Weak Supply and Demand Dominated Magnesium Price Trends, with Structural Divergence Across Subsegments [SMM Weekly Magnesium Review]

1 Market Review

1 Dolomite

This week, the ex-factory prices excluding tax for 1-3 cm dolomite (Wutai) were 108 yuan/mt, basically flat WoW, and for 2-4 cm dolomite (Wutai) were 138 yuan/mt, basically flat WoW.

This week, the China dolomite market operated in an overall stable manner. Supply side, regional structural divergence persisted. Top-tier enterprises in Wutai remained shut down, but local raw material inventory provided strong support to market supply. Coupled with timely volume replenishment from other major producing areas, overall national supply remained stable. Demand side, the operating rates of primary magnesium enterprises in the main producing areas of Shaanxi, Shanxi, and Inner Mongolia remained steady, with rigid demand released in an orderly manner. Enterprises held sufficient raw material inventory, and the overall procurement pace remained prudent. Based on supply and demand fundamentals, China dolomite prices mainly stayed stable.

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

This week, magnesium prices consolidated at high levels. As of press time, mainstream transaction prices of 99.90% magnesium ingot in the main producing areas were stable at 16,650 yuan/mt, basically flat WoW.

This week, magnesium prices in the main producing areas fluctuated rangebound. Looking back at this week's magnesium market, the magnitude of price change continued to narrow, with transaction prices centered around the quotation range of 16,600-16,700 yuan/mt, while the market stalemate in supply and demand intensified. In terms of weekly transaction volume, overall trading saw mediocre performance, with only a few working days relatively active, mainly due to the phased shipment pace of smelters. Concentrated emergence of low-priced cargoes provided some stimulus to transactions. From the regional trading pattern, strong reluctance to sell prevailed in the main producing areas this week, and producers' quotations were generally firm. Ningxia and Shenmu in Shaanxi became important supplements to magnesium ingot supply in the market. Overall, the market showed a weak supply and weak demand pattern this week, with insufficient momentum for unilateral fluctuations in magnesium prices, which continued to fluctuate rangebound.

1.2.2 Magnesium Ingot (Tianjin Port - China FOB)

This week, China FOB prices were quoted at $2,410-2,450/mt, with an average price of $2,430/mt. Magnesium ingot FOB quotations eased slightly this week.

This week, magnesium ingot FOB quotations and the center of actual transactions both edged down to the lower end of the market range, at around $2,400-2,420/mt. Some traders reported that new orders remained limited this week, but as ocean freight rates gradually eased, inquiries from Europe and India rebounded slightly. Downstream enterprises remained bullish on the magnesium market and are expected to release some forward tender orders in the near term. Overall, foreign trade market orders are expected to gradually increase in volume.

1.3 Magnesium Powder

This week, the mainstream tax-inclusive ex-factory prices of 20-80 mesh magnesium powder in China were 17,850-18,050 yuan/mt; China FOB prices were $2,570-2,610/mt.

This week, the magnesium powder market as a whole held up well with stable-to-firm performance. Affected by raw material prices fluctuating rangebound, magnesium powder quotations remained firm. Recently, foreign trade orders for magnesium powder gradually entered the market to purchase raw materials, which provided stronger support for demand for magnesium ingot, so prices remained relatively firm. At present, since March, the operating rate of magnesium powder has gradually picked up, prod

1.4 Magnesium Alloy

This week, the mainstream tax-inclusive ex-factory prices of magnesium alloy in China were 18,750-19,050 yuan/mt, and the mainstream FOB prices of magnesium alloy in China were $2,780-2,850/mt.

This week, magnesium alloy prices generally remained stable, while low-priced supply emerged periodically in the market. In terms of supply, the operating rate of top-tier magnesium alloy enterprises steadily rebounded, and with newly added capacity being put into operation one after another, market supply increased significantly, with some room for negotiated discounts on actual orders for certain cargoes expanding somewhat. On the demand side, downstream die-casting enterprises had gradually digested pre-holiday inventory, with restocking mainly driven by just-in-time procurement, and market transactions were moderate. Overall, the current magnesium alloy market showed a pattern of strong supply and weak demand, and magnesium alloy prices are expected to remain in the doldrums.

2 Weekly Summary

This week, trends across various products in China’s magnesium industry chain diverged, while the overall market maintained a core tone of stability with fluctuate rangebound moves. The stagnant supply-demand situation became increasingly evident, with insufficient momentum for a unilateral market trend. The upstream dolomite market maintained stable operation. Although a top-tier enterprise in the Wutai area suspended production, raw material inventory remained sufficient, replenishment of capacity in major producing areas was timely, and coupled with the steady pace of just-in-time procurement by primary magnesium enterprises, prices held steady without fluctuations. As the core product, magnesium ingot prices in China’s major producing areas consolidated at high levels, mainstream transaction prices remained stable, market transactions showed mediocre performance, and producers showed strong reluctance to sell. Under the pattern of both weak supply and demand, quotations fluctuated rangebound. On the foreign trade side, FOB quotations softened slightly. Along with the pullback in ocean freight rates, inquiries outside China recovered somewhat, and there were expectations for the placement of long-term orders. Supported by raw materials and boosted by the entry of foreign trade orders, the magnesium powder market maintained firm quotations and held up well. In March, the industry’s operating rate gradually recovered, and support from the demand side became more evident. Magnesium alloy market prices generally remained stable. On the supply side, as the operating rate of top-tier enterprises rebounded and newly added capacity was gradually released after coming on stream, while downstream buyers mainly restocked through just-in-time procurement, the market showed a pattern of strong supply and weak demand, and prices are expected to remain in the doldrums in the near term. Looking at the entire industry chain, there were no significant changes in current market fundamentals, and in the short term the market will still mainly see steady fluctuations with localized slight adjustments.