having orders scheduled until the end of February. Rigid demand from downstream industries persists, but due to the approaching Chinese New Year, die-casting plants are gradually suspending operations, causing disruptions to downstream magnesium alloy orders. Magnesium alloy producers all adopt a produce-based-on-sales model; affected by this factor, February production may experience a slight decrease.

Market Outlook

The magnesium market in February is expected to show a trend of initial stability followed by weakness. In the early part of the month, market trading gradually weakened. On one hand, year-end inventory clearance by smelters was largely completed, and on the other hand, year-end stockpiling by downstream manufacturers also concluded, causing market sentiment to return to sluggishness. Coupled with intensified losses in semi-coke driving up coal gas costs, primary magnesium smelting costs increased significantly, leading to a pronounced cost support effect. Enterprises showed a relatively weak willingness to sell, market offers remained firm, and magnesium prices remained stable before the holiday. After the holiday, market prices may face pressure and pull back. On one hand, smelter inventory pressure is gradually increasing, and some manufacturers may choose to reduce prices for shipments; on the other hand, coal prices are expected to decline after the new year, correspondingly weakening cost support. Together, these factors may lead to a slight correction in magnesium prices. However, this correction is only a temporary phase. As die-casting enterprises resume production, supported by demand, magnesium prices are expected to enter a new upward cycle.

This year's magnesium market has come to an end. While magnesium price fluctuations in 2025 may not stand out among non-ferrous metals, it is precisely the stable price trend in the past that will foster the potential for nearly 300,000 mt of magnesium alloy demand growth in 2026. The magnesium metal market in 2026 is set to be a year of prosperity, a critical year for the magnesium market to stride toward prosperity. The industry is expected to write a new chapter of growth, worthy of anticipation across the sector.

On this occasion of bidding farewell to the old and ushering in the new, on behalf of the SMM magnesium team, I would like to extend our sincerest gratitude to industry colleagues, magnesium enterprise partners, experts, and scholars who have long cared for and supported SMM! Wishing everyone a prosperous new year, immediate success, abundant wealth, and lasting blessings!