Recently, magnesium prices exhibited an "inverted V" trajectory. In early April, bullish sentiment across the industry chain was strong, producers showed a notable hold-back-from-selling mentality, circulating supplies in the market remained persistently tight, end-users stockpiled in advance, and overall market transactions performed well. Combined with rising speculative demand and traders' strengthened willingness to stockpile, magnesium prices displayed a stepwise upward trend. From mid-to-late April, driven by fear of high prices, end-user purchasing activities slowed down somewhat. Coupled with panic shipments from producers, market prices continued to decline steadily.
Primary Magnesium and Magnesium Alloy Production Rose in Tandem, with Supply Growth Far Outpacing Demand — Analysis of Why Magnesium Prices Encounter Resistance
Taking primary magnesium and magnesium alloy production in March 2026 as an example, primary magnesium production was up 25,100 mt YoY in March 2026, while magnesium alloy production was up 22,900 mt YoY in March 2026. Based on an average shredded scrap addition ratio of 29.3% and an alloying element addition ratio of 10%, the demand for primary magnesium from the magnesium alloy demand side in March 2026 was estimated at 13,900 mt. The demand gap caused by supply-demand mismatch and blind mutual growth from sellers and buyers was estimated at around 11,200 mt. Affected by this, although magnesium prices showed upward momentum on several occasions driven by speculative sentiment and end-user stockpiling, prices struggled to hold at high levels, and magnesium prices moved sideways.
Traditional Export Demand for Primary Magnesium Faces Short-Term Obstacles; Magnesium Alloy Market Demand Alone Cannot Sustain Support
Since 2026, customs authorities have continuously intensified crackdowns on non-compliant and illegal export operations of magnesium products. Meanwhile, regulatory oversight regarding magnesium-containing substances potentially classified as dual-use items for export, as referenced in relevant 2024 policies, has also become increasingly stringent. Recently, all export vessels carrying magnesium-containing substances are required to provide quality inspection reports to prove that the goods do not fall within the scope of dual-use items listed in policy documents before clearance can be granted. This measure has sent a clear tightening signal to the magnesium export market, and regulatory intensity is expected to further strengthen in the future.
From the current magnesium ingot market landscape, exports remain the primary consumption support for primary magnesium. However, with the continued tightening of customs supervision recently, export risks for foreign trade traders have risen significantly. Some traders, out of caution, have slowed down the pace of export document submission. Combined with the market sentiment of rush to buy amid continuous price rise and hold back amid price downturn, traders have generally postponed their purchasing plans, resulting in weak short-term demand from the foreign trade side.
Speculative Sentiment Amplifies Magnesium Price Fluctuations; Magnesium Market Awaits a Return to Rationality
As magnesium alloy projects have successively materialized, social capital has accelerated its inflow. In early April, bullish sentiment surged, and active transactions drove magnesium prices to rise rapidly. However, after the rally, momentum proved insufficient. Previously stockpiled supplies purchased at low levels were dumped at low prices in a concentrated manner, and magnesium prices entered a downward trajectory as panic sentiment spread. Compounded by the dual pressure of capital constraints and inventory on smelters, market quotations continued to decline, falling into a vicious cycle of low-price competition.
Strong Supply and Weak Demand Pattern Established in the Magnesium Market: Where Will Magnesium Prices Head Next?
In April, the operating rate of primary magnesium smelters continued to rise driven by profits. Nationwide primary magnesium smelter output in April was likely to hit a historical high again, up over 4,000 mt MoM from March. The strong-supply-weak-demand pattern in the magnesium market was further reinforced, while the anticipated surge in magnesium alloy demand had yet to materialize. Overall, the market is likely to remain in the doldrums in the short term. However, as current prices are approaching the break-even line for primary magnesium smelters, some smelters may opt for maintenance shutdowns or production halts. SMM will provide timely updates on the operating conditions of primary magnesium smelters in major producing regions.
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