Fear of High Prices Dominates Demand Side, Magnesium Ingot Shows Weakness After Consolidating at Highs [SMM Magnesium Weekly Review]

1 Market Review

1 Dolomite

This week, the ex-factory tax-exclusive price of 1-3 cm dolomite (Wutai) was 108 yuan/mt, flat WoW, and the ex-factory tax-exclusive price of 2-4 cm dolomite (Wutai) was 138 yuan/mt, flat WoW.

This week, China's dolomite market remained stable. In terms of supply, dolomite production in the Wutai area remained suspended, with supply supplemented by stone material plants in surrounding counties to ensure market supply. Demand side, the operating rate of primary magnesium smelters in major producing areas edged up, and primary magnesium smelters maintained rigid-demand restocking, providing notable support for dolomite market demand. Considering that international crude oil prices currently moved sideways and transportation costs stabilized at highs, dolomite delivery-to-factory prices are expected to remain stable in the short term.

1.2.1 Magnesium Ingot (Fugu, Shenmu – Major Producing Areas)

This week, magnesium prices consolidated at highs. As of press time, mainstream quotations for 99.90% magnesium ingot in major producing areas were 17,400-17,500 yuan/mt, basically flat WoW.

This week, magnesium prices consolidated at highs. Reviewing the magnesium market this week: Supply side, affected by magnesium prices continuing to consolidate at highs, market transactions lacked follow-through momentum, and primary magnesium smelters all experienced slight inventory buildup. Affected by this, some primary magnesium smelters saw weakened hold-back-from-selling sentiment, low-priced supplies increased in the market, and magnesium prices gradually showed signs of weakness. Demand side, end-user manufacturers had strong fear of high prices, domestic and foreign trade orders were scarce, and downstream traders only maintained rigid-demand restocking, with weak market demand support. Cost side, coal and semi coke prices edged down, coal gas costs moved sideways, ferrosilicon spot prices declined, and primary magnesium smelting costs trended downward. Overall, the supply-demand pattern in the magnesium market reversed this week, with market pricing power shifting back to buyers, and magnesium prices pulled back slightly this week.

1.2.2 Magnesium Ingot (Tianjin Port – China FOB)

This week, China FOB prices were quoted at $2,500-2,600/mt, with an average of $2,550/mt. Magnesium ingot FOB quotations consolidated at highs this week, with weak transactions.

The foreign trade market was overall sluggish this week, with few large inquiries and limited market transactions. Actual transaction centers leaned toward the lower end of quotations, concentrated at $2,500-2,540/mt. Mid-week, factories' sentiment to hold prices firm weakened somewhat, magnesium ingot ex-factory prices were slightly adjusted downward, and some traders dumped cargoes at low prices. FOB quotations are expected to gradually move lower accordingly. However, influenced by recent expectations of a US dollar exchange rate decline, overall prices are still expected to remain relatively stable.

1.3 Magnesium Powder

This week, the mainstream tax-inclusive ex-factory price of 20-80 mesh magnesium powder in China was 18,600-18,800 yuan/mt; the China FOB price was $2,690-2,730/mt.

This week, magnesium powder prices remained firm, consolidating at highs, mainly supported by raw material magnesium ingot prices fluctuating at highs, with strengthened cost-side driving forces. In terms of supply, magnesium plant operating rates rose notably in March, providing a stable supply foundation for the market. Demand side, the domestic trade market was dominated by rigid-demand restocking, while foreign trade orders surged significantly last month, with an evident overall demand recovery trend. Notably, magnesium powder enterprises stockpiled more this week and showed strong enthusiasm for purchasing magnesium ingots, which may have front-loaded subsequent demand to some extent.

1.4 Magnesium Alloy

This week, the mainstream tax-inclusive ex-factory price of magnesium alloy in China was 19,550-19,750 yuan/mt, and the mainstream FOB price of China's magnesium alloy was $2,920-2,980/mt.

This week, magnesium alloy showed a pattern of benchmark prices consolidating at highs with firm processing fees. Supply side, magnesium alloy smelters maintained stable operating rates this week, while some magnesium alloy smelters had inventory at high levels, and low-priced magnesium alloy supplies occasionally emerged. Demand side, downstream die-casting manufacturers had strong fear of high prices, and market transactions were mostly driven by rigid-demand restocking. On the end-user front, the automotive sector continued to release terminal orders, while the pace of magnesium alloy order release in the two-wheeler sector slowed down. Overall, the magnesium alloy market was in slight surplus this week, and magnesium alloy prices are expected to remain stable in the short term.

2 Weekly Summary

This week, segments across China's magnesium industry chain diverged in trends, each with distinct supply-demand characteristics. The dolomite market remained stable, with production suspended in parts of core producing areas and supply supplemented by surrounding sources. Downstream primary magnesium smelters saw slightly higher operating rates and maintained rigid-demand restocking, providing solid demand support, with short-term trends expected to remain stable. Magnesium ingots in major producing areas showed signs of weakness after consolidating at highs, as slight inventory buildup at smelters weakened hold-back-from-selling sentiment, while downstream fear of high prices was strong and orders were scarce, shifting the supply-demand pattern toward buyers. The Tianjin Port magnesium ingot FOB market saw weak transactions, with factories' sentiment to hold prices firm cooling. Short-term quotations may edge lower but are expected to stabilize overall. Magnesium powder prices remained firm, with higher plant operating rates ensuring supply and recovering domestic and foreign trade demand, while enterprise stockpiling behavior may have front-loaded subsequent demand. Magnesium alloy consolidated at highs, with stable smelter operating rates but somewhat elevated inventory at some plants. Downstream demand was mainly driven by rigid-demand restocking, and terminal order release showed structural divergence, with short-term prices expected to remain stable.